Thomas Friedman to America: China is Kicking Our Butt

Tianjin. Photo by Sarmu

New York Times foreign affairs columnist Thomas Friedman was in Tianjin earlier this month for the 2010 Summer Davos World Economic Forum. His trip yielded a pair of opinion pieces blasting America for its lagging economic progress in comparison to rising China.

The title of Friedman’s first piece, Too Many Hamburgers?, references a skit produced for the Davos Forum where four children wearing four different flags – Chinese, American, Indian and Brazilian- are about to run a race. The child with the American flag bolts ahead only to lose ground shortly after due to a bout of cramps. The others wonder what is wrong with him until one of them says, “he ate too many hamburgers.”

I saw this skit myself on the local English-language TV station here, CCTV News, and though it was contrived, the point is well-taken. China sees this moment as a chance to pull ahead- which it is doing at alarming speed. Back in the U.S., rising groups like the Tea Party continue to futilely bicker about ‘lower taxes’ while ignoring the global forces at work undermining American economic strength.

Friedman’s second piece, Their Moon Shot and Ours, is perhaps more alarming as he spells out the sectors where China is taking the lead in innovation. Up until now, China has always been a place where ‘cheap things are made’. America could always count on being the innovator while China continued being  the low-cost manufacturing giant devoid of creativity.

This is no longer the case. As Friedman spells out in the first paragraph:

China is doing moon shots. Yes, that’s plural. When I say “moon shots” I mean big, multibillion-dollar, 25-year-horizon, game-changing investments. China has at least four going now: one is building a network of ultramodern airports; another is building a web of high-speed trains connecting major cities; a third is in bioscience, where the Beijing Genomics Institute this year ordered 128 DNA sequencers — from America — giving China the largest number in the world in one institute to launch its own stem cell/genetic engineering industry; and, finally, Beijing just announced that it was providing $15 billion in seed money for the country’s leading auto and battery companies to create an electric car industry, starting in 20 pilot cities. In essence, China Inc. just named its dream team of 16-state-owned enterprises to move China off oil and into the next industrial growth engine: electric cars.”

You don’t even need to read the rest of the piece to get the idea. If this isn’t a wake up call to the American people then I have no idea what else could be.

With all the praise Friedman has given China recently, some have criticized him for being an ‘apologist for communism/repressive regimes’. If one thinks that lifting millions of people out of poverty and creating new jobs in innovative sectors for the 21st Century is repressive then I would have to respectfully disagree.

The most repressive thing any government can do is not create opportunity for its citizens. Unfortunately, the U.S. is doing just that.

The New York Times: Too Many Hamburgers?

The New York Times: Their Moon Shot and Ours

Chengdu’s First Subway Line Set to Open

Entry shell to the new Chengdu underground metro

October 1st, 2010 will be a momentous day in the Sichuan capital of Chengdu. On this day, the city will inaugurate its first subway line: Line 1. This is significant not only because road traffic is getting increasingly worse in the city and more alternatives for getting around town are much-needed, but also because it represents to the citizens of Chengdu a rite of passage into modern China.

Line 1 of the Chengdu Metro traverses a north-south axis through the middle of the city, reaching from the older neighborhoods in the north to the newly developed high-technology zones in the south. In the center is the Tianfu Square station, where Line 1 and Line 2 are set to converge in the future making it a critical transfer hub.

I had the privilege of getting a first look at the new metro line two weeks ago when the city was running trial operations. The experience left me highly impressed. The design of the subway stations are minimal and functional- not too different from the look of metro systems already in place in other Chinese cities. The same can also be said about the subway trains.

Just as encouraging was the reaction of the local Chengdu people who were lucky enough to win tickets to ride Line 1 before its official opening. The smiles and flashing camera bulbs told the story of a citizenry genuinely elated and proud to see this kind of new development in their city.

Some locals are disappointed with what they see as a less than inspiring design of the line’s central stop at Tianfu Square. One of my colleagues described the sunken plaza in the middle of the square  that leads to the underground metro station as huo guo (hot pot).

