The China Track 与中国接轨

Baotou Bound

In mid-August I visited Baotou, a medium-sized city in Inner Mongolia. Baotou is the center of China's rare earths (RE) industry; and given that China produces over 95% of the world's rare earths, Baotou is center of the global rare earths industry.

I think by now most folks have heard of rare earths simply because of the number of news stories about them. RE's are 17 element minerals who are used in a variety of technologies, from batteries to missiles to computer screens. RE's typically are just a tiny fraction of the cost of a product, but in some instances, such as wind turbines, they constitute a large portion of the production cost. RE's are far more important their $2 billion in annual sales would suggest. The US and others used to dominate RE production, but they gradually withdrew from the sector because of the high costs of mining and more stringent environmental standards. That left RE's to China, and over the past decade China has been trying to restructure the sector in order to deal with the pollution, make the sector more efficient and technologically sophisticated, and use domination of RE production to help develop downstream sectors that depend on rare earths, such as advanced magnets.

While in Baotou, I visited the main company that mines and processes RE's, Baogang Rare Earths High-Tech Co., and talked with some local officials and experts. As luck would have it, on my first day in Baotou there was a national Rare Earths Forum being held at the Shangri-La Hotel. So I crashed the party and met a few people, though I was not allowed to sit in the formal meetings because they were closed to foreigners.

Funnest of all, I visited the Baiyun Ebo Mine, 180 kilometers north of Baotou, close to the border with Outer Mogolia, or as we know it, the Republic of Mongolia. Along the way, we came across a massive number of hot air balloons that were all trying to glide past one of the oldest sections of the Great Wall, built about 2000 years ago.

Once at Baiyun I got to see the two main open-pit mines from which they mainly get iron ore and rare earths. I wasn't allowed to take pictures of the mine, but I was permitted to take a few shots of the giant trucks that rumble up and down the mine roads carrying the ore.

The tires alone were twice my size, giving the impression that I'm not very tall.

I have to say I was extremely impressed by the high esteem in which everyone in Baotou holds Cheng-ji-si-han, or as you know him, Gengis Khan, who created an empire that stretched from Mongolia across China to the south and toward Europe to the west.I've heard that in the first few decades after "Liberation" in 1949 Chinese spoke of Mao Zedong in equally glowing terms, but I had never witnessed that myself, or at least seen it so universally. You could say Gengis Khan "is the man," but he's revered almost as a god.

China being what it is -- a capitalist socialist mecca -- it shouldn't have come as a surprise that Gengis Khan has been turned into essentially a brand, with business upon business taking advantage. I had dinner at a Gengis Khan theatre restaurant pavillion that made me think I was visiting Busch Gardens.

There you could eat in a yurt, with all the modern conveniences, or in a yurt-shaped room in the main building. In either case, you could have local ladies join your party for singing and dancing (which I avoided, in order to not hurt the feelings of the Inner Mongolian people because of my horrific voice). It was more fun watching others.

I did learn a lot about rare earths and will be writing about them before too long, but just as important, I had a heck of a lot fun in Baotou, a town with people that deserves our admiration.

 

 

High Speed Trains: Not So Fast!

The Wall Street Journal, People's Daily, and others are reporting that China has decided to reduce the maximum speed of its high-speed train fleet to no more than 300 kilometers an hour. Doing so will save on energy and allow the tickets to be cheaper. The changes are to take effect July 1st.

If so, that means I was among a privileged class of riders to enjoy travel at warp speed. Last month I took the train from Hangzhou to Shanghai, and we cruised along at a comfortable 346 km/hour.

As we went whizzing by buildings, fields, and roads, more than one person in my group worried about what would happen were we to jump the tracks. Simple: we'd be toast, and it'd be extremely messy. I immediately thought of the movie The Fugitive (1993). In an early scene of the flick, Harrison Ford, having been wrongly convicted for the murder of his wife, is traveling by bus to prison. Some other convicts try to escape (the old foam bubbling out of the mouth trick), and the bus crashes, falling down an embankment and ending up on railroad tracks. Before long a train comes along, and just before it rams into the bus, Ford jumps to safety. He then scuries down a hill in his shackles with the train tumbling toward him. He gets out of the way just in the nick of time.

If that plodding locomotive had been a high-speed Harmony #1, as they all are called in China, things wouldn't have been so harmonious, Harrison would have been crushed, and the one-armed man would have gotten away with murder! Thank heavens the Chinese high-speed trains are on raised platforms where no car, bicycle, scooter, 3-wheeled ag vehicle, tractor, or prison bus can go.

