Mon, 2014-03-10 10:20
Anonymous

The following is an edited version of an article that was first published in Cantonese Business magazine. The article was translated by James Robinson.

The Cantonese Business Association and the Washington China Relations Council signed an agreement at Guangdong’s Reception Hall on November 17, 2013. According to the agreement, both parties will establish a long term cooperative relationship, and will together share respective member benefits and work to encourage cooperation between Guangdong enterprises and Washington State.

This is the first visit for Washington State Governor Jay Inslee and Washington State China Relations Council (acronym: WSCRC) interim director Sam Kaplan. WSCRC was established in the year 1979, and is America’s earliest state established non-governmental group dedicated toward Chinese business relations. In the past 34 years, it has been very successful in selling Washington State imports to China. Last year, through the efforts of companies such as Boeing, Microsoft, Starbucks and Amazon, Washington State exports to China reached $14.2 billion. Washington ranks No. 2 in the United States in exports to China, second only to California.

The distinct comparison is that in 2013, China’s investments in Washington State were only $131 million, not even reaching one-fifteenth of China’s investments in California ($2 billion). Kaplan knows that right now is not only the time for Chinese people to be buying products; he must also think of a way to bring Chinese investors’ money back to Washington. WSCRC has more than 100 high-quality business members and sturdy local connections. Kaplan believes there are already enough advantages to do well in bringing in Chinese investment.

Inslee also wished to strengthen business cooperation with Guangdong Province. Before he began this trip to China, he and a Guangdong business entrepreneur held a meeting. In September 2013, WSCRC invited Wang Shi then studying overseas to come to Seattle and conduct a three-day informational visit. At this time, Inslee met Wang Shi of Vanke (the largest real estate developer in China) as one of the companies targeted, in order to understand the way Guangdong’s businesses are run.

Wang Shi once did a special trip to ascend Tiger Mountain near Seattle. Thereafter, he had numerous trips between the East Coast’s Harvard University and the West Coast’s Seattle. He agrees that Seattle is the “Emerald City,” and also says that Shenzhen has many similarities with Seattle: both have large ports, both are surrounded by mountains and coasts, both are emigration destinations, and both have a vigorous drive for entrepreneurial influence.

Inslee had a lot of interest in China’s real estate tycoon; however, he knew that since 2011, when Wang Shi started studying abroad at Harvard, Vanke’s real person in charge had become Yu Liang. Now, drawing the support of the Cantonese Business Association, on this entrepreneur platform, was his first occasion to meet with Yu Liang.

Once Yu Liang arrived at the event, he was trapped in the spotlight. Energetic, tall and skinny, he was wearing one extremely slim, black colored (Western style) suit. From 2010 he started running, and he and his current assistant Huang Ruiqin both said they have trained well to do iron-man triathlons.

Yu Liang said he also is looking forward to cooperation with Washington. In the current year, Vanke already opened the door to overseas (business). In July 2012, Vanke’s sole ownership subsidiary company, Vanke Real Estate Purchasing (Hong Kong), obtained Hong Kong listed company Winsar’s stock trading rights through an acquisition. On January 1, 2013, Winsar was renamed Vanke Real Estate Overseas. In February 2013, Vanke invested $175 million and together with Tishman Speyer Real Estate, started a high-rise luxury apartment project in San Francisco. Wang Shi said they went along with their clients -- 30 percent of Vanke’s clients have already immigrated to North America. Internationalization is an opportunity and “enhancing learning and exploring upgrades at the management level benefits Vanke’s domestic business,” he said.

At the Cantonese business meeting following WSCRC’s cocktail reception, they signed agreements again with representatives on both sides and participated in prefectural governor Zhu Xiaodan’s welcoming banquet.

Washington State and Vanke’s  agreement is still evolving. After the reception, the second day, Yu Liang invited Inslee and a group of representatives from Washington State to visit Vanke’s headquarters. In Shenzhen, Inslee and a representative from the University of Washington (UW) took the trip together and met BGI’s (Beijing Genomics Institute) research head Wang Jian. Since Wang Jian formerly studied at UW, BGI and Washington State are poised to have even more technology exchanges.

Fri, 2014-02-14 10:10

This is the first in a series of occasional essays focused on significant events and trends in China and U.S.-China relations.

The 3rd Plenum of the 18th Party Congress: a Watershed for Further Reform?

The 3rd plenary session of the Chinese Communist Party's 18th Congress was held November 9-12. The 18th Congress, installed in November 2012 along with the lineup of top party leaders including Party Secretary (and also China's president) Xi Jinping, was convened to discuss and decide upon several major policy issues confronting China. Traditionally when a new party congress is installed (once every five years), the first two plenary sessions are usually convened soon after to settle procedural and personnel issues; the third session is then convened to tackle major policy issues.

What are the issues China is currently confronting?

There are many, but among the most pressing economic issues are:

• The crying need for economic rebalancing. China has become over-dependent on fixed asset (including infrastructure) investment and exports to drive growth. But, investments are often being made without adequate studies of feasibility, environmental impact and financial risk leading to serious industrial overcapacity on one hand, and empty cities and bridges to nowhere, on the other. The cost of labor and other inputs in China is rising rapidly, undermining one of its more important competitive advantages even as global demand for Chinese products is slowing. To keep growth reasonably robust going forward, China must shift away from its traditional drivers and rely much more on domestic consumption. To accomplish this, however, Chinese consumers must be persuaded to save less and spend more. Of household income in China nearly 40 percent goes to savings while only 35 percent goes to consumption. In the U.S., the figures are 71 percent (consumption) and less than 4 percent (savings).

• The widening gap between China's haves and have-nots. Before 1978 China's centrally planned economy didn't produce very much but what it did produce was relatively equitably distributed. In what amounted to cradle-to-grave state welfare, everyone was guaranteed employment, and also received free or heavily subsidized health care, education, retirement and housing. With the introduction of market reforms over the past thirty years, state welfare has largely disappeared and most people must fend for themselves for most of what used to be provided by the state. This fact goes a long way to explain why Chinese maintain such incredibly high savings rates. The market reforms that replaced the centrally planned economy and removed government social welfare coupled with rampant corruption have led to a massive concentration of wealth in the hands the few, which in turn has created serious deprivations among a large and growing number of people and fed deepening resentment.

• A market economy that still isn't. There is no question that China has made great strides in the past three decades in dismantling the Mao era planned economy and adopting market economy practices. Yet, the hand of government in the market place is still too heavy. It is the government and not the market, for example, that determines resource allocation and decides prices for energy and electric power, telecommunications, oil and gas, and water, among other things. Moreover, state ownership of key enterprises and their assets entitles the state owned enterprise (SOE) complex to a disproportionate share of resources (including human resources), concessionary financing often through "policy loans" by state owned banks, and government protection from competition – both domestic and foreign. Some sectors such as telecommunications, energy and transportation are open only to state owned enterprises. SOEs engage in monopoly pricing and collect subsidies in one form or another not available to the private sector; these advantages accorded SOEs account for more than 100 percent of their profitability, according to some studies. Because of their protected status SOEs are bloated, inefficient destroyers of capital that are shedding jobs rather than creating them, and contributing greatly to China's declining productivity and mounting debt.

• The ecological disaster that China has become. AQI readings as high as 900 (200 is considered hazardous) have been recording in north China this year. China's water supply is dwindling and much of what remains is polluted to the point of being undrinkable. China is now the world's largest consumer of energy, largest generator of greenhouse gasses (70 percent of China's energy comes from coal-fired power plants), and the world leader in automobile production and sales. Although China's leaders understand the dimensions of the problem and have begun to invest heavily in environmental protection and remediation, nearly three decades of extremely rapid growth without corresponding concern for its environmental consequences has severely impacted China's environment and the health of China's population.

• China's population is on the move and aging. More than 200 million peasants have left their farms over the past three decades and relocated in China's cities where opportunities are perceived to be much greater. Another 150-200 million will be joining them over the next ten years. This ongoing supply of mobile excess rural labor has helped sustain China's remarkable economic growth in the industrial and services sectors, while also helping to build China's historically unprecedented expansion of infrastructure. But, because of China's highly restrictive household registration system, virtually all of these urbanized former peasants are not, and cannot become, lawful residents of the cities in which they now live. Further, lack of lawful residence means they cannot receive education, health care and other services provided by municipal governments. They constitute, in effect, a permanent underclass that is systematically denied the benefits to which they should be entitled. The population is also getting older. The impact of China's one-child policy, enacted in the early 1970s, is now beginning to be fully experienced. The number of entrants to the productive years (at age 18) has begun to fall year-on-year and China's "population dividend" is starting to evaporate. At the same time, the number of people at age 60 and above is rapidly rising. By mid-century this category will likely make up 30 percent or more of China's population. China is now in a race to get rich before it gets old, and the odds don't look good.

• Rural-urban divide. The "pull" factor that is inducing up to 20 million peasants each year to move to China's cities is enhanced by a "push" factor as well. Rural land is collectively held and individual peasants have very few land tenure rights, if they have any at all. While legal urban residents can obtain long term leases on land, use them for residential and/or commercial purposes and transfer their leases and any improvements upon the land through commercial transactions, their rural cousins enjoy none of these rights. Individual peasants do not hold leases on the land they farm and upon which they reside, cannot make commercial or residential improvements themselves and cannot transfer their land in commercial transactions. In fact, they can be (and sometimes are) subject to involuntary relocation by the village leadership committee to clear the way for industrial or infrastructure development, and with little or no compensation. Although "urbanized" peasants lack the rights and opportunities for improvement that their lawful urban resident cousins enjoy, the peasants continue to come to the cities because the meager opportunities afforded them there outstrip the even fewer opportunities they would have in their rural villages. The disparity between city and countryside must be addressed in both environments in order for China to achieve balanced and rapid economic development going forward.

• Corruption. The problem is pervasive and endemic and results not only in the misallocation of resources, but is also fueling growing resentment among the masses. While the new leadership lineup headed by Party Secretary Xi Jinping has been cracking down on some corrupt officials, the only brake on corruption is self-policing by the party, something it has proven unable to do systematically and over time.

• Absence of significant political reform. Leaving aside the question of how China's leaders should be chosen, there is great need for reforms to increase government/party transparency and accountability – judicial independence, uncensored media, and an active and widespread civil society, for example. These would be far more effective in the battle against corruption than self-policing by the party (see bullet above) and would constitute the checks and balances needed to combat wasteful and ineffective allocation of resources, among other issues.

• There are other areas in great need of reform as well. Among them: lack of regulatory and governance uniformity among different levels of government and different regions; the financial and fiscal relationship between the central government and lower level governments under which local governments must pay for social welfare and other development costs but are unable to do so because they must remit most of their revenue to Beijing (a situation that directly contributes to seizure of peasant lands by local governments to enhance government revenue); and China's still tightly controlled financial sector with government-set prices in some sectors, interest rates kept artificially low, a closed capital account, and major restraints on inbound and outbound investment.

The reform and opening policy launched by the party in 1978 has transformed China in a manner that no country has ever experienced in history. China is now the world's second largest economy and number one in international trade; has world-leading infrastructure that has compressed time and distance within China and between China and the rest of the world; and has lifted more than 200 million people out of absolute poverty, to name but some of the accomplishments of reform and opening.

But, as the above list of problems indicates, there is much more that needs to be done. The course Beijing has generally steered over the past three decades has failed to address some of the country's structural problems on one hand, and has introduced some new ones, on the other. Drivers that have kept China's growth rate in double digits over much of the past thirty years – fixed asset investment in factories and infrastructure and export-driven production – have pretty much run their course. During the past several years, Beijing has focused increasingly on urbanization to promote fast growth and development. But, the problems that rural migrants face in the cities and the continuing disparity between the urban and rural sectors together limit the potential of urbanization. China's growth rate, which two years ago was still above 10 percent, will fall to about 7.5 percent this year. If the current situation is left unchanged growth rates will continue to sink in the years ahead perhaps leaving China in a "middle income trip" if it fails to create new drivers and advantages for itself to replace the ones that are disappearing.

China is clearly at a crossroads in its development and needs to make a significant course correction. The implicit agreement between the party and the masses that has existed since the Tiananmen incident in 1989 – "you are free to get rich, but stay out of politics" – is unwinding in the face of the problems outlined above. As was the case in 1978 when Deng Xiaoping launched the far-reaching reform and opening policy, the current situation demands drastic reforms and not simply incremental change. This, then, is the backdrop in which the 3rd Plenum of the 18th Party Congress took place in mid-November 2013. Let us look at some of the major decisions of the meeting.

Will the 3rd Plenum of the 18th Party Congress be a watershed that a similar meeting in 1978 proved to be in the history of China's development?

Soon after the meeting ended, the leadership on November 15 unveiled a 60-point reform plan that probably met or exceeded the expectations of even the most optimistic China observers. With varying degrees of specificity the document addressed all the major issues facing China and proposed major reforms for most of them.

