Wednesday, December 31, 2008

Upcoming Stories

Watch for these upcoming stories in Beijing Eye:
  • Why the Chinese savings rate is so high & why the U.S. (and China itself) probably can't do anything about it.
  • Education in China: What's right, what's wrong & what needs to change.

Friday, December 26, 2008

A Day in Beijing

From The Archives:

A Day in Beijing

We were walking in the center of Beijing, along the northern end of Tiananmen Square. My son Josh's first time to Beijing, my third or fourth visit. He was visiting from New York and I was living in Hong Kong. We were in Beijing for a January week, being tourists, visiting friends.

We walked along the sidewalk between the square and the front gate of the Gu Gong, the Forbidden City. Chang’An Avenue, the Avenue of Eternal Tranquility stretched out to the west towards the Fragrant Hills. It was still in the days before massive urban reconstruction began to turn half the city into a replica of Los Angeles, with bland tasteless buildings built on top of historic rubble.

As bicycles streamed by, then still the most common transportation tool, we walked along the crimson walls that separated the city rush and flow from the Zhongshan Park gardens on the inside. The park was originally built in 1420 as the Altar of Land & Grain and in 1928 renamed for Sun Yat-sen (Sun Zhongshan in mandarin), the founder of the 1911 revolution. Inside the park is the Zhongshan Concert Hall, now renovated and modern, but then a down-at-the-heels theatre little better than the bandstand it had started out as. We didn't know this at all. We were wandering west down the street, soaking in the sites, watching the people flow past us in both directions, like schools of fish gracefully keeping their distance. We had no discernable destination. When we got there, where ever it was, we'd know. It was a grey day, from threatening snow or pollution or both.

We had been walking for more than an hour and looking for a break. We turned north, and walked up the quiet street that divides the Forbidden City and its public parks and museums and Zhongnanhai, the "Central and South Seas", the really forbidden home base for China's central government. Maybe Deng Xiaoping was inside. The further north we walked, the more little shops we saw. As we walked, a bicyclist rider slowed along the curb in front of us. Strapped to the back of his bike was a canvas backpack, faded through long use into a colorless tan. It was open on the top and the cover flapped loosely to the side. Out of the top of the pack we saw the black ends of ten to fifteen scrolls, either calligraphy or traditional Chinese paintings. The rider, a middle-aged Chinese man with a sensitive face and a full head of hair, seemed just as frayed as his backpack.

He pulled his bike over the curb, angling across the wide sidewalk, on a trajectory that would quickly intercept us.

“Hello”, he said in accented English.

We mumbled a response, ambivalent about the encounter. On the one hand, we wanted to make contact with people. On the other, we’d become bruised by the constant efforts by Beijingers to separate us from our money.

“Where are you from?”

Again we responded. He introduced himself as “Wang Laoshi”, Teacher Wang, and said he was a calligraphy teacher from a nearby school. The scrolls in his pack were both his and his students. He was taking them to an exhibit.

“Where are you going?” he asked.

We told him we were looking for a place to rest, maybe have some tea. Actually, coffee would have been better but, in those days, coffee was hard to find. None of Beijing’s now ubiquitous Starbuck’s existed.

“I know a place very close; you can have tea. And noodles. I’ll show you.” Wang hadn’t asked for money, at least not yet. I kept my hands in my pockets. As we walked up the road, he told us that calligraphy was a very time-honored art in China. Writing hanzi, characters, was both literary and artistic. Every educated Chinese was taught calligraphy, he said. I thought of how different it is in the west and how bad my handwriting looked. I’d almost failed penmanship in second grade. If I were Chinese, I’d be considered a complete idiot. We nodded and smiled.

“It is different from the past. Before we used traditional characters. The same for a thousand years. Now, we don’t. China is a very poor country. No money. So Chairman Mao decided Chinese people should use simplified characters – use much less ink and paper, save money.”

I’d never heard this theory before. I mean, I knew what he said was true: that outside the PRC, in Taiwan, Hong Kong, Singapore, and even New York’s Chinatown – the characters were the traditional, more complex ones. They had more brush strokes and were harder to write & read. I’d always thought that the PRC had switched to simplified characters because they were easier to learn. If they were easier to learn, more people would master them. If more people mastered them, literacy rates would go up and China would look better to the world. I kept my mouth shut, but determined not yet to discard my own view; maybe I was wrong, but Wang’s theory sounded a bit, well, . . . goofy. What was this guy up to? He hadn’t offered to be our tour guide, translator, money-changer, girl-friend-finder, or any of the myriad other scams and money-related schemes we’d been battered with.

