Part I – Growing Wealth, Growing Inequities

It is undeniable that the economy is developing rapidly and that many peoples incomes have dramatically increased in recent years. However, the truth remains that the vast majority of the population are as poor as ever. But, the lives of an important part of Chinese society have dramatically improved in recent years. Yet, outside the wealthy areas of Beijing, infrastructure is years behind. Venture 10 minutes away from the wealthiest part of Beijing (Chaoyang Business District) and toilets remain outhouses, water is not sanitary, electricity lines are carelessly strewn, dirt floors abound, garbage strewn about, little heating and poorly constructed housing. The gap between western cities and Chinese cities is so large it is hard to describe and the fact that China is so populous only adds to the burden of raising the basic standards of living. Traveling in smaller Chinese towns re-emphasizes the situation. We can see a Porsche Cayenne (125000$ car) parked next to a beggar who lives on 1$ a day. Many people, namely the Chinese Authorities, industrialists and the new middle class claim these are the necessary and temporary inequities required to develop the country. Just as we saw during the industrial revolution in the West, inequities go hand in hand with rapid growth. While inequity is unlikely necessary, it may well be inevitable.

These problems are said to be of concern to the Chinese Government, but in reality, little has been done. There have been increasing demonstrations and unrest by countryside peasants against the governments seizure of farm-land for development and the careless regard for the environment and the safety of the poor (see IHT July 31, 2005). Small towns near steel or chemical plants are so polluted that I have difficulty imagining the health of the children growing up there come 20 years. On a personal note, poor people regularly ask me how much money I spend per day, how much my rent is and how much I earn. This is never a comfortable subject and I usually blatantly lie to them, telling them I spend about 30RMB (8 RMB = 1 US$) per day, in reality it is about 170RMB per day if you include rent and all that other stuff. While this sum is really not that much compared to the west, or to wealthy people in Beijing, it is enormous when compared to a peasant construction worker who earns 800 RMB per month at most. How can this be rectified? How can the differences be brought in line with those in found in western countries? Considering the size of the population, the difference in education, the corruption, and the attitude of the Chinese elite: I have no idea. Not the slightest. So lets turn to another aspect of this exploding society.

On an international level, China has the world by the balls. It is not in China’s interest to see the United States, and by extension the world’s, economy falter, but they could do it at the flick of a switch. They control so much American Treasury Bonds that selling 10% of them would send the US into a serious downturn (see August edition of The Economist). Most people associate China’s growth to the opening of its financial markets and the introduction of free market practices. This remains true in part, but overlooks the meat and bones. China’s policy is to develop large institutions as state controlled companies and allow them to breed smaller companies, which are not controlled directly by the government. This is contrast to India’s policy of allowing private companies to dominate sectors such as health, water, roads and to place the responsibility of development on them, and not the government. Indias’s growth is significantly less and anyone who has traveled there will agree that as poor as rural China is, India is much worse. As said by someone else, “The truth is, Chinese markets are as free as my kids: they can do whatever they want unless I say they can’t.” China will continue to grow and some rules will be loosened, while others will be tightened. Considering the number of half-finished and half-full apartment buildings in Beijing I cannot say that I am completely at ease with the situation here.

Corruption is still rampant and there are serious issues regarding the availability of cheap money from Banks. Laws regarding the banking system have been introduced and borrowing seems to be slowing down, along with the excessive real estate development in large cities. The steel industry, which is the driving force behind the entire economy, is expanding as fast as humanly possible, and sometimes faster. There are however obvious limitations: Raw Materials. As in the rest of Chinese society, the next big issue will be the availability of resources. Chinese plants, for the most part, are using poor quality coke, lime, and ore (basic ingredients for steel) as they are the only types available for a reasonable price. Which brings about another issue, a lot of what is done by Chinese is done fast and on the cheap.

Beijing’s lack of any type of urban planning has created a city, which is a hodgepodge of new glass towers, communist cement blocks, low poor housing, and every style of condominium known to mankind. The new buildings are going up so fast that they purchase mass-produced, low quality material that will not last long. I am not saying that all the buildings need to be made of marble and gold, but the disregard for quality is somewhat alarming. The engineering of the buildings is sound and I have yet to hear of any failures, but when you touch the appliances, the lamps, the desks, you just feel the cheapness. There are high quality products available here for very cheap prices in relation to the west. Heavy furniture, statues, and other household things are available for a bit more than the generic items that are usually used. The buildings that are built often cut corners and without coming across as more Eurocentric than I already am, Chinese architecture is bad and they generally Chinese people do not have that much taste (see next article). The rapid development of a city has traditionally created beautiful cities with some form of uniform style (i.e. Paris and New York), but Beijing has not forced constructors to follow any particular style. While there are many buildings that are interesting on their own as modern artwork and marvelous feats of engineering, the city lacks any sort of unifying style. Even the most high end buildings use poor interior architecture and cut corners.

As usual I use the steal industry as a general indicator and concrete example: the general motto for most Chinese steel plants is to push tonnage (or quantity) and not quality. Some plants, with lots of capital (namely Baosteel) buck this trend and follow western plant practices who have shifted to higher end steels, which are stronger, last longer and cost more. China has been better organized in the modernization of a society than any other large country in history, but there are still many short-comings. Of course, keeping a reign on 1.3 billion people who are hard working, creative, ambitious and biting at the bit is not easily accomplished. China is succeeding where many have failed, but they are no were near the finish line. Western living standards will not reach most of the population, in my opinion for at least another 30-40 years, if at all.

Much of Chinese historical artifacts were destroyed during the Cultural Revolution (some estimate as much as 90 %), but China is losing more than just buildings and statues now; they are losing the intangible culture that makes a nation a civilization.

My next short article will be on the encroachment and enthusiasm that Western culture is making here. What is your culture when almost everything you use and do is centered o
n western technology and corporations?