The document throughout emphasizes the theme of consumption driving growth and development. To do this, the reform plan calls for "improving the people's livelihood... (and) reform(ing) income allocation systems." Among the measures approved for accomplishing this was wealth transfer from the state owned enterprises through higher taxation and dividends to be paid. Health care insurance and pensions will become more uniform and widened across China in an effort to reduce the felt need to save.

Also in the general category of improving the people's livelihood, the reform plan promised limited reform of the household registration system to permit the full, legal integration of rural migrants into smaller cities (but not the major metropolises like Beijing and Shanghai).

The new reform program also aims to greatly reduce the gap between rural and urban by introducing a new integrated system that will give peasants more property rights, including the right to make improvements on their property and to transfer or mortgage their property. Other reforms call for improving conditions for farming so that peasants and rural laborers are equally compensated for equal work. The new reform plan called for building an "ecological civilization," including "perfecting environmental governance and ecological restoration. Among the specific requirements of the plan was a call for drawing "red lines" for ecological protection of selected sensitive areas. Specific measures included establishment of natural resource and environmental carrying capacity limits along with mechanisms for monitoring and warning of limit excesses. Also included is a new tax on environmental damage.

As for the aging of China's population, the reform plan eliminates the one child per family policy. While this move is likely to be greeted with widespread popular approval, its impact on slowing China's aging is likely to be only marginal.

Some of the most specific and significant changes under the new plan occur in the relationship between the government and the market, and between the SOE network and private enterprise. While reaffirming SOEs will continue to play the leading role in the economy, the role of the private sector has been elevated. The private sector will now also be considered an "important" sector of the economy. Indeed, the document recognizes that the "non-public" economy (i.e., the private sector) has an important role in supporting growth, stimulating innovation, broadening employment and enhancing income. The document called for promoting "...equality of rights, equality of opportunity and equality of regulations; ...the elimination of hidden barriers and the formulation of concrete rules for non-public enterprises to enter into specifically permitted areas of business." While continuing to support the primacy of the state owned enterprise network, the reform document calls for leveling the playing field for private enterprises in some important areas where it has heretofore suffered significant disadvantages, including access to capital. Moreover, the market and not the government will now play the decisive role in allocation of resources and in pricing of water, oil gas, electric power, transportation and communications, all areas where SOEs have dominated and have enjoyed monopoly pricing rights, or government subsidies. Although there is no indication that SOEs are going to be phased out, the leadership hopes that improved conditions for the private sector will increase competition for SOEs and thus oblige them to become more efficient.

Political reform and improvements in governance are not likely to see major change from the 60-point reform plan. One of the broad categories of reform does call for strengthening the socialist democratic political system. The points within this category, however, do not propose and significant structural changes in the current system, but rather call for perfecting the elements of the current system. Similarly, while the document calls for constructing a "rule of law China," there is little or nothing new among the various points in this category. While there will likely be some marginal improvements in areas such as furthering grassroots democracy at the village level and tying judicial and prosecutorial powers a bit more closely to actual laws (and thus somewhat removed from the influence of party policy), China's leadership is not considering an agenda for political reform. One undeniable improvement in this category was the abolition of "reform through labor," under which minor troublemakers were swept up by the police and sent to labor camps for up to four years without benefit of a trial or any form of appeal. Such "administrative punishment" has long been protested within China and by international human rights organizations.

The document calls for strengthening anti-corruption efforts, including the implementation of a responsibility system to ensure a clean and honest party work style, including the implementation of "realistic and feasible responsibility investigation mechanisms." Elaborating on this the document states that higher level Discipline Inspection Committees must strengthen their leadership over lower level committees and that first place is to be given to higher level committees in handling corruption cases. This change plays to Party Secretary (and President) Xi Jinping's ongoing anti-corruption drive by further centralizing the party discipline inspection committee system. Whether this technical adjustment can overcome the inherent problem of leaving the party to police itself remains to be seen, however. Party members are also enjoined to standardize their work and life styles and avoid any hint of lavishness in either. A more effective tool would have been to require all party members to make an annual, itemized disclosure of their wealth and income, but this point was not included (if it even was discussed).

On the other hand, a number of points in the document address government administrative reform. It appears a significant effort will be undertaken to streamline and standardize government functions hierarchically and across China. One such point calls for "...transforming government functions, deepening administrative reform, ...strengthening government credibility and government power, and building a rule of law government and a service-style government." Another requires the party to "...correct the tendency of evaluating officials' achievements merely by the speed of economic growth, and expand the power of targets (in officials' evaluations) concerning resource depletion, debt growth, environmental damage, overcapacity, etc., and pay more attention to conditions of labor and employment, residents' incomes, social security and the people's health." This could prove to be a significant reform of government administration and measurement of success among party members. Under the current system, the most important measure of administrative success is economic growth in one's bailiwick. High growth rates equal promotion, whereas industrial overcapacity from unwarranted fixed asset investments, or environmental degradation from taking production as key without concern for the environmental costs have not been considered strikes against one's record. This may well be about to change.

Finally, the document calls for perfecting the financial market system and deepening fiscal structure reform. Among the specifics under financial markets include permitting small and medium sized private banks and other "financial organs." This measure should help to increase the supply of capital to private enterprises, now chronically starved for it. Other intended changes in this area are"... the completion of multi-level capital market systems , stock distribution and registration system reform, promotion of many channels for equity capital develop and standardize bond markets,...(and) reform of the insurance industry (to include) systems for huge disasters." Perfecting mechanisms for the "formation of Renminbi (China's currency) marketization" is also called for. This package includes easing restrictions on the bi-directional flow of cross border investment capital, increasing convertibility of cross-border capital and financial trading, and accelerating the process of Renminbi capital account convertibility.

Under fiscal structure reform, budget management "...must become completely standardized, open and transparent. Tax reform must be deepened, starting at the local level, and steadily raise the proportion of direct taxation." Much needed value added (consumption) tax reform will move forward with falling rates. High energy consumption, high pollution products and processes and at least some high-end consumer products will see significant tax increases. Individual income tax brackets and rates will be further rationalized, and real estate tax legislation will finally be approved and implemented, according to the reform document. Long-standing locality-to-center transfer payments that leave localities with unfunded mandates which force them to fund their budgets off-record or through real estate transactions resulting from land seizures are to be adjusted to favor localities.

To retain tighter control over the reform process established by the 60-point resolution, the party leadership also established two new central bodies with far-reaching responsibilities and authority. One is a National Security Committee to coordinate domestic and foreign issues and the responses to them. Although the exact functions of this committee have yet to be delineated, it appears the NSC would take control of the various security agencies and ministries including the Ministry of Defense and (in the event of a foreign origin issue) the Ministry of Foreign Affairs. It is thought at this point that the new Chinese NSC would function something like a combination or the US' NSC, along with the Department of Homeland Security and a dollop or more of FEMA - depending on the nature of the crisis. The important point is that national security issues now have a structure that places them directly under the control of Party Secretary Xi Jinping. Although it is possible that a director for the NSC will be appointed to handle day-to-day operations, there is no question that a director – if there is one – would report directly and only to Xi.

Similarly, to direct the implementation of the 60-point reform document, a Leading Small Group to Deepen Reform has been created. This small group will most likely be chaired by Xi Jinping and serve to drive the reforms forward in the face of lethargy, or outright resistance.

Is it enough and will it work?

The above are only some of the more important highlights from one of the most detailed and potentially far reaching reform plans in China's modern history. Its scope at least matches a similar document promulgated at the party congress in late 1978 that launched reform and opening. This is clearly a blueprint for attaining the party's goal – established during the Hu Jintao era over the last decade – of repositioning China as a post-industrial economy whose growth will henceforth be driven by domestic consumption. As was the case in 1978, the push for far-reaching reform this year was inspired not by an embrace of reform for reform's sake, but to try to head off growing popular dissatisfaction with the party resulting from a failing economic model and stagnant or declining living standards, pollution so bad that it is lowering life expectancy through much of China, official corruption, and a wealth gap between a handful of China's richest (and most corrupt) and everyone else. The implicit compact established in 1989 – "you are free to get rich, but stay out of politics" – has never been as threatened as it is today.

The 60-point document is far reaching and could well have the salutary effect on China today that Deng Xiaoping's reform and opening policy had on China in 1978, and for the 35 years that followed. But, the document approved at the 3rd Plenum this year is only a blueprint, and not a highly detailed one at that. The issue before Xi Jinping and his supporters among the party hierarchy is how completely and how quickly this blueprint can be fleshed out and implemented. There are very strong interests in the SOE network, the military and among lower level party committees and governments that are heavily vested in the existing system, dysfunctional though it may be. Representatives of these interests undoubtedly voiced strenuous opposition to many of the sixty points during the 3rd Plenum meeting; indeed, the original Communique issued immediately after the conclusion of the plenum, unlike the "Decision" issued several days later, was replete with CCP slogans and mentioned very few specific reforms – perhaps a sop to the opponents of reform.

We should also keep in mind that Xi Jinping, Like Deng Xiaoping 35 years before him, is neither Adam Smith nor Thomas Jefferson. Both Xi and Deng held that reform is only valuable insofar as it perpetuates the ruling party status of the CCP. "Reform" to China's top leadership means strengthening the party by strengthening China.

Whatever our political preferences might be, though, there is a powerful argument to be made for a confident, prosperous China as opposed to a weakened and threatened China. If you doubt this, consider what could happen to our interests and indeed the world order that we have constructed if China collapses. The reverberations would be destructive well beyond China's borders. There are no guarantees that the ambitious reform program launched by Xi will succeed enough to change the downward course of China today, but it is in our interests that it does.

Work on the reforms and their successes (or failures) will be subjected to intense interest within China and by global markets in the weeks and months ahead. We will update our analysis as significant developments occur.

*******

Mon, 2013-10-07 12:14
On October 1, the Washington State China Relations Council held its 34 annual banquet at the Sheraton Seattle Hotel. The event was attended by over 350 persons and featured U.S. Ambassador to China Gary Locke, Washington Governor Jay Inslee and Vanke Company, Ltd. Chairman Wang Shi as speakers. The Council also presented its lifetime achievement award to Sidney Rittenberg and its member of the year award to Expeditors. The award was accepted by Expeditors’ CEO Peter Rose.
 
2013 ANNUAL BANQUET - PRESIDENT’S REMARKS
 
Let me extend a warm welcome to all of you and in particular to our featured guests, Ambassador Gary Locke and his wife Mona!
 
I feel as though tonight completes a circle that began 16 years ago almost to the day. I had just arrived in Seattle to take over as head of the Washington State China Relations Council. My first major project in that role was to assist then-Governor Gary Locke take a group of 50 business and academic leaders to China on a mission quite similar to the one our current Governor, Jay Inslee, will be leading in November this year. This would be Gary Locke’s first trip to China as governor and I felt especially honored to be included among his advisors. I won’t go into the details, including Governor Locke’s last minute request to me to teach him some Chinese that he could use on arrival in Beijing (suffice it to say it did not turn out very well!), but the mission was a great success!
 
And now tonight, Gary is here with us to help mark a special passage for the WSCRC and for me personally: I will be retiring from the Council this month. Thus, Ambassador Locke represents both the alpha and the omega of my tenure here.
 
I have been president of the Washington State China Relations Council for 16 years. During this tenure I have made countless new friends and enjoyed many rewarding experiences. I have had innumerable opportunities to work closely with many others who share our dedication to building strong and mutually beneficial relations between the people of China and Washington State, including all of you here tonight. 
 
My life has been greatly enriched, and I hope that my efforts have contributed to the goals of this worthy organization.
 
I feel this is an opportune time for positive change. Over the past year I have experienced a growing desire to ease back a bit, but also to take on some new challenges. At the same time, the Washington State China Relations Council can benefit from new leadership with fresh perspectives and high energy. 
 
An active search for my replacement is underway and I am confident that a highly-qualified new leader will be selected soon. 
 
 
In the meantime the executive committee assisted by Trade Development Alliance President Sam Kaplan will insure that the outstanding work of the WSCRC continues without interruption. Now, as always, this 34-year-old organization will maintain its vital role in guiding our state’s crucial relationship with China.
 
Looking ahead, I plan to do some consulting and will join Bill Stafford as a senior advisor to Nyhus Communications in Seattle. I will also assist the WSCRC through the transition as needed, and expect to remain engaged in Council activities and with China long into the future.
 
I am deeply honored to have served this organization and its membership for nearly half of its 34-year existence. 
 
As I prepare to move on, I am heartened by the knowledge that the Washington State China Relations Council can continue to count on the loyalty and support of our members and friends. Thank you!
 
SIDNEY RITTENBERG INTRODUCTION
To receive the WSCRC Lifetime Achievement Award
Presented by WSCRC President Joe Borich
 
The WSCRC is in the business of building links between the U.S. and China, and in particular, between WA and China. We have at long last created an award to honor those among us who have exemplified the noble purpose of bringing our peoples closer together, and tonight we will pay special tribute to the first recipient of this award, Sidney Rittenberg.
 
