This is China! blog

Frank Langfitt, the Shanghai correspondent for the America’s National Public Radio, assured me a couple days ago the weekly radio program “This American Life” had expanded its profiles from – as called it – old white guys with gravelly voices (usually doing some sort of manual labor or intensive craft, I might add) to a younger set, Americans in their twenties and thirties. Apparently, the demographic of the listening audience (1.7 million, at last count) had shifted dramatically, predominantly to a younger age range with university educations and relatively liberal views. Good, I told him, pointing at myself: I hardly fit the OWGGV image (nor am I in my twenties or thirties … keep counting). Nevertheless, the two-hour long interview in a Shanghai bistro was great fun.

We ranged over topics that involved the shift in China’s industrial policy for foreign investors over the last ten years, with peppered with personal stories; the change in attitudes in Chinese society toward expats; innovation with Chinese characteristics; whether the ascendance of China means the descent of America; as well as my own plans for my future in China.

I’m not sure if and when the program will air to the million-seven that apparently listen to the weekly profiles on American radio; however, it was indeed an honor to have been asked to interview nonetheless.

Technorati Tags: china, expat life

I recently had a conversation with a young(er) American expat who has been living in China nearly ten years. I had told him about the talk – The Warlord and the Engineer – the Royal Asiatic Society (Suzhou branch) had hosted a few weeks before. The remarkable thing about the talk was how the Danish Engineer Robert Christensen and adviser to the warlord Zhang Zuolin had meticulously recorded his life in journals while he lived in China during the 1920s, had cataloged hundreds of photos and had captured the times on film, as well. The expat and I agreed those of us living in China were experiencing a special period in its history – call it “The Goldilocks Time”, when wealth seemed to flood Chinese streets. One day, the rapid-development period will all be a distant memory. Who amongst us will be the chroniclers of this time?

The expat admitted he had desperately few photos of himself and his time here in China, despite a decade’s worth of experiences. I personally have a bunch of photos, the blog, the books I’ve written. And now that I have a son, recording the ordinariness of our lives here has become more important to me.

I told the expat that for me, while watching the photos and film footage of 1920s Mukden (Manchuria), what interested me most was not the foreigners frolicking in the foreground, but the locals toiling in the background against backdrops that are gone forever.

It’s tough to gauge just how precious one’s everyday existence may be to future generations.

Technorati Tags: china, expat life

The past month here on the ground in the Yangtze River Delta has seen activity that runs counter to macroeconomic measures in the property development sector. By all accounts, construction sites are supposed to be grinding to a halt and new projects deferred indefinitely. Instead, what I and Western friends are seeing is an acceleration of construction activity. Where for the last two years we’ve only had to bear incessant noise, dirt and dust from sunrise to sunset, now we are hearing construction activity 24/7 the past three weeks (whenever I became conscious in the shift of pace of construction). And new development projects are continuing to sprout up around us in a region that theoretically is economically mature. It seems a near-impossibility to escape the din of construction machines punching the ground or stamping steel or crunching concrete.

One building that friends and I were talking about in the Suzhou Industrial Park is still having floors stacked on its skeleton frame of concrete and steel while construction workers fix mirrored-windows to lower levels of the same structure.

We’re not entirely sure of why construction activity has accelerated recently; however, we’re sure it has to do as much with uncertainty about what the government will do next with the property sector as much as uncertainty about the Chinese economy in general. Some of the questions likely at the forefront of the minds of developers include: will the government end bank loans to developers completely at the end of the year? will they end all construction projects for and indefinite period of time? and will they be able to find buyers for their residential projects and renters for their office property?

One thing, however, is certain: the accelerated pace of construction does not fill me with any greater sense of security in the integrity of the finished structures.

Technorati Tags: bill dodson, china, construction, economy, infrastructure

FinanceAsia recently reported that officials in the northern province of Jilin were fired for permitting construction teams to fill bridge with garbage instead of with concrete.

China has fired at least 10 railway officials over a sub-standard Rmb2.3 billion ($360 million) construction project that involved bridges filled with trash instead of concrete, and builders without any relevant experience, including one team led by a cook.