Originally conceived as a modern plaza by the Pei Partnership, the scheme was eventually shelved for a design that relates more closely to local Chengdu culture. In the sunken plaza, faux-rock formations with waterfalls pay homage to the natural surroundings outside the city. On the walls of the plaza, photographs of old Chengdu tell the story of a tea-drinking culture that still continues on today.

Aesthetic critiques aside, the subway is a huge accomplishment for the city and only the beginning of what will be a comprehensive metro system, thus making mobility around Chengdu ever more convenient and efficient.

See additional coverage of the new metro Line 1 from local Chengdu blogs:

Chengdu Living: Chengdu Subway: Day One Photos

GoChengdoo: Panda Express: Chengdu Metro Line 1 Opens for Free Sneak Peeks

Architect Ole Scheeren Opens New Office in China

CCTV Building in Beijing. Photo by Fred @ SG

German architect Ole Scheeren, a former partner of the Dutch firm OMA and lead designer of the CCTV Building in Beijing, recently announced the establishment of his own architectural practice, Büro Ole Scheeren. This news is significant not only because of the exciting work bound to come out of the new office, but because Scheeren has selected two Chinese cities (Hong Kong and Beijing) as the base for his operations. According to the press release:

In choosing China as the firm’s headquarters, Büro Ole Scheeren demonstrates its commitment to Asia and the region’s acute significance in the worlds of architecture and design.

The rise of China has directly benefited marquee-name architects from the West, providing them with opportunity to design radical forms unable to be physically realized in their home countries due to various socioeconomic factors. And while many of these firms have opened branch offices in China, no Western architect has yet opted to set roots in the region. The announcement of Büro Ole Scheeren changes this- and once again affirms the growing significance of China as a laboratory for progressive ideas in architecture and urban design for the 21st Century.

Archinect: Ole Scheeren announces his new practice

Building Design: Former OMA partner Scheeren sets up own practice

China, America, Paul Krugman

Every few months, Nobel Prize winning economist and New York Times columnist Paul Krugman writes an opinion piece lambasting China for ‘manipulating’ its currency, the renminbi (RMB). Whenever he brings this particular issue up, Krugman argues that China is undermining America’s (and other countries) manufacturing competitiveness.

I have responded to Krugman’s previous commentaries about the Chinese currency issue before (U.S. – China Trade Complications) and discussed why letting the RMB float will not bring manufacturing jobs back to the U.S. Krugman doesn’t seem to be getting the message based on yet another  Op-Ed he penned titled China, Japan, America.

He begins by mentioning Japan’s recent complaint about China’s trade policies and then continues on wondering why U.S. politicians cannot do the same by also taking a tough stance. Actually, just to be clear, there have been those in the U.S. Congress and White House who have been vocal about what they see as China unfairly manipulating the value of the RMB- but these voices have done little to change China’s currency and trade policies.

Freeing the RMB peg and letting it float would be a very dangerous move domestically for China. If the value were to rise too quickly, making manufacturing costly and uncompetitive, the result would be a huge surge in unemployment. This could lead to potentially devastating social instability, a reality which Krugman completely ignores.

Another reality he ignores is the fact that U.S. corporate executives and the shareholders of their companies directly benefit from the cheap cost of outsourcing to China. Does this hurt the average American worker? Absolutely, but this is no surprise- American business executives and corporate managers are the best in the world at ‘minimizing overhead/maximizing profits’.

In the end, U.S. politicians will pay lip service to pressuring China over the RMB value, but it is doubtful any real policies will come out of Washington that would end up hurting trade relations.

The New York Times: China, Japan, America


Just a few days after Paul Krugman’s aforementioned opinion piece, the New York Times produced another editorial about the China currency issue. This time, the NYT editorial board applauds U.S. Treasury Secretary Timothy Geithner’s recent comments encouraging Congress to do something about the shaky China trade relationship.

Mr. Geithner is following the lead of Japan’s minister of finance (who Krugman mentioned in his piece) in anticipation of the G20 finance ministers meeting next month. Geithner made clear to Congress that keeping the RMB value low against the U.S. dollar is not in China’s long-term interest, as it not only hurts the U.S. and other developed countries, but developing nations as well.