I assume everyone here knows or knows of Sidney. If anyone doesn’t, come see me after the program! He is the “China hand” above all “China hands”!
 
His Life is well documented, literally! I would commend you to Lucy Ostrander’s excellent film “The Revolutionary.” Also, Sidney’s autobiography “The Man Who Stayed Behind” co-authored by Amanda Bennett is must reading.
 
From 1945-1980 Sidney resided in China, feeling compelled to remain there for humanitarian reasons after his U.S. Army demobilization. He became a confidante of China’s top leaders like Mao and Zhou Enlai. Even to this day he is well received within China’s leadership circles.
 
But, in choosing to stay behind in China Sydney got more than he bargained for: 16 years in Chinese prisons and spent entirely in solitary confinement. Wrongly accused of being a spy, he was eventually exonerated of that charge. 
 
This experience would have undoubtedly destroyed a lesser person, but Sidney drew strength and inner peace from it instead – strength and inner peace which continue to serve him well. 
 
The other source of Sidney’s strength throughout most of his life in China to the present day is his heroic wife and partner, Yulin Wang Rittenberg. 
Today as he has for the past nearly 35 years since he left China, Sidney continues to live his lifelong dream of becoming a bridge-builder between Chinese and Americans--a dream which became his life's unwavering purpose, from then to now. 
 
In honor of the award’s first recipient we are calling the WSCRC Lifetime Achievement Award the “Sidney.” We do not envision this as an annual award; in the future it will only be presented to persons of this state that the WSCRC identifies as lifelong bridge builders between the people of the U.S. and China.
 
Inscription:
Lifetime Achievement Award
Washington State China Relations Council
 
October 1, 2013
 
Presented to:
 
Sidney Rittenberg
Who helped bring the U.S. and China closer together by “staying behind”.
 
 
FAREWELL
 
With this final WSCRC blog posting I conclude my 16 years as president of the WSCRC. I wish all our WSCRC members and friends happiness and success in your endeavors.
 
Kind regards,
 
Joe Borich
 
 
 
 
 
 
Thu, 2013-03-21 11:59

I was honored March 20 to address the weekly meeting of Seattle Rotary, the world's largest Rotary Club with over 600 members and the "holy grail" locally for public speaking.  I would like to express my gratitude and appreciation to President Paul Ishii and past President Bill Center for their kind invitation. 

My address - titled 'Are we in transition from the American Century to the China Century?" - included a number of themes that have populated some of my previous commentaries along with some newer themes and analyses.  For readers who would like to see my address, the filmed version will be posted on Seattle Rotary's website - www.seattlerotary.org/.  There follows my address in itw entirety.

The 21st Century has certainly started out as though it will be China’s.  Over the past 25 years (and the past ten or so, in particular) China has invested trillions of dollars in roads, rail, ports, airports, the power grid and telecommunications. 

 

Taking China’s rail network as an example, Beijing is in the midst of a $300 billion expansion of its network, including more than 8,000 miles of new track specifically for its bullet trains capable of going over 250 mph.

 

For expressways, China now has the second largest expressway network in the world.  Work on its expressways continues apace and China will soon surpass the U.S. in total miles of high speed roads.

 

For air travel over 40 airports are currently under construction including a second international airport for Beijing capable of handling 70 million passengers per year.

 

In telecommunications all of China’s cities are now linked by backbone fiber optic cable.  There are more than 700 million people plugged in to the Internet and about one billion with smart phones.

 

Similar examples of phenomenal growth can be found in all elements of China’s infrastructure.

 

All this infrastructure investment for transportation and communications is having the cumulative effect of diminishing time and space within China and between China and the rest of the world.  It is this new found, world class ability to connect people and businesses across time and space as much as anything that underpins China’s competitive advantage today – and will continue to do so tomorrow.

 

Along with infrastructure China is also investing massively in education.  It now can boast more college graduates per year than the U.S.  There are more than 700,000 graduating with engineering certificates or degrees. 

 

The above helps to illustrate the leap China is making from the 19th Century to the vanguard of the 21st Century. 

 

This transformation in barely a quarter century’s time is not only unprecedented in China’s history; there are arguably no precedents in global history.

 

China’s proclaimed development goal is to become a mid-level developed country by the end of this century.  This is a seemingly modest goal considering

all that China has accomplished so far in the past quarter-century; it becomes even more modest when compared to China historically.  600 years ago China’s navy ruled the oceans unchallenged.  It was the world leader in business, finance, education, science and technology and governance.  It generated nearly 50 percent of global GDP.  Can China reclaim its past glory?

 

Perhaps – at least a sizeable portion of it – but serious challenges to even its modest goal exist.

 

There are two longer term challenges.  By “longer term” I mean that even if these challenges are effectively addressed now it will be several decades before measurable results are evident.

 

Energy.  Beijing must find effective answers to the need for more and cleaner energy and to address its environmental problems.  China is already the world leader in energy consumption and greenhouse gas generation.  Heavy industry is the big power consumer in China – roughly 70 percent of generated power.  To meet growing demand China is adding each week power generation capacity at the rate of roughly the amount of energy needed to power the city of Seattle.

 

But, it’s not just about power generation and heavy industry.  China now is also the world’s leading automobile manufacturer and the number one market for automobile sales.  Its share of global production and sales will continue to grow quickly. 

 

Project ahead a decade or two when private car ownership rises from the current rate of under ten percent to somewhere between 30-40 percent of the population, a virtual certainty.  What will the impact be of another 400-500 million cars on China’s roads on its own environment, as well as the biosphere generally? 

 

Demographics.  China’s population is getting older.  One demographic consequence of the "one child" policy is that China is now one of the most rapidly ageing countries in the world. 

 

Currently there are about 167 million people in China over 60; that number will grow to 248 million by 2020, and to 437 million by mid-century.  If birth rates do not change substantially by then about one-third of China’s population will be over 60 and China’s population pyramid will resemble a top-heavy hour glass.  The challenge:  will China get rich before it gets old?

 

Immediate challenges:  1. Rebalancing China’s economy; and 2. corruption

 

To meet these two challenges, China must revive and strengthen the reform process, which has largely been in abeyance for the past decade.

 

Ten years ago when the new leadership headed by Hu Jintao and Wen Jiabao was unveiled, there was widespread expectation that a period of significant political reform was about to unfold.  This was, after all, the first time in China’s history that an institutionalized process was created and effectively implemented to turn over power in an orderly fashion. 

 

Apparently China and its leadership did not see things the same way.  What China got instead was “harmonious society.”

 

“Harmonious society” aimed at bringing relief to China’s underpaid peasants and least paid urban workers, as well as to the 50 million workers who lost their jobs in the shake-out of the state owned enterprise system.

 

Some progress was made on the goals of harmonious society.  Peasant incomes went up; more resources were allocated toward rebuilding a social security system, as well as to health care, education assistance, and low income housing.

 

But, the past ten years have also been marked by the rise of powerful interest groups – among them leaders of the revamped state owned enterprise system, the People’s Liberation Army and entrenched provincial and municipal bureaucracies. 

 

These interest groups today are represented at or near the top by factional leaders who have become highly resistant to meaningful reform of any kind that does not advance their interests. 

 

Along with the rise of powerful interest groups has come pervasive corruption, now infecting all levels of Chinese society and government. 

 

Entrenched interests and corruption created a decade of growing income inequality and resentment among the have-nots, especially because the income inequality is widely viewed as resulting in large measure from corruption.  Resentment increasingly is boiling over into acts of protest; though no figures have been released for 2011 or 2012, the government acknowledged there were 180,000 protests in 2010, nearly 500 per day. 

 

Adding to the problem is China’s slowing economy, having fallen from double-digit growth of past years to barely 7.8 percent in 2012.  Slowing growth was probably inevitable for China, due in part to the fact that the traditional drivers of its growth – fixed asset investment in factories and infrastructure, exports and (of late) urbanization – cannot sustain indefinitely such high levels of growth as China has experienced.  The first two drivers are running out of gas and the third – urbanization – while holding great potential still, is plagued with structural problems at least for the time being.

 

I don’t want to imply that China is now saturated with factories and infrastructure, but the pace of both over the past decade may be close to outstripping current need.  Industrial consolidation is arguably what China now needs, not more automobile factories and steel plants. 

 

And while there are still large areas of China that are relatively untouched by modern infrastructure, the rush to build has included many highly questionable investments in “bridges to nowhere” and new cities without inhabitants.

 

Similarly, China’s high dependence on exports for growth is not sustainable.  In the near term, Europe’s continuing financial distress and major uncertainties lingering on in the U.S. economy render prospects for significant growth in China’s export sector highly problematic. 

 

Longer term, China’s reliance on exports for growth and its determination to maintain a positive balance of trade while continuing to grow foreign exchange reserves have appeared to other governments as latter day mercantilism, and there is a continuing threat of retaliatory measures by the U.S. and EU.  China must also contend with rising labor and other input costs of production, and the growing competitiveness of other developing economies.

 

For the past several years, China’s government – aware of the fast approaching limits on growth presented by its traditional economic drivers – has been seeking to rebalance its economy by placing more emphasis on the domestic market and less on investment and exports.  Along with and presumably supporting this rebalancing is a growing faith in China that urbanization will drive consumerism and economic growth.  While urbanization and expanding consumerism may well be the way out of China’s economic conundrum, getting there will be no easy matter.

 

Expanding China’s domestic consumer market, for example, must be coupled with other structural adjustments to boost consumer confidence, including far greater social spending. 

 

In the old days of the top down, command economy, China didn’t have much, but what was there was relatively equitably distributed.  In today’s capitalist China, the various social safety nets that used to be in place – guaranteed affordable housing, free medical services and education and state sponsored retirement – are no longer widely available. 

 

To hedge against future health care, education and retirement needs that were once covered by the state, personal savings in China now average more than 40 percent of income.  This prudence on the part of Chinese, however, means that they on average consume far less than per capita incomes would otherwise enable. 

 

Thus, in order to rebalance China’s economy and put growth on a more sustainable footing, Beijing must further strengthen China’s pension and healthcare systems, to boost consumer confidence. 

 

As noted above, some progress in this has been made under the “harmonious society” policy of the previous ten years, but the transition is still far from complete.  70 percent of U.S. GDP comes from consumption; in China it is only 35 percent. 

 

Further economic rebalancing will probably require an additional and more painful shift of resources from all-out expansion of physical capital (where the bulk of Chinese investment has gone for the past several decades) and toward development of human capital including investments in education, healthcare, affordable housing and retirement. 

 

I say “painful” because this resource shift will have to be made in the face of certain resistance from the powerful interest groups mentioned above, that are both politically and economically vested in the current pattern of resource allocation.

 

Urbanization as an economic driver also presents challenges, the most basic being, perhaps, definitional.  The Chinese government’s definition officially considers anyone with an urban household registration and who lives in an area defined as “urban” for more than six months in a given year as qualifying statistically as an urban resident.  By that yardstick, China officially became an urban society last year; the urban-to-rural ratio is now 51-49 percent. 

 

However, only about 35 percent of Chinese in fact have an urban household registration and therefore are not officially entitled to live in the cities where they reside.  Urban dwellers without urban household registrations have created a several-hundred million strong exploitable labor force that has fueled China’s boom over the past 30 years.  But, the urban dwellers without urban registrations are now locked into an underclass facing permanent impoverishment and without hope of upward mobility under the current system. 

 

China has found it difficult to fix the household registration problem because entrenched interests resist corrective changes.  Here’s why:

 

For municipal governments, this situation is all upside.  The governments benefit from more laborers without having to pay the social costs for health care, education, etc.  Unwilling to give up to lose so much “free” labor, municipal governments have so far effectively resisted household registration reform.

 

While statistically urban, city residents without urban household registrations are effectively blocked from enjoying middle class incomes and benefits, and thus will not be a significant factor driving China’s economy upward as long as this situation obtains.

 

The transition to a new leadership lineup that began last November and concluded with the National People’s Congress in March 2013 marks only the second such power transfer in China’s history (the first having occurred in 2002).   But, new Party Secretary and President Xi Jinping and his colleagues have a tough row to hoe, starting with tackling the reforms I thought China needed to undertake with the last leadership transfer ten years ago.  These included encouragement of the spread of civil society; the unfettering of the judicial system and the media; and far greater government/party accountability and transparency.  

 

Although some analysts are inclining toward the view that China is reaching a tipping point and that the new leadership must undertake sweeping reforms immediately or face national disaster, I am skeptical that an existential crisis is at hand – at least for the foreseeable future.  I do maintain, though, that even more today than was the case ten years ago, major reform must be undertaken or China may soon find itself blocked from furthering its development goals. 

 

The risk is not so much of an economic implosion or a political explosion, but rather of economic mediocrity and societal malaise, and the gradual erosion of hope that Deng Xiaoping’s reform and opening policy ignited 34 years ago.

