Divorced from Reality

January 17, 2016

I spent a large chunk of the last week sitting in meetings with our Chinese partner talking about expansion throughout China over the next several years and one thing I was struck by was how all of the conversations were completely divorced from the macroeconomic reality in China.  There was no mention of China’s economic troubles, whether it be the falling stock market, an oversupply of housing, falling economic growth, overcapacity in the manufacturing sector, or any number of statistics that point to a rapid deceleration of the the Chinese economy.  The only thing that came up was the devaluing the the Chinese renminbi and its mention was prompted by the Americans in the room.  Equally absent was any discussion of the current political situation in China, though that is slightly less surprising.  However, on the whole if we were sitting in a roomful of American or European business executives, the economic climate would have certainly been a part of the discussion and even maybe one or two political quips, including some comment about how unfathomable Donald Trump’s candidacy is and the sad state of American politics.  But there was none of that in these meetings.

It’s often something I wonder about when I see people wandering the mall or around me at a restaurant – what do they think about what’s happening in their country?  Do they even know what is happening in their country?  It’s very likely they may not be fully aware of what is going on since they would need a VPN to read foreign news sources and the Chinese media is largely silent as to the country’s economic doldrums.  Plus most people are too busy watching tv shows and movies on their phones to pay attention to the news, whether it’s CCTV or one of the many government publications sitting untouched in the newsstands around the city.  My meetings last week confirmed for me that there is a disconnect between what the reality of what is happening in China and how people are engaging with that reality.

Much has been written about the housing glut in China and no matter what city I travel to, I’m usually greeted with too many cranes to count as I drive into town from the airport. So many cities seem to be all about building new central business districts replete with malls, office buildings, and more apartments.  And yet the question is the same – who is going to move here?  If the government is seeking to continue its drive to urbanize and move the rural population into the cities, I cannot imagine that they are going to be re-settled in these luxury housing developments that continue to rise all over the country.  The malls are a whole other phenomenon.  How many luxury malls does a country need? Apparently there is no limit, but when I was in Chengdu I walked through a few of these new malls and some were eerily empty, both of people and stores.  Apparently the SCMP and I went to some of the same malls.  In Shenzhen the malls seem to be more for strolling than shopping with most people just wandering the mall, taking pictures, eating and drinking, but not really holding shopping bags.

I think at this point there is no disagreement that the Chinese economy is slowing down. The problem is that nobody quite knows how much.  The official statistics are less telling. It’s more about reading between the lines or anecdotal evidence of such a slowdown. It will be interesting to see what number the government announces on Tuesday for 2015 GDP growth.  There is so much gray when it comes to this country and not only on the economic front.

Over two weeks ago, Lee Bo, a publisher of books critical of the Party disappeared in Hong Kong. He was the fifth person to disappear in connection with this particular publisher.  He was last seen at his warehouse in Hong Kong before New Year’s and since then there have been a series of odd occurrences including phone calls to his wife from a Shenzhen number where he is speaking Mandarin rather than the Cantonese he uses at home and a letter to his wife that he is going to be away for awhile taking care something on the mainland.  The Hong Kong government has asked Beijing where he is and over two weeks later they still have not received an answer.  The issue at stake is that because of the whole “one country, two systems” between HK and China, Chinese law enforcement officials are not supposed to be coming into HK and taking away HK residents.  They are supposed to go through proper legal channels if they have reason to want to interrogate someone.  Coming in and secretly ferreting a HK resident across the border is a serious violation of the principle behind “one country, two systems”. It’s more than problematic that Beijing has not given the HK government an answer as to  Lee Bo’s whereabouts and shows a serious lack of regard for HK and its autonomy.

So I digress.  The point of all of this writing was that I still wonder if Chinese people actually know what’s going on with their own country or simply do not care.  I don’t know if I will ever be able to get a straight answer.

