China is visible to us everywhere—in the news, in every trip to the store, and in many of our business plans, either as a partner or a competitor. Yet it is hard to grasp the enormity of the numbers associated with China. After all, it has never happened before, and it is happening on the other side of the globe. What does it mean that it is growing three times faster than the United States? That China uses 40% of the world’s concrete and 25% of its steel? That a rural population equal to the entire US population is migrating from their farms to their cities in the greatest migration in human history? Here are some impressions from my first trip to try to understand the country that is poised to dominate the world scene for at least the next 50 years.
What we saw was both staggering and frightening. China, once hobbled by poverty and Communist ideology, is rapidly progressing towards its goal of transforming a nation of peasant farmers into a modern, urban country.
Our tour was run by a joint venture with the China government, so I am aware that much of what I saw and learned was selected to create an impression of a rapidly developing country that I could feel quite comfortable in. To be sure, all the people we met were warm and friendly and we felt very safe wandering around in all the cities we visited. We met many people who know English as a second language (now mandatory in schools beginning in primary grades). Many of these look forward to visiting the USA someday when we begin to offer them tourist visas.
The nation’s new face
There is great pride in what they have accomplished – and what fascinates me is that this has all happened in my lifetime, much of it in the past 16 years.
Newly minted cities can reach the size of Chicago or Los Angeles in just a few years, and small farms and rice paddies lie just beyond. This photo shows the bottom half of their TV tower as seen from a night cuise in Shanghai. This city currently has one of the five tallest buildings in the world and have an even taller one under construction.
It was much heralded in the U.S. when our population reached 300 million a month or two ago. China is nearly five times that. And while China’s size may be the best-known fact about the country, the human scale of those numbers is still the hardest to grasp. The numbers are so staggering that it is best to get calibrated. One of the books I’ve been reading, China Inc., tells the amazing story of how “the slumbering Red giant woke up and at warp speed, transformed itself into the greatest superpower of the (near) future—with the biggest, tallest, longest, and fastest of just about everything there is.” Here are some highlights:
- Three hundred million rural Chinese will move to cities in the next fifteen years. China must build urban infrastructure equivalent to Houston’s every month in order to absorb them.
- 220 billion text messages were sent over mobile phones in China last year.
- General Motors expects the Chinese automobile market to be bigger than the U.S. market by 2025. Some 74 million Chinese families can now afford to buy cars.
- China has more speakers of English as a second language than America has native English speakers.
- China has more than 300 biotech firms that operate unhindered by animal rights lobbies, religious groups, or ethical standards boards.
- There are 220 million “surplus workers” in China’s central and western regions. The number of people working in the United States is about 140 million.
- Apparel workers in the United States make $9.56 an hour. In El Salvador, apparel workers make $1.65 an hour. In China they make between 68 and 88 cents an hour.
China today is happy as well as proud. Their happiness is founded in having plenty of food, as well as enjoying modern conveniences. They are very proud of their skyscrapers, neon-lit cities, and a magnetically levitated high-speed train that runs from Shanghai to the airport. This photo shows my wife Jennifer pointing to the speedometer at 430 km/h (approx. 260 mph).
China today is happy with both good spirit and laughter, which understandably was missing a few decades ago. Many of us still remember the older China where millions of children were starving (early 1960s), the population was peasant farmers wearing common gray uniforms and most books, other than The Little Red Book, were banned.
Mao Zedong’s picture still hangs in Tian Amen Square and is on some of their paper currency. He is revered as their “first president” much as George Washington is for us. Yet it is perplexing to understand how they revere the man who was responsible for the disastrous Great Leap Forward and Cultural Revolution. They seem to look over this and say that “70% of what he accomplished was very good for them.” They have not been in a war since 1949 and now enjoy many modern luxuries. One of our tour guides had a marvelous way of depicting both the magnitude and rate of change by describing the three things every Chinese bride wants:
In the 1960s, a wrist watch, sewing machine, and a bicycle.
In the 1970s, a radio, electric fan, and a 12” black and white TV.
In the 1980s, a refrigerator, color TV, and a washing machine.
Early 1990s, a home phone, VCR, and an air conditioner.
Late 1990s, a cell phone, computer, and a digital camera.
Today, brides want a car, apartment, and a credit card.
Oddly, one of our guides cited bottled water as evidence of their progress. Tap water is clean but must be boiled before drinking.
China Burning
Pollution is accepted as a consequence of developing. Water is scarce in the regions with the greatest population and the rivers are highly polluted.
China is second only to the United States in carbon-dioxide emissions, the root cause of global warming. Our first few days were spent in a fog-like smog in Beijing where coal is used for both generating electricity and for heating homes. It soon got much worse as we took a 2-hour ride through a cloud of smoke in the countryside caused by burning of the straw off the rice fields at the end of the season’s harvest. Part of me wonders whether this enormous country is investing its money to race us to the cliff. The US is the dominant consumer of the world’s products and resources, so it’s difficult to own the moral high ground.
This photo shows coal stacked outside a home we visited.
While pollution is a huge problem, it is of little concern compared to their top priority which is earning money. Older generations pin their hopes on the children, and also depend on them for support. Interestingly, with the one-child policy, ultimately each child must support seven: four grandparents, two parents, and self. Both parents continue to work when a child is born. The child is raised by the grandparents. When old enough, it is the children who migrate to the cities where wages are higher and some earnings can be saved and brought back to the family.
Sixty percent of their population are still farmers. Here wages and education is the lowest and opportunities the most bleak.
Many of the factory workers today are earning 1,000 yuan per month, or about $125. So within a half century, this country has changed from a culture where being poor was a noble pursuit, to a culture that aspires to the luxuries of wealth. This is still a communist country, and while there is freedom of speech (except in Tien Amen Square), there is not freedom in writing. Will the vast economic disparities evident today continue to peacefully exist? Or will China’s peasants and the working poor ultimately rebel? And, what is my position on this as I type today wearing a pair of 40 cent socks from China?
Under the new economic freedoms after Mao first floor housing was converted into shops for private enterprise.
A great number of jobs in the U.S. risk being outsourced. The size and costs give China has an exceptionally strong hand for labor-intensive products. At what cost should we try to protect these U.S. jobs? A lot of questions remain unanswered (for me) from this first look at the implications of China’s development.
It’s impossible to see how the future will unfold, but it is clear that China does not need to boom indefinitely in order to both supply the world with competitive factories and provide a large middle class population (market) for the rest of the world to chase.
Notes:
1. Our trip was by Citslinc International which is a joint venture with the China government to promote positive economic growth between countries. In the US they organize trips for Chambers of Commerce. Twice a year (during Nov and March) they bring about 5,000 U.S. visitors to China. Total cost of trip was $1299 and included air travel, one domestic flight within China, 4 or 5-star hotels, and all buses, food and guides. It is hard to say no to this price but you must be prepared for a very structured tour that includes many stops to many factories where shopping is encouraged.
UPDATE 23Nov06: The price of our tour was so outstanding that we didn't explore alternatives (plus we wanted to join some of our friends), but here are some tours that already temp us to go back! http://www.chinafocustravel.com/index2.html
2. A good book regarding the implications of China's development for American business is The World is Flat by Thomas Friedman.
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"General Motors expects the Chinese automobile market to be bigger than the U.S. market by 2025. Some 74 million Chinese families can now afford to buy cars."
Well, it happened in 2009; 16 years ahead of the estimate.
Posted by: yee liaw | April 28, 2010 at 01:46 PM