I wrote about this sort of padding two years ago in an article for CHaINA magazine, when there was a rash of bridge collapses. Though officials were censured and construction companies fined, seems old habits die hard. Of course, the last thing the nation’s leaders need is for this to be found on their coveted high-speed railway.

Nevertheless, the company responsible for the garbage bridges, China Railway Material Commercial is pushing ahead with a Rmb14.7 billion ($2.3 billion) IPO in Shanghai.

A migrant worker who helped build the bridges said to Chinese media, “I wouldn’t dare to take the train once it’s finished.”

A wise man indeed.

Technorati Tags: china, infrastructure development

This past weekend I had the pleasure of introducing Simon Gjeroe to local Suzhou residents interested in hearing dramatic tales from the China’s warlord period. We had gathered for a monthly Royal Asiatic Society (Suzhou branch) talk on Chinese culture and society. Simon is proprietor of Beijing Postcards, which sells reprints and books of photos taken by foreigners visiting China in the 1800s and early 1900s.

The warlord period in China took place during the roaring 1920s, when warlords shifted sides and assassinated each other as often as they changed concubines, and when the majority of expats in Northeast China lived in the lap of luxury. Simon gave us all a unique peek into the life and times Zhang Zuolin, one of the mightiest warlords in China during the chaotic 1920s, as chronicled and photographed by the Danish arms dealer and adviser to Zhang, Robert Christensen. He also showed a 25-minute long documentary about the era, all of which was made up of photos and film footage taken by Christensen himself.

Simon revealed that five years ago Chinese were universally embarrassed by the photos taken of the country in the late 1800s through mid-1900s. “Why,” they would ask him, “do you want to look at old photos of how poor China was?” Now, Simon said, the Chinese make up the majority of his customers in Beijing. I was astonished when Simon pointed out that nearly all the old photographic and film images of China are from foreigners. The Chinese have little idea of what their lives really were like during the end of the Qing and warlord periods.

That is, not beyond the latest rounds of soap operas on Chinese TV.

Listen to my interview with Simon here .

Technorati Tags: beijing postcards, bill dodson, china, history, robert christensen, simon gjeroe, warlords

This past weekend Paul French came out to Suzhou to introduce his latest book to the Royal Asiatic Society. Midnight in Peking is a recounting of the true-life murder of a lovely British expat in 1937, just as the Japanese are about to sweep into the city. I interviewed Paul about the book and discussed with him his motivations for excavating the story and for trying to solve what has been a cold case for more than 70-years. The book has been top of the readers’ lists in Hong Kong and Australia for the past month.

Listen to the interview here.

Technorati Tags: bill dodson, china, detective, midinight in peking, murder, mystery, paul french, peking

A British mate of mine who has worked with Chinese supply chains since the late 1990′s told me he is seeing a sea change in domestic manufacturing. He’d worked in manufacturing in Britain for several decades before coming to China. The Chinese owners of the factories in China are beginning to reign in waste in their production processes. “Before, if they screwed up an order they’d just call in another hundred bodies for pennies, have them work overnight to remedy the situation, then let them go,” he told me. “Now,” he explained, “pay rates have gotten more expensive, material inputs are more expensive, and there’s not as much business to go around. So Chinese owners are beginning to look at how to improve their processes, get the orders right the first time the most efficiently they can. That’s another reason why some of them are looking into or investing in robots to do some parts of the job. Fewer errors.”

The former plant manager put the change into context for me. “It was the same in Britain in the sixties. We wasted a lot of material, made a lot of mistakes. Then, in the seventies, everything began getting more expensive to manufacture. We cleaned up our lines, our processes. Things like Total Quality and Lean Manufacturing came along. It’s a natural process. China’s not special in that way,” he added.

China’s going to find one day that economically, middle age sucks.

Technorati Tags: bill dodson, china, lean manufacturing, manufacturing, suppliers, supply chain, total quality

The New York Times recently had an article about the shrinking purse Chinese consumers have been suffering for the last decade. The article discusses how central government infrastructure projects and the resuscitation of the State-owned Enterprises (SOEs) has been at the expense of all but the well-connected and very rich.

Indeed, economists say this nation’s decade of remarkable economic growth, led by exports and government investment in big projects like China’s high-speed rail network, has to a great extent been underwritten by the household savings — not the spending — of the country’s 1.3 billion people.