Searching for Owen Lattimore

One of the highlights of the just-completed China study tour was the inclusion of journalists. Chris Fyall, a young and energetic reporter with the Bloomington Herald-Times, Greg Andrews, the equally energetic, though slightly older (seasoned?), managing editor of the Indianapolis Business Journal, and George Vlahakis of IU's Office of University Communications were all terrific. Chris, who must not need sleep, filed several stories in the midst of the trip. (When we returned I heard many people remark about the quality of the pieces.) Greg and George both kept blogs as we traveled, and Greg then made China the cover feature for the March 28-April 3 edition of the IBJ. George also took a few thousand photos -- literally -- several of which made it onto his blog, and many others were burned onto CDs he shared with the group. 

One special element of their participation is Greg Andrews' special connection to China. His full name is Greg Lattimore Andrews. His great uncle was Owen Lattimore, one of the world's foremost China experts of the 20th century; and his grandmother, Owen's younger sister, was Eleanor Frances Lattimore, who herself was a famous author of children's books. If you haven't read Little Pear to your children, you should (even if your kids are 40). Owen and Eleanor's parents moved to China at the very turn of the century to teach English, first living in Tianjin before moving to Shanghai, where Eleanor was born in 1904. (Owen and Eleanor had 3 other siblings - Katharine, Isabel, and Richmond.) After going to school in the West, Owen returned to China and in the 1920's worked in the insurance division of the British firm, Arnhold Brothers & Company. Part of his job involved traveling to western China to learn about the risks some of their clients faced, and that is how he originally became an expert in a part of China so few westerners (or Chinese) ever saw. Those skills were later translated into positions with the US government (he helped the US and its allies understand Mao and his Communist movement when the CCP was based in Yan'an, in northwestern China) and then as a scholar at Johns Hopkins University. McCarthy singled Lattimore out as one of the "Communists" lurking in the State Department, a total fabrication, but enough to force Lattimore out of Hopkins. He left the US and taught at the University of Leeds in the UK. Lattimore returned to the US much later in life and passed away in Rhode Island in 1989.

Having not learned of Greg's family connections until well after he had agreed to participate and just a couple weeks before we left for China, one side goal of the trip became to find the home in Shanghai where Owen and Eleanor lived. I put a call into my favorite historians: Jeff Wasserstrom, formerly of IU and now at UC-Irvine, has written some great books about Shanghai, including Global Shanghai; and Bill Rowe, who has taught history at Hopkins since the early 1980's. Bill didn't have any info on Owen's old addresses in Shanghai, but he shared a wonderful article (Download Rowe Lattimore JAS 2007) he wrote about Owen's scholarship. Jeff didn't have any details either, but he put me in contact with Shanghai officianado Paul French. Given his authorship of The Old Shanghai: A-Z, I figured we were in luck. I told Paul where we thought Greg's relatives had lived (in something called "The American Compound"), but that didn't yield any more substantial clues. He then put me in touch with another Shanghai specialist Tess Johnston, but her expertise is on the 1930's and 1940's, a little too late for us. So we boarded the plane to China thinking all was lost. Heck, even if we had an address, we figured that the building would have long been torn down and replaced by one of Shanghai's 5,000 high rises.

A couple days into the trip, Paul emailed me with one last suggestion. He said I should try Greg Leck, another Shanghai expert whose interest was the first few decades of the 20th century. I emailed him my final plea, and low and behold, he responded:

My 1916 directory does not show him [Owen], but my 1921 directory already has him moved out to Tientsin, to which he returned from his sojourn in Shanghai, to take up a journalist position. The best I can do is give you the address of his Shanghai workplace:  Arnhold Brothers & Co., Ltd.  (He worked in the insurance department.) Arnhold Building, 6 Kiukiang Road, Shanghai. (The company moved to Sassoon House at 1 Nanking Road around 1930, but Owen was long gone by then.)

He wrote "best" as if to apologize, but to us, this was fantastic. We had a real place and building to connect Greg to his family. I wrote to Paul and thanked him, and he responded with even more encouragement that made us more excited.

Just to let you know the Kiukiang Road (Jiujiang Road) building of Arnhold and Brothers still stands magnificently on the street and also has a plaque on the building identifying it as the former Shanghai office of Arnhold's. It's well worth a visit and you'll also find some other Arnhold buildings from slightly earlier round the corner on Dianchi Road (formerly Jinkee Road) - these two are identified by plaques on the outside.

