Check out the latest Hot Pot Podcast on how China’s leadership may be shifting infrastructure development into lower gear, while the society is still on speed.

Listen to it here here. (Running time: 7 minutes, 19 seconds)

AP Photo

A China Realtime Report cited a Weibo text that had sounded off about the recent, fatal accident between two high-speed trains running the Hangzhou-Wenzhou line. The message – from a Chinese national – was so well written, succinct and accurate I had to pass it on:

“When a country is corrupt to the point that a single lightning strike can cause a train crash, the passing of a truck can collapse a bridge, and drinking a few bags of milk powder can cause kidney stones, none of us are exempted,” wrote another Weibo user. “China today is a train traveling through a lightning storm. None of us are spectators; all of us are passengers.”

“Egads!” I thought to myself, “I’m one of those passengers!”

Technorati Tags: middle class, social trends, urbanization

I recently wrote a couple posts on my book blog ChinaInsideOut.info about worker unrest disrupting company operations in China, and even entire communities. Zengcheng, in Guangdong province, seems to have settled back down to being the jeans manufacturing capital of the world. The one city alone generates 40-percent the jeans Americans slip over their buttocks. Migrant workers got sick and tired of being treated like second-class citizens and revolted en masse. Staff at a factory owned by Citizen, the Japanese manufacturer of the watch brand of the same name, also recently staged an industrial action.

I’ve written more in-depth about the impact the spate of unrest is having on China-based operations and the knock-on effects on supply chains of international companies that rely heavily on China being a stable Workshop of the World. The report is called, “Social Unrest in China: Implications for Foreign Invested Enterprises”. One of the interesting points I turned up in my research for the report was the overwhelming number of companies at which workers are staging proletariat-style revolts are Asian: Taiwanese and Japanese, mainly, with some Hong Kong investors I suspect are predominantly Chinese Mainlanders “round-tripping”; that is, setting up HK investment vehicles to re-invest in the Mainland as foreign companies: helps in reducing local tax burdens and makes it easier to get their income out of China.

I’ve always been of the mind Asian investors tend to treat their employees as liabilities, disposable; while Western companies invested for the long-term in China tend to treat their staff as assets to take care of and encourage. People don’t like being treated as liabilities. Of course, their are exceptions in both camps; however, I’ve found few exceptions over the years.

Read more about the report here.

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The Unrested in China

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It looks like food prices will skyrocket even further here in China, with Xinhua announcing the worst drought to strike Shandong province in 200 years. Shandong is a part of China’s wheat basket, in the northeast of China.

While south China has just over half the population of the country, it has nearly 85-percent of the nation’s water resources. The south supports 40-percent of China’s croplands. The north, by contrast, has only about 15% of the country’s water, 55-percent of its population and 60-percent of its cropland. For instance, the citizens of the sea port city of Tianjin, which faces the Korean peninsula, can only provide its population of 10 million with one-tenth the amount of water of the average citizen in the world.

Modernization has only exacerbated the historically drought-like conditions in the north: industrialization, certainly; but agricultural, overwhelmingly. The low price of water connected with the lack of education of farmers in sustainability and the government’s lack of regulation and enforcement of irrigation has made a bad situation even worse, very quickly (see photo).

Technorati Tags: china, environment, natural resources, water

Two days later, during lunch with two Chinese friends in Suzhou – both high-level professionals managing an American operation – they echoed the exact same sentiments. The CFO was adamant he would not buy any more real estate in Suzhou: “It’s a bubble,” he said with conviction. We talked about the introduction one day of property taxes. “One day!” the CFO bellowed. “Sooner than you think!” My Chinese plant manager friend – the CFO’s colleague – agreed, but added he did not think when the property market resets itself the Suzhou market will suffer terribly.