This system, which some experts refer to as state capitalism, depends on the transfer of wealth from Chinese households to state-run banks, government-backed corporations and the affluent few who are well enough connected to benefit from the arrangement.

Inflation has its part to play, as inflation rates holding between 5-6 percent eat away at bank deposits that accreted only 3-percent interest. With not many other options in which to place their money, families have been squirreling away an increasingly larger portion of their income. With government strictures severely limiting purchase of additional residential property and overseas investments dramatically curtailed, families pretty much have three options: traditional banks or gray-market banks that promise stratospheric returns on interest. Or under the mattress.

James Kynge writes in an article in the Financial Times about the gray market for deposits and the extent to which the Beijing Consensus of central government interference in the economy and industrial policy has left the country with hidden debts of its own that leave the country unable to provide another adrenaline-jolt to the economy, in case the world goes into double-dip recession.

It’s no wonder the powers that be are increasingly concerned about placating the masses during eruptions of discontent.

image credit: eastsunrises.wordpress.com

Technorati Tags: bill dodosn, china, consumer, middle class, soes, state-owned enterprises, wealth

The Wall Street Journal recently published an investigation into the possible causes of the Hangzhou-Wenzhou train accident of July this year. The findings coincide with research I’ve been doing on pollution created by the manufacture of “green” energy solutions, like the polysilicon that goes into the production of solar power cells.

The WSJ writes:

The problem, these people say, is that Hitachi—fearful that Chinese technicians might reverse-engineer and steal the technology—sold components with the inner workings concealed from Hollysys. Hitachi executives say this “black box” design makes gear harder to copy, and also harder to understand, for instance during testing.

“It’s still generally a mystery how a company like Hollysys could integrate our equipment into a broader safety-signaling system without intimate knowledge of our know-how,” a senior Hitachi executive said.

The Washington Post reported in 2008 that Luoyang Zhonggui High-Technology Co in Henan Province, near the Yellow River, was dumping raw, unprocessed waste into the surrounding countryside, where villagers lived just hundreds of meters away.

About nine months ago, residents of Li’s village, which begins about 50 yards from the plant, noticed that their crops were wilting under a dusting of white powder. Sometimes, there was a hazy cloud up to three feet high near the dumping site; one person tending crops there fainted, several villagers said. Small rocks began to accumulate in kettles used for boiling faucet water.

It seemed that in its rush to build its factory and production processes based on German technology, Luoyang Zhonggui had all but cut out its waste management system.

The Luoyang Zhonggui factory grew out of an effort by a national research institute to improve on a 50-year-old polysilicon refining technology pioneered by Germany’s Siemens. Concerned about intellectual property issues, Siemens has held off on selling its technology to the Chinese. So the Chinese have tried to create their own.

A rush to construct with inadequate planning and preparation; incomplete technology transfer from foreign producers and a lack of understanding of what has actually been transferred; and a blatant disregard for the dangers to human life implementations offer have concocted an industrial base in China that is unsustainable in the long-run.

What other black boxes lay hidden in China’s modernization machine?

image credit: voidspace.org.uk

Technorati Tags: bill dodson, china, crash, Hanzhou, high-speed rail, innovation, pollution, solor power, technology, Wenzhou

Last year in CHaINA Magazine I published an analysis of the implications of China building infrastructure too fast, with roadways crumbling and bridges collapsing. I wrote:

The new decade began tragically in China with the collapse of a newly constructed overpass to the new Kunming international airport, in Yunnan Province. The accident killed seven workers and injured 34. The central government has slated Kunming as a logistics entrepot between China and Southeast Asia, and between China’s east coast and its interior, with its airport positioned to be the fourth largest hub in the country.

The speed at which China is developing its road transport infrastructure is truly admirable. China currently has 3.5 million km (2.2 million miles) of road. More than half of that is low grade, according to Reuters.

Read an extended analysis note on the implications of infrastructure problems for business in “Infrastructure Quality Issues Present Hazards to Business” . (requires registration to access – free).

Technorati Tags: accidents, bill dodson, bridges, bullet train, china, collapsing, high-speed rail, infrastructure, logistics, roads, roadways, shanghai, subway