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Chengdu Cheating

December 28, 2015

I just returned to Shenzhen after what was mostly an awesome weekend in Chengdu, but today started off with an early morning cab ride to the Chengdu Research Base of Giant Panda Breeding (熊猫基地) where my cabbie tried to bilk me for double the fare.  My hotel hailed me a cab and when we were around the corner, he pulled out his phone and put a price in and said I should pay that.  I told him to turn the meter on and he told me it was too cheap.  Then I threatened to get of the cab, which was stopped at a light, and he finally agreed to turn the meter on.  Later on today, I ordered an Uber to go to the airport and at the toll plaza by the airport, the driver asked me for RMB14 for the toll.  Absent-mindedly, I handed him the money and he paid the toll.  When I was in line for security and received my Uber receipt via email, I saw that I was charged again for the same toll.  Now maybe my driver did not know that the app would include the toll or he decided the dumb foreigner would give him some extra cash.  I’m not sure, but I quickly fired off an email to Uber to alert them to what he did.

I spent a lot of time in cabs today, going to and from the pandas and then to the airport and ending the evening with a cab back to my room in Shenzhen.  I was stunned by the lack of road decorum in Chengdu and to a lesser extent, Shenzhen.  When I am here, I don’t take cabs often because I am not going all that far.  But in Chengdu, no one really follows the lanes noted on the road and at an intersection, cars weave in and out as they’re trying to make turns.  It’s sheer chaos, but somehow it generally works as long as everyone is refusing to play by the rules.  I think the likelihood of an accident goes up if someone actually attempts to drive safely.  It’s offensive driving at it’s best and worst.

This post is meant to tie up a lot of loose ends from the weekend, but I could not help but comment on the fact that China’s rubber stamp parliament passed the country’s first anti-terror law today.  It’s an odd concept in a state where the police and other public safety agencies already pretty much have carte blanche to do that they want to reign in the population when they’re acting out of line.  It will most likely be another way to justify repressing groups or individuals who take actions thought to be against the state.  After so many years, I should not be amazed, but I find myself baffled because upon reading that today, I had the thought that I am making a life for myself out here and interacting on the regular with a state that is seeking total control over or at least the ability to monitor its population in terms of thought, expression, and actions.

But really the best thing to happen today were the pandas.  I arrived at the Base right before 8:00am with the sun just coming up and at least 30 minutes before the first tour buses arrived, so I pretty much had the place to myself.  Though I saw more Westerners there than I had the entire weekend or even in Shenzhen for that matter.  I guess all us foreigners had the same idea to see the pandas on a cold winter’s morning right after Christmas.

So without writing anymore, here are some pictures and videos of today’s main attraction.

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A panda giving face before he tears into that bamboo

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Pandas

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More pandas

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Baby pandas sleeping

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And yet another

Another Day, Another Mall

December 27, 2015

I don’t want anyone to come away from my blog thinking all I do in China is walk around malls and sit in Starbucks drinking coffee, but if I didn’t spend any time doing this, I’d be missing out on a big part of what’s making modern China tick.  These luxury malls and the shoppers who frequent stores purveying these premium brands (yes, Starbucks is a premium brand here when the average drink costs RMB30 or a bit less than US$5) are the future of this country, especially when the leadership is hellbent on reorienting the economy away from manufacturing and infrastructure investment towards domestic consumption.  It’s places like the IFS and today’s mall, Taikoo Li (太古里), that represent the way going forward if China is to ever make that transition.

So yes, I am sitting here at a Starbucks in Taikoo Li, which was built by the Hong Kong developer, Swire Properties.  A good friend of mine in Hong Kong who lives in Taikoo Shing, a family-oriented neighborhood on Hong Kong Island, told me that anything with the Swire name is going to be a quality property and this mall is no exception.  Built around an ancient temple, Daci Temple,  where you can still partake in a traditional tea ceremony, Daci Temple (大慈寺), Taikoo Li is filled with your usual luxury shops including Gucci, Burberry, Max Mara, and Cartier, as well as the Chengdu flagship stores for Apple (which with its two stores in Chengdu has more here than in Shenzhen) and Muji and the first stores in China for brands like Victoria’s Secret and Hollister.  It’s quite the complex laid out as if it was a warren of traditional Chengdu alleys, similar to Xintiandi in Shanghai or even Sanlitun in Beijing, which is another Swire property.  And the place is hopping with people eating, drinking, taking pictures, and even doing some shopping.

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One of the main squares in Taikoo Li

The Christmas decorations are still out in full force and effect, but so are the after Christmas sales with some stores offering discounts up to 40 or 50% off.