So on Friday, March 18, we set out to complete the journey. After wrapping up very interesting visits to Tianma Micro-Electronics and Cummins Fleetguard, we took our charter bus from Pudong back into Puxi (the western side of the Huangpu River) with the rest of our group, but then had the bus drop the two of us off at the first convenient place it could pull over. We then walked 3-4 blocks to get to Jiujiang Lu (九江路), which is the more common way Kiukiang is transliterated into a form non-Chinese readers would understand. We started at about 700 Jiujiang Lu, and the numbers got smaller in the direction of the Bund, so that's the way we went. With even numbers on the left side of the street, we expected sooner or later we would have to run into 6 Jiujiang Lu. Block by block we went, and the numbers got smaller and smaller. I could then see we were getting closer to the Bund, and as we did the buildings began to look older and some of them had plaque on the walls identifying the historical roots. But we were running out of blocks, because the Bund is at the river's edge. When we got within 50 yards of the end of the street, I looked at the last building on the left, and it was something like #36 Jiujiang Lu. The plaque on the side of its cement face gave no indication of the Arhold Brothers & Co. To focus on something different, we crossed the street to the bund itself and enjoyed the skyline view of Pudong and the river and talked to a few curious Chinese. We then crossed back over and decided, hey, let's walk back up on both sides of the street, thinking that perhaps the street numbers since the 1920's had changed, and we should focus on the plaques rather than the address. We did this for about 15 minutes without any clear luck until I happened upon an old man sitting in a booth next to one of these buildings. I explained Greg's story thinking nothing would come of it, but I got an interesting answer. The man, who was serving as a guard for one of the buildings, or at least its parking lot, said that although he himself was born "after Liberation," that is, after 1949, he thought the building directly next to his had at one point been owned by a British company. So we went to give it a second look. We walked all the way around it and found no plaques; we peered through some glass windows, and the inside was currently being entirely renovated. It was stripped bare, with nothing of note inside, and just a light white-gray facade on the outside.

We got no confirmation this was the right place, but we were tired. We had exchanged emails with Jeff, Bill, Paul, Tess, and Greg, and Greg Andrews had consulted his living relatives and even some of their family papers. Despite not being sure, we decided to adopt this building as part of Greg's heritage. In front of it he stood, and I clicked away (iPhones have a nice fake clicking sound).

It's very likely we did something wrong in the search -- that there may be a different Jiujiang Lu, or we should have been at WEST Jiujiang instead of EAST Jiujiang, or we passed by the right building and were just too stupid to notice it, or it was just around the corner and we would have seen it had we taken 10 more steps in this or that direction.

But for now, that's irrelevant. Perhaps for no good reason, Greg and I now are nostalgic about this building. It may or may not be where Owen Lattimore worked in the 1920's, but it was where Greg Lattimore Andrews stood in 2011, and we know for sure his great uncle and grandmother walked these streets and stood along the bund and admired the beauty and vibrancy of where they were. What's a block or two when you've circled half the globe? We may not have found "history," but Greg lived a little more of his family's history. And for that reason, it was an exciting day.

If any of you Shanghai specialists out there know what we did wrong, don't tell us! No, I'm kidding. Please do let us know where we should have gone, and where we should have stood. And if you have a photo, even better! You'll earn a free coffee at the Starbucks nearest to Owen Lattimore's office. Now, I wonder, do you think Owen liked coffee?

Postscript on a Successful China Study Tour

I'm way behind in blogging about a million things, including IU's recent study tour to Hangzhou and Shanghai. Carried out under the theme, "US-China Business Cooperation in the 21st Century," the trip was a terrific success, as you can see from two other blogs: "IU Takes You to China," maintained by IU's George Vlahakis; and "The New China," by the Indianapolis Business Journal's Greg Andrews.The RCCPB itself has a page devoted to the trip, at www.indiana.edu/~rccpb/Chinatrip.html.