Still, the plant manager went on to say, the Suzhou Industrial Park will have companies adding more to employee Provident Funds, up to 6% more; while employees will pay 3% less.  The Provident Fund is meant to help professionals in the economic development zone save to buy their own homes. “But the city is actually going to take more out of the individual’s Fund to pay for increasing social services.” They were both adamant that the demographic shift involving the rapid aging of the Chinese population had already begun, and that even now there were fewer employees to pay for an individual’s retirement services than before.

They, too, talked about how many of their own friends – all Chinese professionals, all in their mid-30′s – were looking for ways to emigrate to the West.

The CFO summed up his sentiments this way: “We work for our mortgages, now; and we all work for the government.”

Technorati Tags: china, demographics, middle class, social trends, urban development trends

A British neighbor sent me a text this morning that read: “Suicide at our courtyard .. Girl jumped from the building.”

My wife sketched in some of the details for me when I returned home today from work: a young man and young woman argued ferociously on the patio of an apartment owned by the woman’s parents. They were boyfriend and girlfriend. The woman jumped from the 18th floor to her death. From our building.

The tragedy reminds me of an instance a couple years before when I called the police in Suzhou to adjudicate a dispute I was having with a taxi driver who was supposed to drive me from Shanghai to Suzhou without a one-hour detour into the Kunshan countryside the near-side of midnight. I was refusing to pay the full fare because of the detour. The police officer said, “Is that all this is? I’ve got a girl who’s slit her wrists and is threatening to jump off a high-rise.” He jumped in his car and sped off as another cruiser rolled up.

This happens all too often in China. Young people threatening or following through with suicides. Yes, it’s a difficult, confusing time for Chinese society. But there’s also a sense that many of the young people in the cities have not been equipped to deal with the disappointments and disagreements that are a part of life no matter where in the world one lives.

Unfortunately, the  25-year old woman who jumped to her death from my apartment building will never know more of this world and all it has to offer. And her parents now know only grief.

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image credit: thechive.com

Of course, being a new parent makes one sensitive to the issues confronting other parents of infants: who’s child is bigger; who’s is showing some glimmer of intelligence; who’s are droolers? My wife told me last evening while we were comparing children in the courtyard in which we live she had seen reports on local Suzhou and national (CCTV) news shows that the number of fetuses diagnosed and infants born with disabilities in China had increased dramatically in the last five years. She reminded me that during visits to children’s hospitals in both Suzhou and Shanghai that doctors she had talked with had been astonished by the number of disabilities related to disfigured limbs this year compared to the year before. The reports and the doctors attribute the rapid increase in cases of disfigurement, malformation and retardation to increased pollution rates in the environment overall, as well as the chemicals used in the decoration of the interior of new flats: owners buy empty concrete shells that need to be finished with electricals, plumbing, sealings, painting and rest, usually with highly toxic chemicals.

The news items put me in mind of a BBC report from three years ago about how the World Bank cut from its own report on the economic impact of China’s pollution on its citizens its estimates of pollution-related death-rates:

High levels of air pollution in China’s cities leads to 350,000-400,000 premature deaths, it said. Another 300,000 die because of poor-quality air indoors.

Given our child was conceived and birthed here in China, we consider ourselves one of the lucky ones. Sadly, as we are increasingly witnessing in China’s hospitals, not every family is as fortunate.

Technorati Tags: china, expat life, social trends, urban development trends

The New York Times finally, plainly stated what is so evident here on the ground inside China’s property market: space is curved inside a bubble. In particular, it’s the State-owned Enterprises (SOEs) themselves and local governments that have been driving the market to dizzying heights. The Times wrote, “Land records show that 82 percent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers — up from 59 percent in 2008.”

In other words, the game has been fixed for a long time now; unfortunately, a lot of residents have been left outside the bubble or on the thin-film itself. Even national government administrators have been giving recent property buyers back-handed reassurances that property prices will not fall more than thirty percent. Yipes! What kind of investment is that?