I certainly doubt that China plans on keeping the value of the RMB low forever. Long-term, Chinese leaders face the daunting task of peacefully directing the evolution of its huge economy. Right now, the country is still an economy largely based on low-cost manufacturing. That is quickly changing though, as China’s central government directs investment into IT, R&D and other diverse sectors.

Only when the Chinese economy is diverse enough beyond low-cost manufacturing will the Chinese leaders feel safe letting the RMB rise in value.

The New York Times: Mr. Geithner and China

Happy Birthday Shenzhen: Special Economic Zone Turns 30

By now everyone knows the story of Shenzhen: a small fishing village in  south China’s Guangdong Province transforms into an economic powerhouse in only a matter of a few years. It was a mere 30 years ago this month when China’s then-leader Deng Xiaoping selected Shenzhen to become the country’s first Special Economic Zone (SEZ), laying the foundation for what would eventually become the most symbolic city of the new China.

It is fitting that Shenzhen is the only big city in China where you will find a large statue of Deng Xiaoping instead of Mao Zedong. Starting as a true ‘tabula rasa’, the city boomed from only a few thousand residents to nearly 10 million during its life as an SEZ. This is a direct result of Shenzhen being one of the first places in China where burgeoning capitalist activity was actively promoted after  the  reform and opening of the country.

Selecting Shenzhen as the site for an experimental SEZ was a logical choice due to its strategic location in the Pearl River Delta region. This allowed the  city to have easy access to international markets- first attracting investors from Hong Kong and Taiwan and then  from further overseas. Shenzhen successfully capitalized on its low-cost, high-efficiency  model to become a  preeminent manufacturing and shipping metropolis.

Foreign investment is only half of the story. The other half is the millions of Mainland Chinese who emigrated to Shenzhen to work in factories and become entrepeneurs pursuing what could be considered the ‘Chinese Dream’. Those who came to Shenzhen didn’t come for lifestyle or cultural amenities- the decision was based on economic opportunity.

Shenzhen has achieved a somewhat mythical status around China for its seemingly uncanny ability to bring wealth to people who started with nothing but took risks and persevered through adversity.

Yet today opinions within China about Shenzhen are highly polarized. Most of the Chinese people I talk with either love or hate the city- there are no in-between feelings. Those who love it mention the freedom and opportunities Shenzhen offers while those who hate it lament what they see as empty materialism, lack of culture, and shallow pursuit of money at all costs.

Media reports earlier this year of employee suicides at the Foxconn factory in Shenzhen also created a stir, casting light on the questionable culture of a city that is solely based on overwork and incessant production. This could change in the near future though.

In 2008, UNESCO named Shenzhen a ‘City of Design, making it the first Chinese city to join the ‘Creative Cities Network‘. Although creativity and culture can never be forced on any city, the fact that Shenzhen aspires to merge its forward-thinking spirit with an emphasis on design is a step in a positive direction.

On his visit to the city last month, Premier Wen Jiabao called for continued reform and innovation. Furthermore, and to some surprise in the international press,  Premier Wen also said that “China should push forward not only economic restructuring but also political restructuring” and that “people’s democratic rights and legitimate rights must be guaranteed.”

Could Shenzhen’s history as a laboratory for economic reform also make it the ideal place as a testing ground for political reform as well? Wen’s words open up possibilities that could not even have been imagined 30 years ago. But as the world has witnessed, China is open to change for the better-  and nowhere is China’s story of prosperity more evident in the narrative that is the Special Economic Zone of Shenzhen.

Development in the Far West: Bumpy Road Ahead

Uyghur people in Xinjiang. Photo courtesy of Nicolas Marino

One advantage of China’s top-down approach to urban development is the lack of organized resistance to new projects. Aside from the occasional story of a  lone-ranger hold out protesting imminent demolition of property, China is a nation almost completely devoid of NIMBYs (not in my backyard). This is due largely in part to the collectivist nature of China’s ethnic majority.