 

Let’s be clear that the just completed stewardship of China by Hu Jintao and Wen Jiabao has not been a lost decade; far from it.  Since 2002 China’s economy has more than tripled in size.  At the same time China became the global leader in international trade and the second-largest economy.  The country also weathered the 2007 financial meltdown far better that the U.S. or Europe, both of which have still not completely recovered.  That said, though, China must arguably change directions if Beijing hopes to keep the momentum moving forward.

 

China’s new leadership has a once-in-a-decade opportunity to step up to the accumulated challenges China now faces and address them effectively.  Though early signs that Xi Jinping and company truly “get it” are encouraging, it remains to be seen if the “fifth generation” of leaders can re-set China on a better path to the future.

 

Thank you.

 

Wed, 2013-02-06 14:52

 “Yr. humble and obedient, etc…” has been offline for awhile; a combination of a busy schedule, quite a bit of travel and, I suppose, not having much to say – uncharacteristic though the last may be.

 

But, the Western New Year is already upon us and the Chinese Year of the Snake is rapidly approaching, so it is time again to take keyboard in hand.  Happy New Year!  新年快乐! 万事如意!

 

Well, we can at least hope that 2013/Snake will be a happy year, but the signs and portents are mixed at best.

 

SUCCESSFUL LEADERSHIP TRANSITION, BUT OLD PROBLEMS REMAIN

 

Ten years ago when the new leadership headed by Hu Jintao and Wen Jiabao was unveiled, there was widespread expectation that a period of significant political reform was about to unfold.  Your author had this to say about the new leadership in late 2002:

 

China’s economic integration with the global market and its growing (and increasingly self-aware) middle class are creating pressures not only for an open economy, but also an open polity.  Though it may be many years before Chinese elect their national and local leaders directly and from among competing political parties, China’s new leaders this time around may have to embrace the concepts of civil society, government accountability, a more independent and impartial judicial system and a less constrained media on their watch.  This may happen, but not because the new leadership is likely to experience a group epiphany on the intrinsic value of human and political rights; rather, it will come out of a simple, self-interested need to keep rapid economic development going.”

 

Apparently China and its leadership did not see things the same way.  What China got instead was “harmonious society,” a well intentioned effort to ease the strains brought on by the previous administration of Jiang Zemin and Zhu Rongji, a time marked by a virtual explosion of capitalism and international trade for China, and of rapid growth.  But, it was also an era marked by the constriction of the state owned enterprise system and the end of the “iron rice bowl,” through which 50 million SOE jobs went away.  “Harmonious society” aimed at improving the lot of the newly unemployed (and unemployable) and bringing relief to China’s underpaid peasants and least paid urban workers.

 

To be sure progress was made on the goals of harmonious society.  Peasant incomes went up; far more resources were allocated to develop and propagate a social security system, health care and education assistance, and low income housing.

 

But, the Hu-Wen era was also market by the rise of powerful interest groups – the revamped state owned enterprise system, the PLA and entrenched provincial bureaucracies – that today are represented at or near the top by factional leaders who have become highly resistant to meaningful reform of any kind that does not advance their interests.  Along with the rise of powerful interest groups has come pervasive corruption, now infecting all levels of Chinese society and government.  The disgrace last year of former Chongqing Party Secretary and Politburo Standing Committee aspirant Bo Xilai was an embarrassment to China’s leadership, but also emblematic of the nature and extent of the corruption problem.

 

Entrenched interests and corruption created a decade of growing income inequality and building resentment among the have-nots, especially because the income inequality is widely viewed as resulting in large measure from corruption.  Resentment increasingly is boiling over into acts of protest; though no figures have been released for 2011, the government acknowledged there were 180,000 protests in 2010, nearly 500 per day. 

 

Adding to the uncertainties for the Year of the Snake is China’s slowing economy.  Having fallen from double-digit growth of past years to barely 7.5 percent for most of 2012, the economy rebounded somewhat in Q4 last year to 7.9 percent, but much of that was driven by stimulus money and credit and tilted toward state owned enterprises (although there was an uptick in retail sales and exports as well).  Moreover, there isn’t much optimism among economic analysts that Q4 last year marks a sustained rebound in growth.  Indeed, UBS believes that sequential growth momentum peaked in Q4 and expects momentum to weaken in H2 of 2013.

 

Some have felt that a slowing growth curve was inevitable for China, due in no small part to the fact that the principal drivers of growth – fixed asset investment in factories and infrastructure, exports and (of late) urbanization – cannot sustain such high levels of growth as China has experienced.  The first two drivers are running out of gas and the third – urbanization – while holding great potential still, is plagued with structural problems at least for the time being.

 

We do not wish to imply that China is now saturated with factories and infrastructure, but the pace of both over the past decade may be close to outstripping current need.  Industrial consolidation is arguably what China now needs, not more automobile factories and steel plants.  And while there are still large areas of China that are relatively untouched by modern highways and rail links, the rush to build such things has included many highly questionable investments in “bridges to nowhere” and cities without inhabitants.

 

Similarly, China’s high dependence on exports for growth may be reaching the end of its life cycle.  To be a seller, you must have buyers and buyers abroad in the developed world, at least, have dropped sharply in number from the days before the global financial crisis five years ago.  Europe’s continuing financial agony and large uncertainties in the U.S. economy still facing producers and consumers here render prospects for significant growth in China’s export sector highly uncertain for the foreseeable future.  Moreover, China’s reliance on exports for growth and its determination to maintain a positive balance of trade while continuing to grow foreign exchange reserves have appeared to other governments as latter day mercantilism, and there is a continuing threat of retaliatory measures by the U.S. and EU.

 

THE SEARCH FOR A NEW ECONOMIC PARADIGM

 

For the past several years, China’s government – aware of the fast approaching limits on growth presented by its traditional economic drivers – has been seeking to rebalance its economy by putting more emphasis on the domestic market and less on investment and exports.  Along with and presumably supporting this rebalancing is a growing faith in China that urbanization will drive consumerism and economic growth.  While urbanization and expanding consumerism may well be the way out of China’s economic conundrum, getting there will be no easy matter.

 

Expanding China’s domestic consumer market, for example, must be coupled with other structural adjustments to boost consumer confidence, including far greater social spending.

 

In the old days of the top down, command economy, China didn’t have much, but what was there was relatively equitably distributed.  In today’s capitalist China, the various social safety nets that used to be in place – guaranteed affordable housing, free medical services and education and state sponsored retirement – are no longer universally available.  To hedge against future health care, education and retirement needs that were once covered by the state social security net, personal savings in China average more than 40 percent of income.  This prudence on the part of Chinese, however, means that they on average consume far less than per capita incomes would enable.  Thus, in order to reposition China’s growth on a more sustainable footing, Beijing must strengthen China’s social safety net, including pension and healthcare system reform, to boost consumer confidence and thus demand. 

 

As noted above, some progress in this has been made under the “harmonious society” policy of Hu-Wen, but the transition is still far from complete.  Further economic rebalancing will probably require a further and more painful shift of resources from all-out expansion of physical capital (where the bulk of Chinese investment has gone for the past several decades) and more in the direction of development of human capital including investments in education, healthcare, affordable housing and retirement.  I say “painful” because this resource shift will have to be made in the face of certain resistance from the powerful interest groups mentioned above, that are both politically and economically vested in the current pattern of resource allocation.

 

Urbanization as an economic driver also presents challenges, the most basic being, perhaps, definitional.  As UBS noted recently, the Chinese government’s definition officially considers anyone with an urban household registration and who lives in an area defined as “urban” for more than six months in a given year as qualifying as an urban resident.  By that yardstick, China officially became an urban society last year; the urban-to-rural ratio is now 51-49 percent.  However,  as UBS also notes only about 35 percent of Chinese in fact have an urban household registration, which begs the question how urbanized are the remaining Chinese who live in an urban environment, but are not officially entitled to live there?

 

As University of Washington geography professor Kam-wing Chan noted in a recent article, of the 700 million Chinese urban dwellers nearly a third (230 million) are not truly urbanized because they lack an urban household registration known in Chinese as “hukou”.  Urban dwellers without an urban hukou do not qualify for social security entitlements or access to public housing.  Nor can their children be admitted to public schools.

 

In a way, the hukou-less urban dwellers of China resemble undocumented aliens in the U.S.  And as is the case with resolving the undocumented alien issue here, so China has found it difficult to change the hukou problem.  Entrenched interests resist corrective changes in both countries.

 

In China as Chan writes, hukou-less urban dwellers have created a several-hundred million strong exploitable labor force that has fueled China’s boom over the past 30 years.  But, the urban dwellers without urban hukous are now locked into an underclass facing permanent impoverishment and without hope of upward mobility under the current system.  For municipal governments, this situation is all upside.  The governments benefit from numerically augmented labor without having to pay the extra costs for health care and education, etc.

 

While technically urban, hukou-less urbanites are effectively blocked from enjoying middle class incomes and benefits and will not be a significant factor driving China’s economy upward.  As Chan wrote:  “…That familiar narrative of rural migrants going to the city, getting a higher paid job, moving up and eventually joining the middle class – in short, the magic of urbanization leading to prosperity – cannot be readily applied to China under its present hukou system.”

 

WHAT CAN THE NEW LEADERSHIP LINEUP DO?

 

The transition to a new leadership lineup that began last November and will conclude with the next National People’s Congress in March marks the second such power transfer in China’s history (the first occurring in 2002) and a deepening of the institutionalization of a process laid down by Deng Xiaoping before the turn of the century.  That a process is now in place – one that includes careful vetting and consensus building for leaders – is itself remarkable and unprecedented. 

 

This transition remained true to Deng’s precepts, including mandatory retirement for party and government elders at the national and provincial levels; none of the current crop of leaders is above 68.  The new top party leadership lineup, embodied in the holders of positions on the Politburo Standing Committee, has been described as “centrist” lacking any individuals who could be readily identified as either communist orthodox conservatives, or those who have been labeled as young reformers like Wang Yang and Li Yuanchao.  The Standing Committee has also been pared down from the traditional nine positions to seven which, if nothing else, should make the process of consensus building marginally easier.  A smaller Standing Committee may also mean that new Party Secretary Xi Jinping came closer to assembling his own team with fewer holdovers and newcomer challengers to reckon with.  In the event, Xi and his colleagues will still need to grapple with factions and the powerful interests they represent just below the top.

 

The tasks before Xi Jinping and company are many and arduous.  The reforms I thought China needed to undertake with the last leadership transfer ten years ago – encouragement of the spread of civil society; the unfettering of the judicial system and the media; and far greater government/party accountability and transparency – have yet to be undertaken (indeed, it is possible to identify some areas where China may actually have retreated from political reform over the past decade).  Additionally there are now relative newcomers to that needed reforms list:  corruption; the state owned enterprise system; and the financial system – are probably the most urgent.

 

Although some analysts are inclining toward the view that China is reaching a tipping point and that the new leadership must undertake sweeping reforms immediately or face national disaster, I am skeptical that an existential crisis awaits – at least for the foreseeable future.  I do maintain, though, that even more today than was the case ten years ago, major reform must be undertaken and soon or there could be significant interruptions to China’s development track.  The risk is not so much of an economic implosion or a societal explosion, but rather of enveloping economic mediocrity and societal malaise – the gradual erosion of hope that Deng Xiaoping’s reform and opening policy ignited 34 years ago.

 

Of course the U.S. has also undergone some leadership changes as well, and lest they feel smug, our leaders face their own daunting challenges, too.  But, more on that in a future Update.

 

*******

 

 

 

Fri, 2012-11-02 09:44

At the invitation of the National Committee on U.S.-China Relations (NCUSCR), WSCRC President Joe Borich led a discussion on U.S.-China relations at Winona (MN) State University October 29.  The discussion was tied to the NCUSCR’s 6th Annual China Town Hall Meeting.  Below is an excerpted version of Borich’s opening comments.

 

 

Are we in transition from the American century to the China century?  What does the future hold for U.S.-China relations? 

 

The 21st Century has certainly started out as though it will be China’s.  Over the past 25 years (and the past ten or so, in particular) China has invested trillions of dollars in roads, rail, ports, airports, the power grid and telecommunications. 

 

Taking China’s rail network as an example, Beijing is in the midst of a three-year, $300 billion expansion of its network, including more than 8,000 miles of new track specifically for its bullet trains capable of going over 250 mph.  For expressways, China now has the second largest expressway network in the world.  Work on its expressways continues apace and China will soon surpass the U.S. in total miles of high speed roads.

 

Or, take airports as an example.  Construction of a second international airport with a capacity of 70 million passengers per year began in Beijing last year.  Construction on or expansion of ten other airports also commenced within the past year.  In telecommunications all of China’s cities are now linked by backbone fiber optic cable.  There are more than 500 million people plugged in to the Internet and an even larger number with smart phones.

 

Similar examples of phenomenal growth can be found in all elements of China’s infrastructure.