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

I’ve always been of the mind that China’s swagger about having gotten things right during the Great Recession while the West got it wrong has been more a matter of luck than of cleverness. An estimated US$2.4 trillion in debt will have been loaned out from the beginning of 2009 through the end 2010, placed in one of three pools: infrastructure projects that will not see returns on investment for years, if ever; property speculation instead of on R&D and human resource development; and simply spirited out of the country. What makes the explosive capacity of the bubble even more disconcerting is its opacity: like the credit default swaps (CDSs) and collateralized debt obligations (CDOs).

Like physics, the fundamentals of economics will eventually come to roost in China in a revelation of the most basic law of the universe: what goes up, must come down.

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Bubblicious

A friend and I today walked past an apartment complex that overlooks Golden Rooster Lake (JinJiHu) in Suzhou. The faces of the apartments are dirty and worn. He lives in one of the apartments, which now sell for more than US$1 million. He rents, though. He’s had numerous problems in the apartment, from leaking pipes through faulty sliding doors to a recalcitrant toilet through electricals that shut down when he and his apartment mate run the washer/dryer. I said to him as we strolled down the sidewalk, “So that’s what a million dollar apartment looks like?” We laughed. “When did they build those things,” I asked. “Five years ago? Six?” He answered, “Six”. I told him I remembered when construction had started, even went into the sales office to pick up a brochure. At the time the apartments were facing the lake were selling for about US$150,000. I told him, “Even if I had a million dollars I wouldn’t buy the place.”

Later on in the day he sent me the link to a website that’s translated the words to a popular Chinese song that’s just gone viral in China. It’s about the stratospheric heights to which property prices have aspired, and the dashed dreams of average Chinese to ever manage home ownership. It’s a witty and sad video, very creative. Highly recommended: Huang Zheng’s “Sell” Music Video

NOTE: If I was one of the characters in the video, my head would burst.

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China Property Woes: An un-American Response

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Michael Jackson Heard Rolling In His Grave

Bubblicious

Image Credit: World Wide Real Estate: The China Bubble

A couple Sundays ago, late morning, workers began shearing stone tiles at a curbside near my apartment building. They were laying sidewalk tile by tile, by hand. Their weapon of choice was a grinder they would use to painstakingly slice the stone to fit snugly with those they had already fitted. The noise the stone cutters make is akin to fingernails scratched on a chalk board, or a dentist’s drill boring into a tooth. I eventually went to bed after 12:30am, some fourteen hours after they had started. A neighbor told me the next day he had gone to bed at 1am, and the workers were still at it. The next morning the granite slicing was still going on, at 7am, though I cannot say with certainty whether it was the same workers.

And then the question occurred to me: “What’s the rush?” “It’s Sunday,” I thought, “why not take the day off?” And then, in the evening, I mused, “It’s night; why not sleep?” Not just with manic stone masonry, but with everything in “the country that never sleeps” that is in overdrive. Whether property development or manufacturing production work or servicing customers or going shopping, the sense of having achieved a supersonic speed of life is palpable. It’s no wonder that a Chinese Academy of Sciences’ Institute of Psychology report in 2010 presented that in a sampling of 50,000 urban workers 60 percent were “sub-healthy”. The Chinese Academy of Sciences report stated, “”While one in 10 Americans will encounter situations where they need help from mental health professionals, most Chinese turn to their families and friends when they need help,” according to the China Daily. Chinese culture, though, believes mental health issues are shameful, a loss of face to the disabled individual and to his family. So, basically, most people genuinely suffering from the stress of economic development at the speed of light are screwed.

China’s GDP growth figures are still not up to the double-digit rates they need to create enough jobs for the young people coming out of university, the potential foot soldiers of the country’s nascent services sector. Nor does much of the interior of the country have the infrastructure in place to bring its citizens up to the living standards many along China’s east coast enjoy.

Still, is this 24/7 craziness really necessary? It’s certainly not sustainable. Not over the long haul. One day, China will rest, I’m sure. But not because of a job well done. It will have been through karoshi – Japanese style overwork. With Chinese characteristics, of course.

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