A few things stand out about the trip:

Our delegation members got along great! We were a motley crew of scholars of politics, journalism, and business, thrown together with journalists and business executives. You would think everyone would have their own agenda, some would walk really slowly and others would be running ahead, some would want McDonald's and others would want the strangest things from foodstalls, and some would want to meet movie stars and others beggars on the street. And that we'd get on each others' nerves. That would've been a great soap opera, but it didn't turn out that way at all. Again, we got along great! No whinning, no complaining, no taunting, and no "when are we gonna be there?!!!" A couple folks were squeemish about driving down the wrong side of the road to get through a traffic jam (Shanghai's traffic situation has deteriorated big time), firmly grabbing to their seat handles and tightly closing their eyes, and some of us saw this as great fun and standard practice -- the yellow lines in the road are just suggestive. But in general, we followed Hu Jintao's dictum to be a harmonious group.

Second, the quality of scholarship we encountered at Zhejiang University is first-rate. I may be leaving some folks out, but I was just immensely impressed. Three participants in the conference stood out: Wei Lu (韦路) from the College of Media and International Culture, who presented the findings from a sophisticated study of Internet usage that found the wealthier you are the broader your use of the Internet; Zhao Jun (赵骏) from Guanghua School of Law, who presented research on international investment and stepped in to translate flawlessly with zero notice; and Wang Zhikai (王志凯), from the School of Economics, who took on the job of organizing the specifics of our conference at Zheda and many other details of our visit. I also was fortunate enough to give a lecture on business lobbying to a (small) packed room at the College of Public Administration. Host and vice dean Yu Jianxing (郁建兴) offered some terrific comments, as did grad students and faculty in the audience.

Many of the Chinese with whom we spoke were very worried that the country was falling into what one person called, a "middle income trap," in which the progress of the last three decades was coming to halt in the face of greater government intrusion into business and the lack of a positive business environment for innovation and expansion. At the symposium, a local company executive made an  impassioned argument for more extensive economic and political reforms. One cannot, of course, dismiss such concerns -- they live them every day -- but it is odd that from the outside China looks like it is rising as fast as could be; Americans, Europeans and others believe it is they, and not Chinese, who are hurting the most these days. How could these companies, with China's 11% growth and $2.6 trillion in foreign exhange, be suffering? Explaining these conflicting perceptions is going to be an important task for years to come.

We visited a handful of companies in a variety of sectors, and the distinction between Chinese and foreign seems more irrelevant than ever. Shanghai GM, a JV between GM and Shanghai Auto, is it American or Chinese? Our host, David Chen, was originally from China, but studied at Purdue and worked in the US for a long time before returning to China for GM. Crown Biosciences, a company officially based in the US but with facilities in Beijing, Taicang and Wuhan, is run by Chinese who used to work for Eli Lilly, and one of them taught at Indiana University. One gentleman who showed us around studied at Cambridge and had a nice British accent. They are prepared to comply with both Chinese government and US FDA regulations. Tianma Micro-Electronics, a producer of flat screens, is owned by the centrally-controlled China Aeronautical Technology Group (中国航天科工集团), but it is listed on the Shenzhen Exchange, its production technology and processes are almost entirely Japanese, and its chief technology officer spent years in Silicon Valley. And Cummins Fleetguard, co-owned by Columbus-based Cummins Engine, is a joint venture located in Pudong; almost everyone in the plant was Chinese, and the manager of filtration for Asia-Pacific, Mark O'Connor, is originally from Australia.

 

Finally, on Friday, March 18, we had an awesome reception on the 40th floor of the Shanghai Hilton with about 90 guests, including IU alumni, current students, and friends from the broader business community. Even friends attended from the humbly named Lord Corporation; my brother-in-law Scott Thompson works in their Erie, Pennsylvania facility. It was wonderful to be with such a great group of Hoosiers and friends of Indiana.

All in all, a great visit, and I'm deeply grateful to everyone at IU, Zhejiang University, the journalists and business executives who accompanied us, and the organizations we visited for making it possible.

Americans' view of China: NOT a nation of wimps

It is amazing how profound there has been a shift in the American consciousness about how powerful China has become. The Chicago Council on Foreign Relations, Pew, and others have already conducted lots of polls showing this transition. Ask Americans which country is the world's most powerful, and they are as likely to say China as the United States. Ask Americans which country will be the world's most powerful in a decade or two, and they are more likely to answer China than the United States.

Along with new judgments about relative power, Americans' views of the Chinese people and government are also changing. An increasing number of commentators, from Tom Friedman to James Fallows, identify positive characteristics in China's political system which the United States lacks and needs to adopt. They do NOT appreciate China's authoritarian system, but instead admire the system's ability to focus, identify top priorities, and invest substantial resources toward meeting those goals. Their view is still, though, far from conventional wisdom.