 

The result of all this infrastructure investment for transportation and communications is having the cumulative effect of diminishing time and space within China and between China and the rest of the world.  It is China’s new found, world class ability to connect people and businesses across time and space as much as anything that underpins its competitive advantage today – and will continue to do so tomorrow.  Along with infrastructure China is also investing massively in education.  It now can boast more college graduates per year than the U.S. 

 

The above helps to illustrate the leap China is making from the 19th Century to the vanguard of the 21st Century.  This transformation in barely a quarter century’s time is not only unprecedented in China’s history; there are arguably no precedents in global history.  All of this activity is aimed at China’s stated goal of becoming a mid-level developed country sometime in the second half of this century.

Given the speed with which China is developing today, its goal might seem quite modest at first blush.  Why should China not be a superpower on parity with the U.S. sometime in this century?  The answer is that despite all the progress made so far China still must resolve some major obstacles and systemic weaknesses before it can reach even its own stated development goal.  Let me focus on just four of them.

 

Obstacle number one is the absence of a social security safety net coupled with an overdependence on export driven growth. 

 

In the old days of top down, command economy, China didn’t have much, but what was there was relatively equitably distributed.  In today’s capitalist China, the various social safety nets that used to be in place – guaranteed affordable housing, free medical services and education and state sponsored retirement – have vanished.

 

China’s remarkable growth is not broad enough to give the average consumer a sense of long term financial security.  Thus the paradox is that even as individual incomes have grown on average, so have individual savings accounts. 

Personal savings in China have replaced the old state security net as a hedge against future medical, education and retirement needs.

 

This prudence, however, means that Chinese on average consume far less than per capita incomes would enable.  This, in turn, means that in order to continue to grow its economy at a high rate, China must rely heavily on exports as a principal growth driver, rather than domestic consumption.  The problem is that this strategy skews global trade and investment flows and creates significant political problems with its leading export markets like the U.S. and EU.  

 

Even China’s top leaders now admit that export driven growth is no longer sustainable.  But, in order to reposition China’s growth on a more sustainable footing, Beijing must strengthen China’s social safety net, including pension and healthcare system reform, to boost domestic consumer demand. 

 

Obstacle number two:  Beijing also faces a significant challenge to reduce official corruption and other economic crimes.  The cost of corruption can be calculated not only in terms of lost economic opportunities, but also in social and political discord.  The government conceded that in 2010 there were 180,000 incidents of unrest.  Most of these were precipitated by local corruption, malfeasance and extra-legal expropriation of property. 

 

The absence of competing political parties, an independent judiciary and an unrestrained media means that the ruling party must effectively police itself to root out corruption and official criminal behavior, something it has thus far generally failed to do with consistency.  

 

To deal effectively with corruption and sustain confidence, the party and government must undertake the political reforms that have been largely ignored even as China opened up its economy – things like promotion of civil society, an independent judiciary and uncensored media – that will increase government transparency and accountability.

 

Obstacle number three:  Beijing must also find effective answers to the need for more and cleaner energy and to address its environmental problems.  China is already the world leader in energy consumption and greenhouse gas generation, and is adding power generation capacity at the rate of about one gigawatt per week (roughly the amount of energy needed to power the city of Seattle).

But, it’s not just about power generation and heavy industry.  China now is also the world’s leading manufacturer of and market for automobiles, and its market share of global sales will continue to grow quickly. 

 

Project ahead a decade or two when private car ownership rises from the current rate of under ten percent to somewhere between 30-40 percent of the population, a virtual certainty.  What will the impact of another 400-500 million cars on China’s roads be on its own environment, as well as the biosphere generally? 

 

Obstacle number four:  the issue of China’s demographics and along with that the geographically uneven pattern of development. 

 

Economic development has been more rapid in coastal provinces than in the interior, and approximately 250 million rural laborers and their dependents have relocated to coastal urban areas to find work.  As many as 20 million more are migrating to the cities each year and this is likely to continue for another decade or more.  China will thus have to expand its urban environment by the equivalent of the entire U.S. population before 2030.

 

Not only is China’s population moving, it is getting older.  One demographic consequence of the "one child" policy is that China is now one of the most rapidly ageing countries in the world.  Currently there are about 167 million people in China over 60; that number will grow to 248 million by 2020, and to 437 million by mid-century.  If birth rates do not change substantially by then over one-third of China’s population will be over 60 and China’s population pyramid will resemble a top-heavy hour glass.

 

While these challenges are daunting, they are not necessarily insurmountable.  There are solutions, but they will be difficult to implement.  Considering the challenges China has already successfully faced in the past 30 years, one would be foolish not to bet that it will find ways over or around the ones it is now facing.

 

On re-positioning the economy, for example, the central government is undertaking measures to raise the income floor for peasants and the lowest paid workers while increasing affordable housing, health care and education.  And, most of China’s larger cities now have retirement plans in place funded by contributions from municipal governments, employees and their employers.

 

Official corruption will be tougher to deal with, but the leadership changeover that will begin in November this year offers China’s new leaders an opportunity to begin implementing the reforms I mentioned above.

 

On energy, China is quickly assuming a global leadership role in developing and deploying clean energy technologies and in obtaining energy from sources other than fossil fuels.  By 2020 about 15 percent of China’s energy will come from non fossil fuel sources, according to the current Five Year Plan.

 

The single most difficult obstacle China faces may be the ageing of its population.  It is unlikely that the distorted population pyramid China is creating can be significantly altered over the next 30 years, no matter what policies and incentives are applied.  China’s best bet here is to increase its economic productivity and efficiency enough to offset the declining proportion of its population in their productive years.  In other words, China must get rich before it gets old.

 

Re-centering our Foreign Policy

 

The administration has continued the engagement policy generally practiced by President Obama’s predecessors since Nixon visited China in 1972.  Moreover, this administration has gradually re-centered U.S. foreign policy away from Europe and the conflicts of the Middle East and South Asia, and more toward East Asia and the Pacific.

 

Within the Obama administration’s policy of engagement is a search for a long term modus vivendi between the U.S. and rising China.  Initially, this took the form of attempting to re-establish a military-to-military dialog between the two countries.  As has been demonstrated a number of times in recent history such as the mid-air collision between U.S. and Chinese air force planes in 2001, mil-to-mil contact and transparency is essential given the risk of an accidental confrontation that could quickly spin beyond containment.

 

While our interests and China’s overlap in many areas, significant differences remain.

 

With regard to the Korean Peninsula, for example, Washington and Beijing are perfectly aligned in their desire to limit North Korea’s ability to develop and deploy a nuclear arsenal.  At the same time, North Korea is perched on China’s border, a fact that has constrained Beijing’s responses to Pyongyang’s development of nuclear weapons as well as its acts of outright aggression against South Korea in 2010 with the torpedoing of a South Korean naval vessel and shelling of a South Korean island.

 

Similarly China has given less than enthusiastic support to the West’s imposition of sanctions against Iran’s nascent nuclear program.  This is in part due to Beijing’s historic reluctance to engage in sanctions generally, in part due again to the proximity of Iran to China’s borders, and especially because Iran holds huge reserves of oil and gas sought by China.

 

Another and more recent foreign policy challenge by China is Beijing’s apparent and curious shift starting in 2010 from its traditional “soft diplomacy” approach in relations with its neighbors to a much more assertive stance.  It is not altogether clear that support for the shift was broad and deep within China’s leadership. 

 

Nevertheless, Beijing on several occasions during and since 2010 stridently proclaimed an expansion of its territorial waters off its east coast, which has led to intermittent confrontation between China and Japan.  It also revived an old claim to virtually the entirety of the South China Sea, a claim vigorously challenged by various SE Asian countries.

 

For the U.S., Beijing’s more assertive stance on its boundary waters posed a clear challenge to U.S. naval and commercial shipping operations with South Korea and Japan, as well as transits from the Indian Ocean to the Pacific through the South China Sea.  Indeed, the Obama administration made clear that China’s expanded claims notwithstanding, it would continue to uphold traditional freedom of passage rules in the Yellow, East and South China Seas for itself and other nations. 

 

Perhaps it has been China’s more assertive foreign policy that precipitated Obama’s interest in re-pivoting America’s foreign and security policies over the past year.  The full dimensions of this pivot were enunciated in a speech by the president to the Australian Parliament in late 2011.

While his speech sounded a tough security posture generally, Obama was also clear that among America’s top foreign policy priorities is to continue to build a cooperative relationship with China.  (Quote) All of our nations -- Australia, the United States -- all of our nations have a profound interest in the rise of a peaceful and prosperous China. That's why the United States welcomes it. (Unquote)

This is certainly a long overdue and welcome clarification of our strategic interests ten years on into the U.S.’ proclaimed global war on terror.  While the goal of combating terror and the aims of terrorists must continue to be pursued, the issue has always been the means by which we do this and not the end itself. 

 

By redirecting U.S. strategic priorities to those that encompass a far broader range of American interests, Obama has signaled that a policy based primarily on the blunt use of military force will not defeat terrorism and terrorists, even as it has denied us the opportunity to advance further other U.S. interests that require a more nuanced approach.

 

Beijing may choose to see this pivot of U.S. strategic priorities as directed against itself.  I doubt that it is; as Obama noted there is every reason for the U.S. and the rest of the world to encourage China’s development and emergence as a major player on the global stage and much for the world to gain from China’s cooperation on issues like North Korea, climate change and stabilization of global finances. 

 

Still, there remains the suggestion, at least, in Obama’s remarks in Australia that the U.S. would not stand idly by if China were to attempt to redefine unilaterally the international order as it is presently constructed (heavily influenced by the U.S.), or impede commerce and the freedom of navigation in the region. 

 

Looking ahead:  U.S.-China cooperation, competition, or conflict?

 

China is a rising power that is not going away and we will need to adapt to China and its changing circumstances.  How best to do this?

 

Although our ability to force China into systemic change is long gone (if it ever existed), we still have a limited capacity to influence to some extent the direction that China will take.  Our best cards to play are the indisputable success that a market economy, an open political system and the free exchange of ideas have created here. 

 

To the extent that China may be willing to borrow more from our example, it may help overcome some of its own systemic weaknesses on one hand, while enabling a wider range of convergent interests with the U.S. on the other.  For this approach to work, though, we must continue to maintain our “edge,” or there will be no reason for China to take our example seriously. 

 

And this, I believe, is where we are most vulnerable.  I am increasingly uncomfortable with the direction (or, perhaps, lack of direction) the U.S. is manifesting, and with the emerging parallels between United States today and China of the Ming and Qing Dynasties several centuries ago.  By the early 1400s China was the world’s only superpower.  As recently as 1800, China still accounted for nearly 1/3 of global GDP.  But during those 400 years, China turned inward and rested on its glory while the rest of the world advanced.

 

Much of what China is doing today is flawed and the flaws will constrain to some extent its prospects for further growth and development.  But there is also much China is doing that is right.  Beijing’s policies promote infrastructure development and the growth of educational and research institutions.  If someday China overcomes its systemic weaknesses, it will have in place all the material building blocks needed to reach its goals and go well beyond. 

 

We, on the other hand, are consuming our treasury and lives in a global war on terror while our infrastructure crumbles and our education and research institutions languish through lack of investment and policy priorities.  We have surrendered civil discourse and a sense of commonwealth for winner-take-all politics and a me-first attitude.  We still want to be the best, but we are no longer willing to pay for it.

 

Where are the bipartisan political leadership and a common willingness to share sacrifice that won WWII, produced our interstate highway system in the 1950s and won the space race in the 1960s? 

 

As I see it, the fundamental issue is not whether we can somehow stop or slow China’s advance; rather, it is whether the U.S. will simply cede its advantaged position through lack of political will and effective policies here at home as the Ming and Qing Dynasties did in China at an earlier time.  The question we should ponder is when/if China reaches its goals, will we even be in the game?  The outcome of this issue is completely – and only – ours to control. 

 

How we manage this challenge and our relations with China today may well determine whether historians someday describe the 21st Century as one of peace and prosperity, or one of conflict and suffering.

 

                                                              *******

Thu, 2014-11-06 16:57
Tibet Trip Report – Pandas, Tibet and Mt. Everest 
 
 
As I discovered in both the planning an execution of this trip, Tibet is complicated. I suppose that at some level I always knew that, but I now add to that knowledge a rather thick layer of experience.
 
We did see pandas and visited much of Tibet, but not Mt. Everest. More on that later.
 
The complications started early. Foreigners do not just go to Tibet like they would go to Shanghai or even Ulumuqi; they need special permission in addition to a Chinese visa. Even before we applied for the Tibet entry permit I learned in March that Tibet had just been closed to foreigners. This happens periodically whenever there is any hint of unrest. There were already nine people signed up for the trip, including seven who had gone with me on the Silk Road tour in 2010. I advised patience and indeed by the end of April the ban had been lifted. Soon after that we filed for our Tibet entry permits. 
 
In July I was told even though the ban on foreigners had been re-imposed, our group had applied for its permit before the ban and therefore we could go to Tibet. However, I was further advised that all the individuals in our group had been approved except
 
(wait for it….here it comes...) me. 
 
