Posts under "Business"


Anyone looking for a lesson in both climate change and sustainability (持续性 chíxùxìng) needs to visit China. In a country full of contradictions or 矛盾 (máodùn), it only makes sense that some of the worse environmental degradation is contrasted by very progressive attempts at conservation and sustainability wherever possible.

China is unique because nowhere else in the world (with a possible exception of India) have we seen such a large population transition from an agrarian society into an industrial one in a mere 30 years (following the Open Door Reform Policy-改革开放 gǎigékāifàng). It’s been truly remarkable watching the speed and efficiency in which China has pursued a path of economic development or 经济发展 (jīng jì fā zhǎn) and ave gobbled up FDI or 以进养出 (yǐjìnyǎngchū). As a result GDP or 国内生产总值 (guónèi shēngchǎn zǒngzhí) has hovered between 9 and 10 percent and is expected to maintain a steady 8 percent for the next decade. To put it plainly, China’s economy is very 厉害 ( hai)。

But what many eastern philosophies such as Taoism (道教) teach is that contrary forces are often interconnected, much like the 阴阳 (yīn and yáng). As one expands or exerts itself, the other reacts in order to seek balance. With industrial manufacturing and agriculture comes CO2 emissions and pollution and degradation of arable land–all detrimental impacts on the Chinese environment. China’s environment or 环境 (huánjìng) has been taking one for “the team” for a long time. But now it appears the costs of ravaging one’s environment are now spreading to businesses, industries and society in general:

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While the numbers do range among Chinese and Western scholars, most predict that the negative externalities associated with environmental degredation (such as land loss, health costs due to air, water, food quality, etc…) remove a substantial chunk of China’s GDP when factored into long term growth (estimates run from 4%-10%, begging the question: is this model sustainable for India and Africa in the future?).

Anyone who’s breathed in air from a major Chinese city or experienced a sandstorm or a “fog advisory” knows just how evident the environmental degradation is in China. Yet, amidst the smoke stacks, coal mines and toxic rivers there’s a silver lining: people are recycling, conserving and developing low cost, common-sense practices and technology to mitigate their environmental impact.

Before my first visit to China, I was unaware of how wasteful westerners (especially Americans) are. In China, electricity and heating are often rationed or decided by strict governmental regulation. Water use, or lack there-of is met with rebates while electricity is self-monitored (bought on rechargeable cards much like cell phones) which really does keep you energy efficient. No light or computer is ever left on when the house is empty and if you live in a northern locale, be prepared to wear many layers or even your jacket while inside the house. It really is a society of “less is more” when it comes to natural resources or 自然资源 (zìrán zīyuán).

What really amazes me about China has to be the recycling or 回收 (huíshōu). While there isn’t really a government run recycling entity as in western countries, it is carried out to near perfection by Chinese citizens looking to scrape together a few bucks. (Click here for previous post on Recycling.) The best part is, anyone can reap the rewards of a recycling economy.

For example, in China (anywhere) you can return around 5-8 bottles of beer to get one free–and all you’d have to do is go outside your apartment to the local market and trade them in. As a result, I took to collecting bottles myself (see below).

Yet if you want to see recycling in full force, there will be at least one recycling hub in the city (our local 老外s deemed it “Apocolyptopolis”) where people make a living obtaining, buying, selling and trading all kinds recycle-able refuse. Here, people are “going green” simply because it makes fiscal sense.

In essence, this is what real grass roots environmentalism is. After talking to a few ”entrepreneurs“ or 企业家 (qǐyèjiā), they explained to me how the costs of materials for plastics and glass are increasing, so selling back recycled goods has a higher price with the same baseline cost of labor and time.(See below: This was just one week’s haul for the self-espoused 企业家人).

Just as the market leaned on the environment, the environment is leaning back on industry, providing cheaper alternatives to non-sustainable growth. Clearly the two are highly interconnected, the question is whether or not China will be able to rebalanced itself in time, finding harmony between industrialized growth and sustainable development before the damage becomes irreversible.

GDP and the environment are now interlinked. China’s future will be determined by how the two find balance with one another.

 

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There’s been a lot of focus on China and rare earth in the press lately, so I thought I’d take time with a quick post to explain the value of rare earths and why they matter so much in contemporary politics, trade and economics.

Rare earths or 稀土金属 (xī tǔ yuán sù)are a collection of 17 elemental metals, including yttrium, scandium and fifteen other lanthanides. These metals are crucial in the production of everything from electric car batteries, wind turbines, electronic displays, aerospace alloys to petrol refining. They are also highly valued as magnetic alloys within the industrial military complex and computer industry.

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China, which holds roughly 95% of active global rare earth deposits, namely in the iron ore rich regions of Inner Mongolia and Tibet, is able to extract these highly toxic and volatile chemicals at very low costs compared to the rest of the world. The result of which has been rare earth industrial and growing technological dominance by the Chinese over the last decade as almost the entire industry has moved within Chinese borders.

Almost every high-tech industry needs some component of these seventeen lanthanides, which has accounted for the increase of production until this previous summer. In China, the vertical integration of extraction to production of these rare earth products also allows for technological advancements within rare-earth dependent markets even before they leave Chinese borders. This allows for exponential growth within domestic Chinese industries that can directly compete with highly developed nations such as Japan and Korea regionally, and the US and EU globally.

Chinese Rare Earths: Why They Matter

If petroleum was the fuel of the 20th century, then rare earths will undoubtedly emerge as the fuel of the 21st century. Much in the way that OPEC and oil-rich Middle East nations created cartels to limit supply and mitigate the depletion of oil reserves, the Chinese are aware of how valuable these rare earths are domestically and globally and are making sure they don’t sell themselves short. This is because rare earths are fundamental to most high-tech products and technologies, the industry now receiving attention in the recent rare earths debate is that of renewable energies (which we covered at length in my Green China posts).