We arrived at the faded green door of a tea shop, tucked up against the west wall of the park. To the right of the door was a window, but little could be seen of the inside.

“May I join you?” he asked.

“Sure. Why not”

We went inside and, in the dim light, took seats at a small “four-top” on the right, a few meters in from the window by the door. The whole place looked like it was last renovated during the reign of the Empress Dowager, a hundred years ago.



We ordered tea and noodles.

“Would you like to see a scroll?”

“Yes, of course!” I’d hoped, but hadn’t wanted to ask. I’d been afraid maybe he would think it was too intrusive.

He shuffled through the scrolls in his pack, finally selecting one and pulled it out of the pack. He put the pack back on the floor.

“Do you know Li Bai?” he asked.

“No.” We hadn’t met many people in Beijing besides our hand-full of friends.

“He is China’s most famous poet, from the Tang Dynasty.” No wonder we hadn’t met him.

The tea came, followed by steaming and enticing fragrant bowls of noodles. We slurped the little cups, careful not to burn our tongues.

Wang untied the scroll, stood up, and unrolled it. As it cascaded down, I could see that it was beautiful. But to my ignorant eyes, it was also a mystery. That I couldn’t read it was irrelevant; the mystery just added to its beauty.

“What does it say?”

Wang rolled the scroll back into itself and put it on his chair. He backed away from the table and stood with the window to his right. We watched him, fascinated. He held out both hands, palms down and swept them from one side to the other, parallel to the floor.

“Jing Ye Si”, he said. “From my bed . . .” He leaned towards the window and lifted his hands, palms facing each other but still apart, towards the sky outside the window.

“ . . . bright moon shine.” His hands, palms still facing each other, pointed to the floor near the table. “Chuang qian ming yue guang . . . Think snow on ground.” His hands swept back in a smooth arc.

His hands came together as if in prayer. He raised them towards the ceiling and lifted his face.

“Yi shi di shang shuang . . . ; Raise head see bright moon.”

His chin dropped to his chest, his hands at his sides.

“Di tou si gu xiang . . . lower head, think of home.”

I was overwhelmed. I wanted to clap; a standing ovation wouldn’t have been inappropriate, In the dim light, Wang smiled. He sat down, slurped some tea – by now a bit cooler. He began to eat his noodles.

By now, after Wang’s performance, I wanted that scroll. I would remember the grace and depth of feeling and the magical moment every time I looked at it at home, I was sure. But how to buy it? Wang had offered nothing for sale. I felt awkward and culturally illiterate. What was proper? How could I buy this thing without insulting the moment, without taking its magic and making it a crass commercial encounter?

“Can I see some the other scrolls?”

A few more came out of the pack, all beautiful, all meaningful only as foils for the first one. No more poetic dances followed. Wang quietly shared calligraphy, noodles and tea. He seemed unrushed, attentive. When the noodles were finished, the scrolls neatly tied and put back in the pack, Wang stood.

“I must go now.”

We offered to pay for the small meal. He gently refused and took a few rumpled bills out of his pocket and put them on the table. He turned and took a few steps towards the door. He stopped and turned around, facing us again.

“I would like to give you a scroll,” he said. “For friendship.” He searched through the pack again, pulling one of them out. We couldn’t tell which one it was. They all looked the same – round coils of paper and silk, with black knobs on either end and wisps of silk string tightly holding the coil in place.

“It is Li Bai’s.” he said. I was speechless.

“But you cannot give us that one!” I wanted to say. But not wanting to, either.

“You must let us pay for it. Really!”

“No, no. I cannot.” He put it on the chair. He said nothing for a moment.

“But it is not mine. It is my student’s. Maybe you can give him something for the materials: the paper, the ink, the scroll . . .”

“Of course!” We wanted to be fair, of course. But we had no idea how much this could be.

“How much?”

“It is up to you. You can give him what you think it is worth.”

The scroll seemed priceless to me. A thousand renminbi would be too little. What could I say that would not be insulting? How much could the ink, paper, silk, and the wooden dowel be? And that was too little! Li Bai was a great poet! It was as if he, himself, had written this scroll!