The Tibet Tourism Bureau (TTB) decided that since I had formerly been a career U.S. Foreign Service Officer (long since retired) my permit would need to be approved by the Ministry of Foreign Affairs in Beijing (I told you it was complicated).
 
Well, TTB’s bureaucratic sideways shuffle amounted to an outright rejection of my application. It was now late July and I was set to depart Seattle with a separate group that I was taking on a study mission to Beijing, Chongqing and Shanghai (see previous posts on this site for details of that trip). China’s Ministry of Foreign Affairs moves with the same glacial speed as the U.S. State Department; even if they were willing to take on my application (itself highly doubtful) I had only two weeks before I was scheduled to meet my Tibet group in Chengdu, Sichuan Province, not two months, or two years.
 
Nevertheless, I sallied forth with my students placing my Tibet entry permit application issue in the hands of my tour coordinator in Seattle and her partner agency in China along with a few amituofo’s to the interdenominational Cosmic Muffin, just in case. Not long after arriving in China the Chinese travel agency handling my Tibet tour informed me that my permit had also been approved (quick expression of gratitude to the Cosmic Muffin!) – BUT: the central government had also just imposed new requirements on foreigners’ travel to Tibet and our group, ASAP, would have to submit to TTB:
 
  • Copies of our Chinese visas; and
  • Wire half of our total funds for hotel accommodations and ground transportation along with a letter from our Seattle travel agency on its letterhead stationary requesting confirmation of our Tibet entry permits.
 
Somehow or other our Seattle agency was able to round up copies of Chinese visas for all the members of our group, retrieve half of the Tibet travel funds that had already been sent to the Chinese travel agency and re-wire the funds to TTB, with only hours to spare. Mind you, I’ve spent a lot of time in China and learned long ago to expect the unexpected, but I was beginning to wonder if touring Tibet was such a great idea. The thought passed through my mind ever so fleetingly that maybe the “relie huanying” (“warm welcome”) carpet wasn’t really being rolled out for us in Tibet after all.
 
In any event we went forward with our plans. I parted company with my group of students in Shanghai in mid-August and proceeded to Chengdu where I met my Tibet group. As planned we spent two full days in Chengdu seeing local sights such as the Panda preserve 
 
 
 
and the giant Buddha carved into the face of a cliff in Leshan.
 
 
During the evening of our last night in Chengdu I received from our local tour guide our hard-copy Tibet entry permit with a name list attached that also contained our passport numbers. Having quickly scanned the list to make sure we were all on it and with our names correctly spelled, I put the permit away and paid it no further heed. This was a mistake.
 
Early the following morning we were at the Chengdu airport to check in for our flight to Tibet’s capital city, Lhasa. We checked our bags and received our boarding permits, then proceeded to the pre-flight clearance area for foreigners traveling to Tibet. One by one the members of our group went through the examination of their passports, Chinese visas and names and passport numbers on the Tibet entry permit, until they got to (you guessed it….) me. My name was correctly spelled on the permit, but the passport number was completely wrong – not just a couple of transposed numbers – completely wrong and no, they were not going to let me pass through.
 
Now I’m really beginning to feel like the “chosen one,” but for something far less desirable than enlightenment. There being no other choice I watched the other members of the group pass through airport security and on to their waiting lounge while I stayed behind. Having seen that the rest had completed all procedures and were soon bound for Lhasa, I left the terminal and hailed a cab back to the city, where I again checked in to our hotel with no idea how much longer I’d be stuck there (I assumed without my luggage which, as far as I knew, was on its way to Lhasa.). 
 
Eventually everything got sorted out that day and by late night I had a new Tibet entry permit in my hands, this one with the correct passport number on it. By 6:45 the next morning I was on a flight to Lhasa to join my group, none the worse for wear except for lack of sleep, the cost of an extra night’s lodging in Chengdu, and no time to acclimate to the 11,000+ foot altitude of Lhasa (the previous day had no planned activities in order to permit the group to adjust to the altitude – a luxury I would not have). I assumed at that point that the complications were all behind me and it would be smooth sailing henceforth, but Mother China had one more curve ball to throw me.
 
If you are touring Tibet, there are two givens: the air is thin and there will be many temples and Buddhist monasteries on your itinerary. I joined my group at Johkang Temple, one of Lamist Buddhism’s holiest sites. From there we had a good view of the Potala Palace – ground zero for Lamist Buddhists – across town on a hill where we were going that afternoon. We also toured Barkhor Street market, the main commercial area of Lhasa.
 
I’d been at high altitudes before and was not at all discomfited by strolling around Lhasa that morning. But, I have to admit that climbing the 250 steps up the hill to the Potala Palace and negotiating the seven stories inside the palace with little sleep and no chance to acclimate took a fair amount of wind out of my sails. But, I experienced none of the usual signs of altitude sickness so soldiered on. We stayed in Lhasa for two more days visiting the Sera and Drepung Monasteries and other points of interest, getting in plenty of shopping in Barkhor Street market (especially for Tibetan handicrafts) and enjoying the evenings at the Yaluzangbu Hotel, a very accommodating and comfortable guest house done in traditional Tibetan architecture and furnishings.
 
From Lhasa we traveled by bus for about eight hours west to Shigatse, Tibet’s second largest city. Along the way we crossed Kangpa-La Pass at about 5,000 meters (over 16,000 feet), from which perspective we had a stunning view of Yamdro-Tso Lake (also known as Scorpion Lake because of its shape), the largest in Tibet. 
 
 
The lake is a deep blue color even on a cloudy day and shaped like a scorpion. Our route took us about half-way around the lake, a transit of over an hour – to give you some idea of its size.
 
The main attraction in Shigatse is the Kubum Monastery with its thousands of carved and painted figures and a stupa over 100 feet high
 
 
The following day we were on the road again to the Mount Everest base camp, another 250 miles to the west and south of Shigatse and hard by the border with Nepal. Our itinerary called for an overnight stop at the Rongphu Monastery guest house and then trek the remaining three miles to the base camp early the next morning to catch a view of Mt. Everest at first light. As I said above, though, Mother China had one more curve ball to throw.
 
The last town just before the Nepal border and the location of the turnoff from the main highway to the Mt. Everest base camp is a sleepy little one-stop-sign (no traffic light) hamlet called Tingri. At the turn-off we encountered a People’s Liberation Army (PLA) roadblock. There, we were told politely but with unmistakable firmness that the base camp had been closed to foreigners that very day and no – there would be no exceptions. So, with no other option we turned around and spent the night in what would have been an act of charity to call a one-star hostel in sleepy Tingri (e.g., the place had no electricity most of the time we were there).
 
On the next day we started back to Lhasa with one more (and uneventful) overnight stop in Shigatse. Although we were denied the chance to view Mt. Everest from the vantage point of the base camp, we were partially vindicated with a distant view of the mountain while on our return trip. We took a rest stop at Gya Tso-La Pass and climbed a nearby hill the top of which we reckoned to be about 5500 meters (nearly 18000 feet). From there as we looked to the southeast we were treated to about a 30-second glimpse of Everest as the clouds parted ever so briefly.
 

 

The remainder of the trip was uneventful, but packed with spectacular images of glaciers,
 
the bluest skies I’d ever seen
 
 and the odd reminder here and there of how far away we were from the China I know best.
 
 
From Lhasa we took the overnight train to the capital of neighboring Qinghai Province, Xining. This rail line was built less than ten years ago and is the highest altitude rail line in the world. It is so high, in fact, that the trains using it are pressurized. The line crosses one pass at over 20,000 feet.  For much of its length the line was built on permafrost requiring extraordinary engineering measures to protect the environment and prevent degradation of the tracks.
 
Our two-day stay in Xining was marked by a visit to Qinghai Lake, China’s largest salt water lake and a very sizable body of water. 
 
Our route to the lake took us through a portion of Qinghai’s high plains, a huge bowl surrounded by high hills. Our guide told us that at a special site on these plains was the original laboratory where China developed its nuclear bomb 50 years ago. He remarked that when the laboratory was in full operation (it closed long ago) no one was permitted to visit anywhere near the area and there were large numbers of People’s Liberation Army troops stationed on the surrounding hilltops to make sure no one wandered in. “Of course,” he added, “there was little point in taking these security measures since you Americans were taking pictures of the site from overhead satellites the whole time the lab was operating.” There is a nuclear laboratory museum on the old site which, of course, is closed to foreigners.
 
And then our journey ended, quietly, and without further surprises.
 
Reflections
 
I had never been to Tibet before and I am not sure if I will ever go back. Despite the difficulties we encountered getting to Tibet and carrying out our planned itinerary once we got there, it was nevertheless the trip of a lifetime in many respects. I am not by nature a religious person, but it would have been impossible not to feel moved by the religious intensity of Tibetans, coupled with the pristine environment and the sense of being literally on top of the world. I can understand now why some people say they felt transformed by their stay in Tibet.
 
I expected to find Tibet quite backward compared to most of the rest of China and I was somewhat surprised that it is not – at least the parts of Tibet we visited. Tibet and Shigatse lacked the skyscrapers of most other Chinese cities, but buildings and residences were sturdy, accommodating and mostly attractive. Even the rural areas between Lhasa and Shigatse and between Shigatse and Tingri looked quite developed. Rural electrification was much in evidence, crops and herds in the fields were abundant and the housing looked far better than what I recall from earlier visits to rural Guizhou and Yunnan Provinces.
 
Also in abundance, at least in Lhasa and Shigatse, were Han Chinese. I asked in Lhasa about the proportion of Tibetans to Han.  The ratio officially was 60 percent Tibetan, 40 percent Han, but a Tibetan interlocutor later told me the ratio was more likely the reverse. That seemed apparent particularly in Lhasa. There are really two Lhasas: old Lhasa is distinctive for its Tibetan architecture and is inhabited primarily by Tibetans. New Lhasa is much larger, inhabited primarily by Han and looks very much like other Chinese cities.
 
From several conversations I had while in Tibet, I was drawn ineluctably to the conclusion that the Tibetans wish the Han would simply go back to wherever they came from and leave the Tibetans to their culture and society. Wherever one’s sympathies are in this matter, the Han are simply not going to leave Tibet. They are in for the very long haul, that’s for sure. Perhaps because our visit coincided with the Tibetan New Year period and the army was concerned about a possible increase in tensions and even unrest, security was abundantly evident. Armed squads of PLA patrolled the main market and we could not help but notice snipers posted on some office building roofs. There were no incidents, at least none of which we were aware. The presence of the army is an unsubtle reminder that Beijing is no more prepared to give Tibet back to Tibetans that Washington DC is prepared to return the high plains to the Lakota and Cheyenne. 
 
As I said, Tibet is complicated. However one may feel about Tibet and its relationship with China there are no simple answers and I wouldn’t presume to attempt any. Noted China scholar and current Director of the Center on U.S.-China Relations at Asia Society in New York Orville Schell gave a talk in Seattle on the subject of Tibet a number of years ago. He began his speech by saying there are really three Tibets: the Tibet that exists in the minds of Tibetans, the one that exists in the minds of Han, and the one in the minds of Shangrila-philic foreigners; these three Tibets are completely different from one another. I suppose that analysis explains as well as any the contradiction that is Tibet.
 
*******
 
 
Fri, 2012-10-19 10:42

China Travels – Bainbridge Graduate Institute Study Mission

 

The Washington State China Relations Council agreed to organize and conduct a mission to China for 19 students and one faculty advisor of the Bainbridge Graduate Institute, a school established 10 years ago to confer MBA degrees.  The curriculum of the BGI MBA program is quite unique in that the school teaches not only traditional business subjects; it also is designed to prepare its students to build enterprises that are socially responsible and environmentally sustainable as well as financially successful.  Thus, corporate social responsibility and environmental sustainability are not elective courses; rather, they are infused in the core of every course.

 

In defining the mission and its goals, WSCRC and the participating students agreed that the mission should focus on the following elements:

 

·        Provide the students (none of whom had been to China before) with ample opportunity to learn intensively about China and its culture, history, society, governance and economy; and

·        Focus on China’s efforts to a) rebalance its economy to make development more sustainable; b) meet its current and future energy needs with special emphasis on clean energy and energy efficiency; and c) grapple with the massive population shift from rural to urban environments and the resulting issues of food supply security, the hollowing out of rural villages, the need to create a rapidly expanding urban environment in a sustainable manner and the plight of rural migrants who cannot register as city dwellers.

 

The mission to China this year was the 2012 iteration of BGI’s summer study abroad program.  Students were expected to incorporate knowledge and insights gained on this trip into individual and group projects and papers they are preparing as part of the curriculum.

 

There follows summaries and personal observations of meetings and events undertaken during the third stop on our itinerary, Shanghai.

 

Shanghai

 

August 8 – Typhoon Haikui

 

You just never know what you may encounter when traveling in China.  When our group arrived in Shanghai on August 7, the weather was cloudy with gusty winds and occasional rain squalls.  We were advised that a typhoon was in the area, apparently headed for Shanghai.  I was inclined to discount the probability it would actually hit Shanghai (I was right, but just barely) because the landmass of Zhejiang Province south of Shanghai tends either to deflect typhoons further out to sea, or absorb most of their energy if they hit land.