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Entrance to Taikoo Li as coming from Chunxi Lu (春熙路) Metro stop

I blogged recently about the “real” China and malls like this one are the new “real” China.  What’s neat about Chengdu is that you can walk from your hotel to the Metro station in Tianfu Square and pass by little hole-in-the-wall or “fly” restaurants (苍蝇馆), wet markets, and people playing mahjong in the streets, so not all of the old “real” China is lost.  It’s perhaps this blending of old and new that Chengdu seems to still do so well, whereas a city like Shenzhen which did not exist 40 years ago is all new and will continue to be that way going forward.  I don’t know if Chengdu will be able to survive the onslaught of modernization and the power of the new “real” China, but at the moment it seems to have found some sort of equilibrium, however tenuous.

Having now been here for a few days, I still really like the city.  It’s hard for me to put my finger on it exactly, but this trip is my first time to the interior of China.  When you think of Chengdu, and Sichuan province in general, it’s the last extremely developed area of the country before heading off into the wilds of western Sichuan and Tibet.  Chengdu feels less like a frontier city and more like an experiment in modernizing the interior.  It’s no secret that the government has spent considerable time and money spreading growth from the eastern coast to the interior and Chengdu is something of a showcase city, much like Shenzhen was when it became China’s first Special Economic Zone.  Chengdu has not received so formal a designation, but walking around the city and taking it all in, it’s hard not to feel that there is something special about this place and it’s not just all the panda advertising.

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Panda ad outside of my hotel

Nor is it all of the amazingly spicy food that I have been eating, which I will write about another time.  Perhaps it’s what China could be, though without the pollution that has rendered today a rather smoggy day (though nothing like Beijing) or the fact that signs are still posted on the street reminding people not to smoke on buses and in the subway reminding parents not to let their kids go to the bathroom on the train. Chengdu, like most of China, is moving quickly to catch up to the rest of the world in terms of development, but it feels a little more comfortable taking it’s time doing so and making sure it’s being done the “Chengdu way”.

Of course I wonder how many Gucci or Louis Vuitton stores a city really needs and who actually fills all of these new office towers going up, including the top floors of the Evergrande Huazhi Office Tower, which sit there all lit up and empty at night.

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The vacant and well-lit floors of the Evergrande Tower on the left

Those are questions for another day, but one that China unfortunately will have to reckon with as it continues working through it’s breakneck growth and reorientation to a consumption-driven economy.  These malls and buildings are part of the infrastructure and property investment that has driven growth in many cities around the country and if towers like Evergrande remain empty, one has to wonder what the means for future development and growth in these cities.

On that note, I leave you to get back to the hotel and get ready for a night of sampling Chengdu’s many street snacks.

Greetings from Chengdu!  Being the good Jew I am, I decided to head to Chengdu Christmas morning for a long weekend of eating spicy Sichuan food and seeing some pandas.

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Giant panda climbing the IFS Chengdu, yet another luxury shopping mall in China

Okay, not exactly that panda, though the city makes good use of its panda connection by plastering the creatures all over the city.  Upon landing in the airport, many of the information signs were framed by pandas and that theme has been a constant since that point.

It’s my first time here and a city I have wanted to visit for a very long time. The original motivation was my love of Sichuan food (川菜), but lately everything I have been reading about China mentions the relatively newfound prosperity of its inland cities, which would include Chengdu and Chongqing.  Having only been here for 24 hours, I attest that Chengdu definitely appears to be on the up-and-up.  The IFS above is home to Prada, Gucci, Louis Vuitton, Zegna, two Starbucks, Muji, Uniqlo, a bookstore where I could buy new English books, a huge Western supermarket that is part of a Hong Kong chain, the requisite ice skating rink, and even a bowling alley.  The inside is your typical white marble, soaring ceilings, and the cleanest floors I have ever seen, probably due to the ever-present crew mopping and sweeping as you’re moving around the mall.  However, IFS is just one of many luxury malls in this area of Chengdu, which also includes the retail-filled pedestrian streets of Chunxi Lu (春熙路) and Imperial Examination Alley (正科甲港), an Isetan department store, a number of other Western luxury brands, and numerous Chinese brands.