Recently, Chinese officials have heavily restricted production of, and exports of rare earth elements through the use of quota limits.  The justification for protecting these rare earth elements was “to conserve exhaustible resources and maintain sustainable development” so that the Chinese economy can transition  from low- and middle-tech to high-tech industries. In controlling rare earths, the Chinese look to control every industry from wind turbines to smart phones, ensuring that the next electronic or high-tech good you buy will have a “Made in China” stamp on its underside.

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A sculpture from Beijing's 798 Art District typifying social despair.

Much like inflation, housing speculation and unemployment, income inequality is becoming a hot topic issue in China, stoking nationalist sentiment and prompting social movements and protests. For a supposed communist nation (although we know better), such a divide in wealth foments anger and fosters reactionary sentiment.  As income inequality grows, so does the 800 pound gorilla in the room. China can keep it caged, but for how long?

Income inequality or 收入不平等 (shōu rù bù píng déng) can be statistically measured by the Gini coefficient, or the statistical dispersion/discrepancy among income classes. China’s Gini Coefficient is 41.5 and climbing quickly. The US is already at a staggering 45, placing it among the top 1/3 of mostly failed states where money equates into military might and political influence. See the CIA factbook for an entire list. In countries like the U.S. and China, these large margins between the rich and poor (or even the rich and middle class) greatly influence quality of life and standards of living.

In China, financial crunch, similar to what the US, EU and most of the world experienced during the last 3 years, is coming. Anecdotal stories of such are everywhere. Whether it’s a landlord being squeezed on by a corrupt official, a family that forces a breakup of an engagement due to poor “social status” or a factory worker whose family was so indebted that they couldn’t pay for the funeral, China is a polarized nation, filled with rich entrepreneurs and the remaining struggling masses. Now add in a housing bubble that is causing inflation and homelessness, and you have an idea just how hard it is to make it in China.

 

 

 

 

 

 

 

 

A side street in Kashgar's Ouighur district.

This fact is only amplified when you look at a break down of per capita GDP among provinces within China. Coastal provinces such as Zhejiang, Guangdong, Shanghai, Beijing, Shandong and Jiangsu all have staggeringly high GDP’s per capita and much higher average incomes than their inland counterparts. In fact, as you go west, there is a steady decline in average incomes, with periphery provinces like Tibet, Inner Mongolia and Xinjiang earning near half of their coastal-counterparts. As a result, development has faltered due to a lack of highways, railways, local governmental corruption and cultural discrimination in these innermost areas of China.

It’s not a surprise to me that most social conflict (be it ethnic minority riots, protests for housing relocation and demolition, or school attacks) happens in these very locations, where competition is everything and social mobility is a pipe-dream. We read about China’s amazing GDP, but seem to cast a blind eye to the other part of the country that is struggling to keep up. Uneven development leads to social despair, and ultimately, social unrest.

 

The income gap in China is a topic of frequent discussion, and below are some relevant terms that can help you understand news reports as well as participate in discussions of your own.

Numerous reports of the Foxconn employees leaving their 宿舍 (su4she4 – dormitories) to 跳楼 (tiao4lou2 – jump [from a] building) has raised questions about the working conditions that could lead to 自杀 (zi4sha1 – suicide).  Factory workers aren’t the only people facing this 生活压力 (sheng1huo3ya1li4 – life stress), as the 贫富差距 pin2fu4 cha1ju4 – gap between poor and rich) grows 越来越大 (yue4lai2yue4da4 – getting larger and larger).  Almost everyone I ask talks about the stress of 养家 (yang3jia1 – providing for one’s family) and their fears of 养不起家 (yang3bu4qi3jia1 – being unable to provide for one’s family).  Younger people will work tirelessly at their jobs because they know they have to 养老 (yang2(3)lao3 – take care of [elderly] parents) and will need money.  The stress becomes taxing to the point where people 受不了 (shou4bu4liao3 – cannot take it) or 忍不住 (ren3bu2zhu4 – cannot endure it).  Even those among the 暴发户 (bao4fa1hu4 – new rich) know how fortunate they are to have escaped (if only temporarily) the drag of the rat race.

In the past 24 hours, I’ve tried on a 要带 (yao1dai4) belt which cost 150USD, a 衬衫 (chen4shan1) shirt which cost 400USD, and a 夹克 (jia2ke4) jacket which cost 3000USD.  I wasn’t at a 5th Avenue boutique, rather I was at a 订货会 (ding4huo4hui4 – ordering fair) for a Chinese textile manufacturer in 深圳 (shen1zhen4) Shenzhen.  It’s worth pointing out that the prices quoted above are the wholesalers’ 批量价 (pi1liang4jia4) wholesale prices, which means that consumers will pay even higher prices when the 秋冬季 (qiu1dong1ji4) fall and winter seasons come.  Although being in Shenzhen means hearing different flavors of Mandarin on a daily basis, here the mixture of 口音 (kou3yin1) accents and 方言 (fang1yan2) dialects as well as 白话 (bai2hua4) [Cantonese in this case, also means "vernacular"] took on new depth.  The 采购员 (cai3gou4yuan2) purchasers weren’t  buying for high-end cities like Beijing or Shanghai- rather they were planning on selling these high-end clothes in places like Chongqing, Chengdu.  I don’t know if the clothing to be sold is going to be targeted at 暴发户 (bao4fa1hu4) new rich, but the prices are certainly above .

Linked here is a list of the top-10 most luxurious cities in China.  I suspect that some of the clothing I tried on today could be on shelves there soon.

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