From the sounds and pictures one sees in American popular culture, closer to wider acceptance is the view of Chinese people as hardworking, smart, and committed to the greater good. These are qualities we used to identify in Japan and other Asian countries, what for a while were called "Asian values." Of course, these used to be traits Americans saw as embodied in their own culture (remember the "Protestant work ethic") and which some times are still applied to certain Americans, such as Midwesterners. As someone living in a Midwest state, I can confirm this praise. :)

A beautiful indicator of this shift in conventional wisdom comes from the world of sports. On Sunday (Dec. 26), a football game between the Philadelphia Eagles and Minnesota Vikings was postponed because of an impending blizzard bearing down on Philadelphia. The game was changed to be played on the following Tuesday to protect those traveling to the game and to allow time for snowplows to move snow from the streets and stadium.

This safety-first decision caused an uproar, with an amazing amount of attention given to the supposed differences between Americans and Chinese. Will Bunch, in a column for the Philadelphia Daily News, said the decision reflects how soft Americans have become. Entitled, "The Wimps Who Stole Christmas," Bunch, who I believe is not a China specialist but instead a sports writer, says such a decision would never have been made in China. He writes:

He was joined in his self-flagulation by Pennsylvania Governor Ed Rendell, a Democrat, who asserted the United States is a "nation of wusses." He defended his comments on ESPN.

I personally am not a great believer in cultural arguments about economic success or decline, but I'm probably in the minority. Recognizing that many people do make such judgments (either on their own or prompted by pollsters), a very good question is whether Chinese agree with Americans. I don't think we have enough good systematic data, but anecdotal evidence suggests Chinese tend to believe that Americans are lazy, overweight, and not as industrious and hardworking as they used to be. These qualities are used to explain -- and put in a moral framework -- the 2008 financial crisis, which some Chinese I know see as the product of a society that is addicted to consuming beyond its means. Again, though, we need to qualify such generalizations since we have little survey data, and I also meet Chinese who deeply admire America, including its people, society, and political system.

It is slightly ironic that this self-criticism of the US and praise of China was raised in the context of attending a football game, which last I checked qualifies as entertainment; the tickets are quite expensive, and many in the stands consume a lot of beer, hamburgers, fries, and candy. Perhaps Gov. Rendell and others could push Americans to be "more Chinese" not by walking through snow to attend a football game, but instead by studying harder in school, working longer hours, saving more money, and living healthier lives. But that would be politically unpopular. Tonight where will Gov. Rendell be? In the stands or in front of his TV watching the game, beer and burger in hand. [Update (12/30): the governor was in the stands (no beer or hotdog in open view), but next to him someone had placed a sign: "seat for non-wusses."]

To all the wusses and non-wusses, American, Chinese, and everyone else, happy new year!

Beijing Summer

My son Isaac and I are in Beijing this summer. Besides doing a little work, we're also trying to enjoy ourselves. He's a terrific photographer and much better than me, but I try to do some also.

Last week, we went to Houhai ("back lake"), a touristy area with a lake, duh, along with stores, restaurants, bars, and all sorts of folks. Out toward the front were some older Chinese spending a leisurely afternoon playing games.  Houhai is pretty, but it is not likely the cleanest body of water on the planet. I would expect that there may be some run-off from the surrounding homes and restaurants. That has not stopped some, who appear to be part of a club which regularly swims there. I captured a little of the action.

The Singing Swimmer, Houhai, Beijing, June 2010 from Scott Kennedy on Vimeo.

A few days later, on Sunday afternoon, we went to Jingshan Park,which sits just north of the Forbidden City. It becomes a singer's paradise -- well, depending on your ear. One group I've seen a few times is  highly organized, with musicians, song books, and a few dozen regular participants. They all seem to be middle-aged and sing Mao-era revolutionary songs. Most other groups seem more improvised, treating the park like an outdoor KTV. The quality of singing also varies, but taste is really in the ear of the beholder. And everyone sings with great enthusiasm. Perhaps this is where "Chinese Idol" should do their casting. If anyone can tell me the name of the song below, I'd be most obliged.

Choral Singers, Jingshan Park, Beijing, June 2010 from Scott Kennedy on Vimeo.

Finally, we continued our walk east toward Wangfujing, where we came across the outdoor food market. Now everyone is different, but to my taste, they have some of the weirdest things available which they call "food." I think the old American show Fear Factor could just settle down right here, and they'd have enough challenges to weed out the meek, like myself.