 

By the morning of August 8, conditions had not worsened appreciably, although a light to moderate rain was falling steadily.  As a precaution, the Shanghai Municipal government had closed all of its buildings and offices and was urging people to remain at home.  More than 200,000 residents had been evacuated from the city’s coastal areas and low lands.  The U.S. Consulate General had elected to remain open and thus we were able to having our briefing by Bill Brekke during the morning (see above).  However, we were advised that our scheduled afternoon activity – a briefing by the Shanghai Urban Planning Commission and a tour of the Urban Development Exhibition Center had been postponed because of the city government’s order to close official buildings and it was very much up in the air whether it could be rescheduled for August 9.

 

Instead of the afternoon briefing, the group elected to go by bus to Nanjing East Road, a pedestrian-only thoroughfare of some two kilometers’ length – Shanghai’s biggest and most popular shopping center.  Normally the Nanjing East Road shopping center would have been packed with people, but by the time we got there the wind had picked up significantly and the rain could only be described as torrential.  We had the street almost completely to ourselves.  We’d planned to stay for two hours, but most of the group was soaked to the skin and ready to go back to the hotel after one hour.  A small group of hardy souls elected to brave the storm and walk back to the hotel, a distance of about 4-5 kilometers.  Other than getting REALLY wet and one drowned I-phone, there were no casualties although the group reported that crossing the Garden Bridge at the north end of the Bund was a challenge since the wind was blowing very strong by then and over open water undeflected by tall buildings.

 

The eye of the storm passed over the city of Hangzhou, about 100 miles south of Shanghai.  From there the storm tracked almost due west so by early evening it was all over but the cleanup.  For the record, that was the closest brush I’ve had with a typhoon in all the years I’ve spent in coastal China and Taiwan.

 

By August 9 we were back on schedule again and received a very comprehensive briefing on Shanghai’s development by a senior official from the Shanghai Urban Planning Commission in Shanghai’s stunning Urban Development Exhibition Center.

 

The briefing began with the explanation that Shanghai has an integrated, comprehensive plan for the development of the municipality’s economy, society, population, investment and the environment in a sustainable manner.  The plan includes the 18 districts of the core urban center (officially defined as the area within the outer ring road), its rural counties and the nine new satellite cities each with a population of 300,000-1,000,000.  The plan also embraces economic corridor development between Shanghai and Nanjing (about 200 miles to the west) and the Hangzhou/Ningbo region in Zhejiang Province to the south (each around 100 miles from Shanghai).

 

The purpose of the satellite cities is to disperse the municipality’s population density and mitigate the floor area ratio in the core business area.  These new cities are not just bedroom communities, but business and industrial centers as well.  Under the plan:

 

·        The area within the inner ring road is reserved for financial and tertiary industry;

·        The area between the inner and outer ring roads is reserved for high tech and non-polluting industries; and

·        The area beyond the outer ring road is set aside for primary and secondary industry and agriculture.

 

Development of mass transit is also a key feature of Shanghai’s urban development plan.  The subway/light rail will have 22 lines and be the largest network in the world – 420 KM total trackage.  The system is more than half completed and work continues.

 

Ecology and the environment are also important features of the overall urban development plan.  Developers are required to set aside a certain percentage of the land under development for green space and Shanghai is rife with small neighborhood parks.  Green space must be located within several hundred meters of every resident and overall must average 13 square meters per resident.  As of 2009, a total of 38 percent of the land in Shanghai was given to green space.  Preservation of historical sites like the Bund is also mandated by the plan.  12 areas within the city have been set aside as historical sites, including the Bund and a belt along either side of Suzhou Creek.  This historical preservation areas include both Chinese and Western historic sites.  In the suburbs, 32 sites have been set aside for preservation as historical “water and river” towns.

 

The municipality’s overall development plan includes a section for infrastructure development based on the concept of “two networks and three ports.”  The two networks are land and water transportation, including rivers and canals, city roadways and interurban highways, and rail.  The rail network includes the Hongqiao rail hub (next to Hongqiao Airport and the terminus in Shanghai for China’s ultra-high speed rail system) and the south station rail hub.  The three ports refer to Shanghai’s airports, seaports and its information port.

 

Other data provided:

 

·        Shanghai’s GDP in 2001 was RMB 490 billion; in 2009 it was RMB 1.49 trillion, or $10,000 per person.

·        To register a car and obtain a license plate in Shanghai costs the owner RMB 60,000; funds collected from vehicle registrations are put in a public trust to help fund public transportation.

·        The average residential space per person in Shanghai in 2009 was 32 square meters.  There has been a recent, sizable increase in affordable housing investment.

 

On Shanghai’s land use plan, we were told that the city’s biggest challenge is one of rising population and shrinking land.  City planners are trying to strike a good balance between land development for urban purposes with land for agricultural use.  Between 2006-2020, the Shanghai land use plan sets aside 2981 square kilometers of the municipality for urban development while maintaining an agricultural base area of 3.28 million “mu” (note:  a mu is a Chinese unit of area and equals 667 square meters).  To do this, the municipal government has established construction control lines to demarcate areas for business and residential, for industry, and to preserve farm land.

 

The land use plan also mandates green space areas including two green space rings surrounding the city each 60-100 meters wide (not yet completed).  The plan also calls for 8 green corridors radiating out from the center of the city to the suburbs and ecological/wildlife preservation areas (including most of Chongming Island).

 

The population of Shanghai is 23 million, but population density varies considerably throughout the city.  In Hongkou District (where our hotel was located) for example, density is the municipality’s highest at 40,000-60,000 per square kilometer.  In the suburban new satellite cities, it is “only” 5,000-6,000 per square kilometer.  The average density in the urban center is 20,000-30,000 per square kilometer.  The maximum sustainable population the city can manage is about 25 million people, which means the city can add only about 2 million more before it reaches its cap.  However, there is no practical way the municipality could “cap” future population growth.  In fact, the municipality could exceed what is now considered its sustainability cap by expanding livable space in suburban areas that now have a combined population of only about one million people. 

 

Among other sustainability measures cited at the briefing were:

 

·      Restrictions on automobile registrations;

·      Public transportation investment;

·      More compacting of dispersed suburban populations to increase effectiveness of public infrastructure investment; and

·      Designing new satellite cities not only as residential communities, but also employment centers to reduce long distance commuting.

 

Were it not for a large floating population (persons from other parts of China currently domiciled in Shanghai, but without right of permanent residence there) modern Shanghai would never have been built, nor would it be able to sustain itself.  At the same time the floating population also constitutes a major issue for Shanghai and other large cities.  Efforts are being made to integrate the floating population into city life (refer, for example, to the meeting with the China Development Research Foundation in the first installment of this report).  Shanghai now permits the children of floating population parents to attend public kindergartens and primary schools.  The municipality has also instituted a pilot program to include the floating population in its public health care program.  Also the supply of affordable housing available to the floating population is being substantially increased.

 

At the same time efforts are underway to offer more employment opportunities and other economic inducements to attract more of the floating population back to their home towns (see for example the report on our meeting at Caoping New Village in the second installment).

 

This concluded the BGI study mission.  The students returned to Seattle on August 10.  “Yr. humble and obedient, etc…” went on to Chengdu to meet a second group of visitors that he escorted to Sichuan, Tibet and Qinghai.  More on that soon.

 

Wed, 2012-10-03 14:28

 

The Washington State China Relations Council agreed to organize and conduct a mission to China for 19 students and one faculty advisor of the Bainbridge Graduate Institute, a school established 10 years ago to confer MBA degrees.  The curriculum of the BGI MBA program is quite unique in that the school teaches not only traditional business subjects; it also is designed to prepare its students to build enterprises that are socially responsible and environmentally sustainable as well as financially successful.  Thus, corporate social responsibility and environmental sustainability are not elective courses; rather, they are infused in the core of every course.

 

In defining the mission and its goals, WSCRC and the participating students agreed that the mission should focus on the following elements:

 

·        Provide the students (none of whom had been to China before) with ample opportunity to learn intensively about China and its culture, history, society, governance and economy; and

·        Focus on China’s efforts to a) rebalance its economy to make development more sustainable; b) meet its current and future energy needs with special emphasis on clean energy and energy efficiency; and c) grapple with the massive population shift from rural to urban environments and the resulting issues of food supply security, the hollowing out of rural villages, the need to create a rapidly expanding urban environment in a sustainable manner and the plight of rural migrants who cannot register as city dwellers.

 

The mission to China this year was the 2012 iteration of BGI’s summer study abroad program.  Students were expected to incorporate knowledge and insights gained on this trip into individual and group projects and papers they are preparing as part of the curriculum.

 

In the first installment posted earlier this week we summarized our activities in the Beijing area.  In the fallowing installment, we will discuss our stay in Chongqing, the second stop on our itinerary.

 

Chongqing

 

Our first meeting in Chongqing on August 4 was with a Commercial Officer from the U.S. Consulate General in Chengdu.  (Note:  the Chengdu consular district includes the city of Chongqing and the provinces of Sichuan, Yunnan, Guizhou and Tibet.).  GDP growth in SW China has been considerably more robust than the rest of China for the past 4-5 years.  This has been due largely to the “develop the western regions” policy adopted by Beijing about 10 years ago.  That policy was implemented because of the undeniable and increasingly worrisome development and income gaps that had formed between the western region and coastal China.  The policy has been buttressed by massive wealth transfers from the coast to the west in the form of major infrastructure constructions programs (roads, rail, telecommunications, etc.) and by using a combination of carrots and sticks to induce enterprises to locate or relocate facilities in the west.

 

Chongqing Municipality is not part of any province but is one of four cities under the direct administration of the central government (the other three are Beijing, Tianjin – a port city about 85 miles east of Beijing – and Shanghai).  The city was China’s capital during WWII.  It is the largest municipality in China in terms both of population (about 30 million) and area (more than 82,000 square kilometers – roughly the size of Austria).  This is somewhat misleading, though.  In China the term “municipality” is not synonymous with what we call “city.”  Instead, “municipality” refers to an administrative subdivision of the central government or a province, including an area of land much larger than the urban core.  A municipality is divided into urban districts and rural counties and often includes satellite cities and townships with sizable populations of their own.  Chongqing’s core urban population is about 6 million; the rest of the municipality’s population is scattered among townships and farm villages.

 

Chongqing’s GDP in 2011 was reported to be $154.8 billion ($5373 per capita), with a growth rate of 16.5 percent (about 7 percentage points higher than the national average).  Although Chongqing is not yet a major player in international trade (the total value of imports and exports in 2010 was about $11.5 billion), the construction of the Two Rivers New Area now underway is intended to position Chongqing as a western version of Shenzhen in SE China, or Shanghai’s Pudong.

 

Chongqing’s move toward becoming a major international trade player in China is being aided by massive infrastructure investment, which has broadened considerably the range of products that can be manufactured in Chongqing and shipped to the rest of the world economically.  Chongqing is becoming a center in China and the world for consumer electronic products, which because of their relatively high value and lightweight can be shipped economically by airfreight through the city’s ultramodern, new international airport.  Heavier products like the utility gas engines produced by American manufacturer Briggs and Stratton in Chongqing are moved quickly to market over China’s vastly improved rail network, or down the Yangtse River by barge.  Chongqing also boasts of being directly linked by rail to Europe via the Euro-Asian Land Bridge.  This is literally true, but the land bridge concept is not used much yet because of the welter of Asian countries it passes through each with its own shipping regulations and customs tariffs (and, in some cases, different rail gauges).

 

With regard to consumer electronics, Chongqing and neighboring Sichuan Province are cornering the market in China for production.  Intel’s only facility in China is located in Sichuan’s capital, Chengdu.  Foxconn (a Taiwan company and principal supplier to Apple) is operating a relatively new facility in Chengdu that employees 300,000 people.  HP’s largest facility anywhere in the world is located in Chongqing.  The facility includes HP’s largest equipment production plant anywhere in HP’s world, a global service and software center, and a back office call center.  Acer and four other ODMs are now located in Chongqing as well.  Total laptop production in Chongqing will reach 150 million units per year by 2015.

 

Chongqing is also China’s “motor City” (although at least two other cities in China could make the same claim).  Ford has its largest operation outside the U.S. there.  China automaker Geely, which now owns Volvo, is making Volvos there.  Cummins is making its diesel engines there as well.  Both Chengdu and Chongqing have also become major markets for auto sales.  Chengdu has the third largest rate of private auto ownership in China; in Chongqing, 3000 new cars pour onto the streets every day.

 

Chengdu is one of China’s principal aviation centers.  Boeing Commercial Aircraft, Pratt & Whitney Jet Engines and Timken Bearings all are producing in Chengdu.  Sichuan has also been a historic base for traditional Chinese medicine and so has proven attractive to foreign pharma companies.

