China Notes

China Notes

A friend just returned from China. Here are his notes.

I spent the last two weeks in China. Though I have been to China periodically, this trip was a bit longer than my recent trips and afforded more time to see some of the changes affecting the country, the region and the world.

I first started visiting China in the mid-90s. On all of my trips since then I have been amazed at the continually evolving skyline. Infrastructure is growing on a massive scale. Areas of farmland and small homes have transformed into blocks of amazing sky scrapers. Many of the world's tallest buildings line the horizons and construction cranes continue to dot the horizons (thought this may be slowing down). Factories seem to be growing, though we hear many are relocating further outside of the major cites and also springing up in larger inland cities. Wide roads and elevated freeways now have signs both in English in Mandarin, and electronic traffic controls. Traffic still follows some bizarre and unpredictable patterns, and often at slow speeds. But there are a lot less bicycles and hand carts on the roads. In my earlier trips I saw a lot more of the traditional means of transportation, including bicycles and push carts with everything from pigs to refrigerators piled on top.

The new airports in Pudong, Shanghai and Beijing are truly amazing. Vast, clean, efficient, with great customer service, these airports are architecturally pleasing as well as functional in sharp contrast to the travel experience in most US airports. They know how to move people: great signs, helpful customer service, clean layouts, and friendly staff including through the security turnstiles. I lament what has happened in the US where the TSA has fired all the friendly foreigners to hire US citizens with a civil service mentality. It’s also great to see how a country can build great infrastructure, and pay for it. (In contrast to the US where bridges are falling down and roads are filled with potholes for years on end). They have put a lot of money into roads and bridges, tunnels, buildings and schools, and are making massive investments to create sustainable jobs. While there are still huge problems with pollution (terrible!) and weak environmental protections, government and industry are starting to rally around the need for sustainable environmental practices.






















Chinese national pride is running strong. Olympic fever is running hot all over the country, in the press, in advertisements and on-line as well as on TV and outdoor banners. The economy has done well and employment is strong, though there are big issues looming. Inflation is a big problem, with food costs going up 30%/year. We met with a number of economists who each highlighted different problems such as overcapacity, wage inflation, labor shortages, food hoarding, currency appreciation. The Chinese government is cracking down on corruption, and making public examples of former officials such as the ex-Mayor of Shanghai who avoided the death penalty and ended up with 17 years in prison for accepting bribes.

Several other observations struck me this trip. One is the number of young people in the big cities and their English skills. A decade ago I could hardly understand any of the locals, including fellow employees in our factories and most of the hotel workers from 4 and 5 star hotels. It seems a significant number of people in the big cities under about 30 years of age understand and can converse in English. Another trend we heard about is the impact of urbanization. We heard that ~40% of China’s universities are in Shanghai and Beijing. We heard there is a big transition of young people to big cities to study and work, and that the countryside is left with mostly old people. The young people I saw seemed ambitious and hard working, and they had many opportunities to chose their profession.

Shanghai has over 100k foreigners, mostly westerners. When we were driving, one of my companions pointed out a large complex where a number of retired Japanese reside. These people were instrumental in developing infrastructure and advising the government, and wanted to retire in China, but had no retirement income, so the government built housing for them. Another trend a noticed is the continued influence of overseas Chinese and their impact on entrepreneurship and the economy. Chinese from the US, Canada, Hong Kong, Taiwan and other countries including Europe and Asia have established businesses and are taking advantage of their education and experience in the West, often from top notch universities and blue-chip companies, and going back to their family roots to generate indigenous Chinese businesses.

Another trend is a noticeable acceptance of capitalism. My companion said: “The government directs industry and promotes business, and companies follow the direction of the government.” It seemed to me they have embraced capitalism and free markets to help fuel growth and provide for people much more openly. There are some interesting challenges and tensions arising from their system of governance. One I had not previously considered was the conflict caused by charitable giving. Some companies and NGOs have challenged the government’s traditional role in providing welfare programs with large donations, which have been allowed but watched carefully because of the risk of undermining the traditional role of the party.

These trends, (urbanization of youth, education, returning Chinese, government support for job growth) coupled with US immigration policies which discourage entrepreneurs from staying in the US after completing their studies will certainly result in enhanced Chinese competitiveness in the decade ahead.