I guess it makes sense given that Chengdu has become one of the richest cities in China.  The Milken Institute released a study this fall of the best performing cities in China and chengdu came out number one, beating Shanghai, Shenzhen, and Beijing.  Putting aside studies and government statistics touting GDP growth and per capita incomes, just the feeling I get walking around the city is that it’s one of growth and possibility.  Now one may argue that most of China feels like this and many places do, even in spite of the recent slowdown of the economy, but having spent the past month and a half in Shenzhen, I can sense a different energy here. Shenzhen is right next to Hong Kong and was created to rival its neighbor to the south and serve as a laboratory for economic liberalization on the mainland, so its people are used to being favored and there is also relatively seamless mobility between Shenzhen and Hong Kong, obviating the need to replicate a lot of the shopping in HK north of the border.  I mean, one would think that Shenzhen would have had it’s own Kiehl’s store before Chengdu, but you can only find it at the Shenzhen airport in duty free.  Chengdu has one in the Isetan by the IFC.  Not that Kiehl’s is a barometer for economic development, but the fact that a company like that went to Chengdu after Shanghai and Beijing says something about the city and its place in China’s economic hierarchy.

Chengdu is an inland city and only part of a central government push within the last ten years or so to promote growth inland away from the coasts.  With that promotion, an economic tiger was released as the city promoted its lower labor costs to attract global manufacturers in the aerospace and electronics sectors, including Foxconn, which produces Apple’s iPhone.  Anyway, not to devolve into a boring economics lesson, but the takeaway is that Chengdu has a buzz that is not always as readily apparent in some of China’s larger, more established Tier One cities.

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View of central Chengdu from my hotel

Of course this still being China, I marvel at how well the central government has been able to wall off the country from the rest of the world.  I’ve written a lot about the mystery behind Chinese people becoming more global as they travel the world, but seemingly bringing nothing back from the travels except luxury goods and souvenirs. Forgetting that when you fly domestically in China, you’re not allowed to turn on any electronics, I was left watching some bizarre Korean movie on my flight from Shenzhen to Chengdu.  When I arrived, I thought I would either be given or be able to buy a Financial Times or Economist at the Ritz Carlton or find another hotel with a gift shop at which I could buy one of these publications to read on the way back to Shenzhen, but to no avail.  Even the Page One, where I eventually found English books, had a magazine section with only Monocle and In Style in English, neither of which I was particularly interested in buying.  Putting the availability of Western media aside, I am sitting here in a Starbucks (where else?) in another new luxury mall called The ONE and it’s one of Starbuck’s new Reserve locations with pour-overs and siphoned coffee.  The place is packed with young and old, alike, and many on iPhones or Macs enjoying coffee, pastries, and quiche.  At this particular moment I feel like I could be anywhere.

Yet, with all of that said, there is something about Chengdu that reminds me of the China I knew 15 years ago.  Perhaps it’s the layout of the city with back alleys still filled with little stores and food stalls or the mix of old and new buildings that co-exist side-by-side, though I have the feeling that won’t be the case five years from now since so many look like they’re being readied to be torn down for new construction.  I guess Chengdu is a city that while growing rapidly, still retains elements of what it was.  It has long had the reputation of being one of China’s most laid-back cities and for a city of nearly 8 million people, still moves at a remarkably more languid pace than Shenzhen.  Maybe it’s part of a next wave of growth where people won’t be in such a hurry as they modernize and seek to retain some of what makes a particular place unique?  Or perhaps it’s as simple as the fact that unlike Shenzhen or even some of the other Tier One cities like Shanghai or Guangzhou, Chengdu is a city filled with people who are actually from here or the surrounding areas, which would go a long way to preserving those qualities that make the city special.

As I was leaving my hotel this morning, I was chatting with one of the members of the concierge staff, Roland, asking him for restaurant recommendations while I was here.  He told me that he had just transferred from Beijing two months ago because his wife was pregnant and they wanted to escape the pollution,, traffic, and mayhem of Beijing.  I asked him how he liked Chengdu so far and he remarked that it was more laid-back than Beijing.  He attributed this to the fact that home prices were so much lower than Beijing, so people didn’t have to work so hard, thus they had more time to relax and enjoy life.  Probably the most interesting reason of all for why Chengdu feels so different, yet one that not only makes the most sense, but is very telling as to what is potentially being lost as the country rushes to modernize. As an American, I know all about a country that does not seem to have enough time for leisure as our workweeks get longer and longer and people fear taking holiday because they may fall behind at work.  Let’s just hope that Chengdu doesn’t go the way of the rest of the country and lose what makes it special.