 

As part of its western development strategy, Beijing is trying to create a Chongqing-Chengdu economic corridor (the two cities are about 200 miles apart), and indeed, such a corridor appears to be naturally forming in any case, not unlike the economic corridor that formed over a decade ago between Hong Kong and the capital of neighboring Guangdong Province, Guangzhou.

 

The Two Rivers New Area is not only an effort to propel Chongqing into the front ranks of international trade and business in China a la Shenzhen’s Free Trade Zone and Shanghai’s Pudong New Area, it is also designed to accelerate the process of rural-urban integration in Chongqing Municipality.  Chongqing (along with Chengdu) has been designated as a pioneering area for rural-urban integration.  In Chongqing efforts to increase integration are focusing on bringing everyone – no matter their household registrations are rural or urban – under the same system for health care, education and social security benefits.  Currently government spending on health care is 20 times greater on urban residents than rural, for example.

 

The best picks for U.S. businesses in Chongqing and elsewhere in Western China:

 

·        Environmental technology;

·        Energy and especially clean energy technology;

·        Greenbuild and related architecture and design services;

·        Health care and health care management;

·        Agriculture technology

·        Virtually all manner of consumer products

 

 On August 4 we also visited Caoping New Village in Gulu Township, rural Chongqing.  As part of the overall mission design, we had agreed early on to attempt a look at Chinese agriculture, rural life, and the effects on both generated by China’s ongoing and massive rural-to-urban migration.  The Chongqing Municipal Foreign Affairs Office had arranged for us to visit a rural village about an hour’s drive from the urban center.  The village they selected, Caoping, would probably have been described as a “model village” in earlier times.  Located relatively close to an urban center and the beneficiary of funding and support for several pilot projects, Caoping had all the earmarks of a favored and relatively well off farm village.  That said, Caoping has also experienced the negatives of rural flight to the cities.  Nearly 1/3 of the population – mostly in the 20-35 age group – had left the village for employment opportunities in the cities, mostly nearby cities.  We were told that relatively few had gone to the coastal region.

 

Several pilot projects were underway in Caoping, supported with government funding and technical assistance:

 

·    The largest and most expensive among them was a clean agriculture project involving intensive waste recycling.  In addition to dramatically reducing waste, the project was also designed to attract eco-tourists to the village and thus help generate secondary income as well.  But, the equipment for this project cost RMB400,000 (over $60,000).  The capital costs and even the operating costs of the equipment could not be matched by resulting costs savings and increased income from the project and thus its continued deployment in Caoping would require ongoing government funding.

·    Other pilot projects in Caoping focused on vegetable, fruit tree and maple cultivation, all involving special handling and technologies.

 

Part of the reason for the latter three pilot projects was to try to attract back to the village at least some of the young people who had left for better opportunities in the cities.  The specialized, more technical work involved in the vegetable, fruit tree and maple projects required training and thus set work in these projects apart from routine farming.  Not only would workers in these projects be accorded a higher status, they would also receive more competitive wages for their work – perhaps not quite as high as they might earn in the cities, but higher than their rural colleagues and with the added benefit of being back in, or near to, their homes and families.  For whatever reason, though, these projects had not yet attracted many returnees.

 

Even in this relatively favored rural village, talk of an urban-rural income gap was described as real.  This is somewhat mitigated by the village’s designation as a pilot project intensive, relatively high tech village that could get by quite well with fewer hands.  The average peasant income of $2000 per year was augmented in most cases with funds repatriated to the village by urban workers who had left the village.

 

Asked by one of the students how the pilot projects were being evaluated for effectiveness, the village party secretary responded that the projects were being evaluated both quantitatively and qualitatively.  Quantitatively, there were more than 200 metrics being employed to measure output and financial results, among others; qualitatively, surveys were being taken periodically to measure changes in levels of satisfaction, quality of life, etc.

 

 On August 6 the group met with the Chongqing Municipal Construction Commission’s Energy Conservation Bureau.  The bureau’s principal task is to manage energy conservation projects, especially energy usage in new construction and upgrades of existing structures. Integrating alternative (green) energy with green construction is the primary focus of the bureau’s work.

 

Energy conservation technology was introduced in Chongqing construction in 1998.

 

·        From 1998-2003, efforts were primarily on experimental projects in energy conservation.

·        From 2004-2007 efforts shifted to improving policies and regulations on energy conservation, especially in industry.

·        From 2008 to the present, work has focused on implementing these policies and regulations, promulgated both locally and by the central government.

 

Energy conservation is now well regulated and is producing achievements.  By the end of the 11th Five Year Plan (2010):

 

·        There was an annual reduction of 2.51 million tons of CO2 emissions and a comparable reduction in the use of coal.

·        A total of 51 energy codes and standards had been issued.

·        A system to realize the energy conservation goal of 50-65 percent energy savings had been set up.  The system included design, construction and final inspection phases to ensure energy conservation goals would be reached or exceeded.

 

Chongqing has developed its own energy conservation technologies focusing on increased safety and lower costs.  The construction industry is now closely linked to the energy conservation industry and together they constitute a pillar of the local economy.  Construction projects that fail to meet energy savings targets cannot pass final inspection and thus cannot be brought online until corrective measures have been taken.  The Energy Conservation Bureau collects enormous amounts of data on the projects it oversees, which is then fed back to concerned government agencies at the local and central levels.

 

Chongqing was the first city in China to promote green construction in an all around way by setting up an evaluation system for grading green and green energy building construction.   Many buildings in Chongqing are now rated 1- 2- or 3-star energy efficient, green buildings.  In addition, Chongqing is now considered a national demonstration city for renewable energy, and its Two Rivers New Area is a national demonstration area for renewable energy usage.

 

Chongqing in recent years is leading China in GDP growth (averaging about 16 percent over the past 4-5 years, vs. about 10 percent nationally).  Fast growth plus fast urbanization equals explosive growth in construction, which in turn requires speeding up energy conservation work.  By the end of the 12th Five Year Plan, Chongqing must:

 

·  Conserve energy equivalent to reducing coal consumption by 4.46 million tons annually;

·  Step up energy conservations efforts and strictly regulate new construction and design;

·  Ensure that at least 90 percent of technologies employed in new building construction and retrofits meet or exceed standards for energy conservation goals;

·  Retrofit more than 4 million square meters of existing public buildings – government offices, schools, stores, etc. – with energy conserving technologies by contracting with energy providers to undertake the necessary retrofits;

·  Upgrade 3 million square meters of residential properties with improved energy conserving technologies;

·  Increase energy conservation demonstration projects by 4.5 million square meters; and

·  Increase green energy buildings by 2 million square meters per year, equal to a total of 10 million square meters over the life of the 12th Five Year Plan.

 

While these numbers are impressive, there will still be a long way to go in Chongqing in deploying energy conservation measures and green building technology.  The total floor space of existing buildings in Chongqing was estimated to be 600 million square meters.  For statistical comparison purposes, 1988 is considered the base year.  Compared to the base year, Chongqing’s overall goal by 2015 is to reduce energy consumption by 65 percent in the urban areas and by 60 percent in the rural areas.

 

Chongqing was relatively disadvantaged for solar and wind power since the city is cloudy much of the year and there is usually little wind.  Most of Chongqing’s efforts in the renewable energy field have been directed at geo- and water-thermal projects, especially the latter.  Water thermal pumps have been quite useful because of the abundant amount of water flowing through Chongqing from its two major rivers, and at temperatures ideal for thermal water generation most of the year.  However, relatively few renewable energy projects have been completed and put online so far; most are still under construction.  (Note: we visited one such thermal water project, which when completed will provide very low energy HVAC for Chongqing’s new performing arts theater and opera house.)

 

The greatest challenges Chongqing faces in meeting its 12th Five year Plan energy conservation goals were identified as the following:

·        Market demand calculations must be developed to persuade the average man on the street of the value of energy conservation and renewable energy, even if these measure raise the rate of energy usage;

·        Ensuring that resources remain available to carry out the plan to completion; and

·        The need for human capacity building.

 

Under Chongqing’s 12th Five Year Plan, all public buildings must use green energy by 2014 and 50 percent of ALL buildings must do so by 2015.  New construction over the next few years – all of it requiring use of energy conservation and green energy standards – will offer many opportunities for cooperation with foreign companies.

 

On Chongqing’s use of smart grid technology, we were told that such technologies have been employed since 2009 to monitor the energy consumption in 210 large public buildings.  The next step in smart grid deployment will be to use the systems already in place to begin rationing energy use in these buildings, and also begin expanding the deployment of such systems to other buildings.  For individual residences with individual electric meters, the local government has begun implementing a system that charges differential rates for peak and off-peak energy consumption.

 

 

Mon, 2012-10-08 10:40

 

The Washington State China Relations Council celebrated its 33rd anniversary in fine style September 20 with a banquet program at the Sheraton Seattle.  250 guests attended the program.  Special guests included Seattle Mayor Mike McGinn, Chinese Deputy Consul General Song Ruan, the Grand Old Man of America’s “China Hands” Sidney Rittenberg and his wife Yulin, Expeditors’ CEO Pete Rose, Wells Fargo executives Heather Ray and Tony Liebo, Trade Development Alliance Chair Bill Glassford and Boeing executives Billy Glover and Laura Peterson. 

 

Ms. Peterson accepted the WSCRC’s “Member of the Year Award” on behalf of the Boeing Company.  She noted that Boeing is celebrating this year the 40th anniversary of its business relationship with China, adding that the first sales of Boeing aircraft to China followed soon after President Nixon’s historic visit there in 1972.  Also honored were Bob Anderson, the WSCRC’s first chair in 1979 and currently chairman emeritus, and WSCRC President Joe Borich, who is celebrating his 15th year at the helm. 

 

Our keynote speaker for the evening was Richard Yorke, executive vice president and head of the Wells Fargo International Group.  He predicted that although China’s economy has softened considerably over the past year and more, it is still expected to grow by a very respectable 7.8 percent this year and by 8.0 percent next year – numbers that lead by far developed countries and the other BRICS.  He also stated that even if China’s economy dips further before initiating modest growth in is highly unlikely the country is in for a hard landing.  China is not heavily leveraged (its debt to GDP ratio is only 30 percent compared to the U.S.’ 100 percent) and still holds over $3 trillion in foreign exchange reserves.

 

As always we are deeply grateful to our sponsors whose generosity greatly contributed to the evening’s success and help sustain throughout the year the Council and its mission of building strong commercial, academic and cultural ties between our state and China.  A big shout-out of appreciation to the following companies for their annual banquet sponsorships:

 

Program:

The Boeing Company

Hainan Airlines (two business class tickets for their Seattle-Beijing route that fetched $7000 at auction)

 

Event:

Davis Wright Tremaine

Expeditors International

Garvey Schubert Barer

 

Table:

APA Tours

Callison Architecture

Deerhorn Advisors/Context China

iSoftStone

Microsoft

Port of Seattle

Port of Tacoma

SATin Group

Wells Fargo

 

We are particularly grateful to Wells Fargo, which not only supplied our keynote speaker, but also sponsored six tables. 

 

Thanks to all our great sponsors!

 

 Spencer Cohen and Sam Kaplan 

 TDA President Sam Kaplan with Spencer Cohen

 

Mike McGinn and other guests

 Seattle Mayor Mike McGinn with Deerhorn Advisors CEO Michael Rawding and APA Tours CEO Felicity Wang

 

Laura Peterson and guests

 Boeing execs Laura Peterson and Billy Glover (right) with Hainan Airlines' Joel Chusid

 

Seattle Mayor Mike McGinn addresses the Annual Banquet

 Mayor McGinn addresses the banquet

 

Deputy Consul General Song Ruan speaks at the 2012 Annual Banquet

 Chinese Deputy Consul General Song Ruan offers congratualtory remarks at the WSCRC annual banquet

 

Bob Anderson addresses the WSCRC Annual Banquet

 Bob Anderson accepts his award and speaks about the WSCRC's early years

 

Nelson Dong speaks at the WSCRC Annual Banquet

 Nelson Dong presents an award to WSCRC President Joe Borich for 15 years of service to the organization.  Also on stage are Joe's wife Hsiao-hui and daughter Grace.

 

Joe Borich addresses the 2012 WSCRC Annual Banquet

 President Joe Borich thanks Nelson Dong and the WSCRC membership

 

Laura Peterson is awarded the WSCRC Company of the Year by Gregg Rodgers

 Boeing head of business development for China Laura Peterson accepts award on behalf of the Boeing Company as WSCRC Company of the Year from WSCRC Chair Gregg Rodgers

 

Boeing execs with the award for Company of the Year at the WSCRC Annual Banquet

Boeing's Billy Glover and Laura Peterson with Deputy Consul General Song Ruan, WSCRC Chair Gregg Rodgers and WSCRC President Joe Borich

 

 

For other coverage of the 2012 WSCRC annual banquet see ContextChina’s blog post of September 21, 2012 (http://contextchina.com/).

 

                                                                   *******