That majority is of course the Han people, who comprise more than 90% of China’s overall population. There is a very strong self-identification among the Han, which begets an unspoken but omnipresent social unification. This spirit has been one of the driving forces behind China’s rapid and successful urban development.

Yet as momentum shifts  westward, the outlook for peaceful development looks more uncertain. Whereas the east coast of China consists mainly of Han people, the interior areas are more mixed ethnically. The far west autonomous regions of Tibet and Xinjiang are majority-minority populations.

Xinjiang Autonomous region- which is home to the Uyghur people, a  Turkic Muslim minority- is currently experiencing a significant migration of Han people from the eastern provinces as a result of the central government’s ‘Go West’ campaign. Cities in this vast and resource-rich region in China’s northwest corner are developing quickly. Unfortunately, Uyghur’s and other  local minorities feel as if they are being left out of the new prosperity.

Frustrations boiled over last year when riots broke out in the Xinjiang capital city of Urumqi. The violence pitted the Uyghurs against the Han, leaving nearly 200 people dead. Fortunately, there has not been any flare ups since then but as a New York Times article said recently, ‘resentment is simmering‘.

Urumqi and other cities in the west of China will undoubtedly continue to move full steam ahead with development. Urbanization and modernization need not be a threat to local culture though. Rather, it should reinforce long-standing traditions as prosperity eventually leads to diversity appreciation. The major challenge here will be a social one- including non-Han minorities in with the huge changes taking place.

The New York Times: Resentment Simmers in Western Chinese Region

Expatriate Mobility in China

Scenes from Chengdu and Shanghai – Two Popular Cities with Expats

Since China reopened its doors 30 years ago, the country has attracted a growing expatriate population. Foreigners (known as laowai in Chinese) choose to call China home for a variety of reasons. Many come for business opportunities while others arrive out of a desire to learn about the language and culture. Whatever the reason, the allure that has intrigued people from outside the Middle Kingdom’s borders for centuries is alive today.

American writer Sascha Matuszak, who has lived in China off and on for ten years, reflects on his own experience as a laowai in a piece for Chengdu Living. He recently moved from Chengdu to Shanghai to take a new job. Relocating from one city to another for opportunity is not uncommon, both for native Chinese and foreigners living in China.

What is intriguing about Matuszak’s piece is not only his comparison of the two very different Chinese cities, but his musings on expat culture in China. He makes the case that certain Chinese cities attract different types of laowai based on personality- or is it the particular city where  a foreigner lives that influences them to adapt to local culture? Probably, it’s a bit of both.

Chengdu Living: A Tale of Two Cities: Chengdu vs. Shanghai

China Housing Bubble? Maybe, But Not as Bad as You Think

Many economic analysts are convinced that China is now in the midst of a  colossal housing bubble. Wendell Cox thinks otherwise. In a recent NewGeography piece titled China’s Sliver of a Housing Bubble, Cox digs through the various studies surrounding the talk of a housing bubble and focuses in on one particular study conducted by Dr. Wang Xialou for Credit Suisse.

Dr. Wang’s study differs from the others in that it takes into account the ‘grey income’ that is prevalent in China. Grey income is income not reported in official data. Anyone familiar with the earning and spending habits in China knows that under-the-table dealings are standard practice. This makes it difficult to assess real income versus housing prices and decisively conclude whether there really is a housing bubble.

Another factor to consider in China’s residential development is the absorption rate of newly constructed housing units. It is not uncommon to see empty residential buildings somewhere outside the 3rd ring road of a developing Chinese city, only to come back 2 years later to see the neighborhood completely transformed.

This has to do with limits the governments put on developers to develop land. Many times, buildings finish construction before transportation infrastructure (read: subway lines) is completed. This means that speculators have invested in units in these buildings but no one lives there because the neighborhood has not yet arrived.

This is a scenario that sounds ludicrous to Americans, especially given what just happened with its devastating real estate crash, but it is important to remember that the U.S. has nowhere near the same migration volume to urban areas that China is experiencing at this time.?

NewGeography: China’s Sliver of a Housing Bubble