Wednesday, November 20, 2013


Now that we've been home for three weeks,  I've had time to process my experience in China, and begin to connect the global dots.  I realize the trip was not just about seeing stunning scenery, photographing beautiful faces representing various ethnic minority groups, and meeting some of the country's nicest people.  It was also learning more about how China influences the world economically and politically, and how they affect critical decisions that other countries, especially our own, have to make.   To say that China is growing exponentially as an economic powerhouse is practically an understatement.  If you ask a young educated person on the street in Beijing, he or she would say that in ten years China will surpass the United States as the largest economy in the world.   And when you see the enormous development and explosive growth, it's hard to argue against that person's point of view, although I'm not convinced this will really happen.   Although China is a one-party system under strict Communist Party rule, there is increased government support for greater market-oriented economic policies, capitalistic in style, which gives Chinese citizens many opportunities to make money, become millionaires and realize the "Chinese Dream."  

Modern highways are built through forested land, devastating villages and
burrowing through mountains.  The Chinese want their highways to be
built in a straight line, and nothing will get in the way.

Even though the society is fraught with graft and corruption, the populace seems resigned to this as a fact of life, and many citizens use it to their advantage.   I learned this from a Chinese businessman, named John, whom I sat beside on the twelve hour flight from Beijing to San Francisco.  After three or four glasses of red wine, he was extremely chatty and willing to open up.  As a wealthy Chinese venture capitalist,  he has no problem with overt corruption or the fact that government officials line their own pockets by taking undercover bribes.    He told me he approves, and said it this way.   "Because of the corruption within the government,  I, a private citizen, am a very wealthy man.  Why begrudge a system that helps people make a lot of money and live a better life.  It's a win-win for everybody."   

When John was twelve,  he joined the Red Guard, but in 1989, he shed his nationalistic sentiments and joined with students to demonstrate in Tiananmen Square.   Educated both in Beijing and in the United States,  John became an American citizen, married a Chinese American, and their one son is receiving an education in both the U.S. and China, so he will learn about his Chinese heritage and Asian culture.  John began accumulating wealth in the clothing business. He and a business partner went to Europe to visit many of the famous fashion houses, so they could begin to copy the runway styles.  They were hugely successful in the knockoff business, giving John enough money to begin plowing it back into other profitable investments.   

As a VC, John only invests in new companies in China.  He employs the same copy-cat approach, taking already proven pharmaceutical and medical device technology, developed in the United States, back to China.   While John would like to sell some of these made-in-China products for a substantially lower price in the U.S. markets,  the barrier to entry is complicated by regulations.   American industry is always developing new technology, so John's Chinese companies are usually a few years behind.   Nonetheless, they are making money in China, and John is doing very well.   Incidentally, John cautioned me against personally investing in Chinese companies whose stock is sold as an ADR (American Depository Receipt) on a U.S. exchange because, as he put it, "Chinese management does not have a long term corporate strategy in place.  Instead, their personal exit strategy is based on making money for themselves, and when that happens,  they will leave the company, and the investors,  high and dry."

I talked to a young woman in Beijing who hesitated when I asked her about the 1989 Tiananmen Square demonstration, but replied saying,  "we don't talk about that."  When I asked whether the average Chinese "joe" knows what is happening in other parts of the world, like the civil war in Syria, her answer was  "a little, but not really," adding that "Chinese people are only concerned about what is going on in China." When we talked about the government's policy to deny internet users access to Facebook, she said "There is a giant firewall which makes it impossible," but was proud to say that her fiancee, an IT guru, had ways of getting around it.  She also said they could both get in trouble if somebody found out.  When we were in China, we heard that the government employs two million people to monitor and spy on Chinese internet users.

One of the college students I met in a rural village told me how much he loved China, and how proud he was of his country's position and influence in the world.  He obviously wasn't around during the time of Mao and the Cultural Revolution, and I can only assume that his parents preferred to focus on the positive direction the country is moving and how their son will thrive, rather than dwell on the country's difficult past.   

Mao Ze Dong

Within the Communist ruling party, there have been recent discussions about loosening social restrictions as well:  possibly doing away with the one-child-per-family policy and supposedly eliminating the horrific labor camps that have existed since the Cultural Revolution.  My sense is that the one-family-one-child policy has a better chance of implementation because the government, realizing that the population is shrinking substantially, is facing a huge reduction in its work force.  As far as labor camps are concerned, I would bet they will continue to exist, but under a different moniker so as not to attract attention.    At the same time as the government builds more modern cities throughout China to accommodate the farmers, who will be transplanted from their farms and rural villages,  they are also discussing how to give farmers the ability to sublease their government-allocated plots, so that they can make more money and take advantage of the real estate boom underway in China.  

Sowing Seeds 

So, while China may be growing quickly and developing a consumer economy of magnificent proportions,  how

Highway Construction in Rural China

long can this boom last?  After new mega-cities are constructed,  and more than a hundred thousand miles of new highways are built,  I wonder what China will do next.   How long will China's economy be based on being the workshop for the rest of the world, assembling parts for iPhones and iPads or making shoes for Nike?   Would they ever move on from producing medical compounds inexpensively for American drug companies or duplicating Western medical technology?  Could they begin to develop their own state-of-the-art health care system? (Although from what I heard, acupuncture and herbal medicines are still preferred over antibiotics and advanced surgical techniques by most citizens.) A recent article in Time magazine points out that true world leadership will only come when the driver of economic growth changes from cheap labor to innovation and invention. 


When I returned from China last month, I checked off the country on my list, and thought there was no reason to ever go back.  It's not because I didn't find China fascinating or that I didn't have a really good time.  It's just that I figured I'd seen enough.  After all we covered a lot of territory in 25 days.

At the same time, I was so tired of Chinese food that I couldn't conceive of eating it again for a very long time. But yet, last Saturday I found myself hankering for sauteed eggplant with garlic and pork, so we ate at a little Chinese place near our house, and the food tasted really, really good.  And then the next morning I buried my nose in the Sunday New York Times and read about an amazing adventure two journalist had while traveling on the Karokoram Highway,  the world's highest transnational highway  in China.  (Click on this link to read the NYT article.)  Taking more than two decades to build, the Karokoram Highway links the city of Kashgar in Xinjiang Province in Western China to Eastern Pakistan.  (Click on this link to see the photos.)   I've read the story several times and have sent the link to other traveling friends.  Now I find myself wondering if I want to experience another slice of life in China. 

1 comment:

  1. Thanks, Pam. This post was very interesting, and I appreciated reading your perspectives and your conversations with locals. I suspect you might find reason to go back some day.