“Two hundred and fifty.” I said.

“Haode”. Okay.

I counted out the money, stood up and gave it to Wang. I sat back down. He took it, carefully folded it and put the bills into his pack. Keeping it safe for his student, I thought.

Wang said goodbye, turned and left the tea house. Josh & I paid the bill, stood up and followed him onto the street. He had disappeared, nowhere to be seen.

A few snowflakes floated in the grey January air.

“I think we were just played.” Josh said. “I think maybe he planned that all out, just to sell us a scroll.”

“You think?”

“Yeah.”

I thought about what Josh said, as we walked back towards Chang’An Avenue.

“But he’s really a master,” I answered. “It was worth it every penny.”

We looked for a cab.

We never saw Wang again, but never forgot his remarkable performance. And, in the years since, I’ve sought out Li Bai many times.



Wednesday, December 24, 2008

Creative Bankers

I happened on this column by Thomas Friedman in the New York Times, titled "Time to Reboot America". I was struck by a number of things. First of all, Friedman's point, that the U.S. is essentially in the same shape as GM and that the country needs a fresh start and, furthermore , that the next 3 months or so present an historic opportunity, albeit an expensive one, to start anew, is spot on.

This is something that many American expats can see with a clarity that seems to get muddier the more time one spends in the U.S. these days.

Then a few other thoughts popped up. I saw an article here in China where a chinese banker was intent on defending the value of the many "innovations" the capital markets have been witness to in the last ten years. Quickly on the heels of that was a memory, long dormant but still clear, of the late great Peter Drucker telling me that the field of finance, as he put it, was not a place that encouraged creativity. What he was referring to wasn't management creativity, nor was it the creativity financial pros bring to solving organizational financial problems. He was talking about the kind of financial engineering that became the hallmark of the modern Wall Street; the kind of "creativity" that used smoke & mirrors to create financial instruments so far removed from anything of underlying real value that they had worth only in that someone thought they could be bought or sold, sort of like the mythical emperor's new clothes (which, of course, never really existed). At the time Drucker made that comment, to call a banker creative would have been an insult. People wanted their bankers conservative, even stodgy. That's an attitude that, today, seems rather refreshing.

How ironic it would be if the Chinese, in their efforts to bring innovation to the modern Chinese world, buy that myth from Wall Street: that financial creativity (of the third kind) is the kind of innovation that China needs. Its not. As the U.S. has learned, to its horror.

Christmas Eve, 2008


Seasons' Greetings To Everyone!




Monday, December 22, 2008

Factory Workers Go Home for the Holidays

I had an interesting talk this morning with a friend from southern China. Altho he owns a factory, he has lots of ties to the migrant workers themselves. Of course, in his case, what you may think of as a factory may not match the reality. He runs his Guangdong province factory in about 300 sq. meters ( about 3230 sq. feet), with 5 workers, one supervisor - a brother - and a bunch of knitting machines; not exactly General Motors, altho he makes more money than GM these days. He says he's doing fine still, altho he has worries. Of the many laid off factory workers, he had this to say: For the most part, from what he's seen & heard, workers are angry at factory owners who they feel (in many cases, justifiably) have cheated them. In some cases, as widely reported elsewhere, factories have been shut down with no warning and migrant workers haven't received all their wages. Nevertheless, altho they've been laid off, they are mostly taking it in stride and just going home to their villages hundreds (or more) kilometers away. Since they had planned to return home, as they do every year, for Chinese Spring Festival/Lunar New Year anyway, the hardship is not major. They are leaving a month or two before they'd planned. The traditional Chinese New Year holiday this winter falls in late January and workers may often take from 10 days to 45 days off before returning to their work places. Any anger they feel, according my friend, is not directed at the government at all, but at their employers. In addition, altho wages are often meager for migrant workers, they are able to save considerable percentages of their pay, so the financial hardship is cushioned.

Of course, once the Spring Festival period is over, these workers hope to return to their migrant residences & resume work. If they can't, they can be expected to look for new jobs.
And if they can't find work, how will they react? Come March and April 2009, feelings may not be quite so stoic.

Block on Times Disappears

UPDATE: In a spirit of fairness to all (especially those guys & gals sitting in little rooms staring at screens, trying to ferret out all the dangerous info on the net), the New York Times is unblocked, as of this cold Monday morning in Beijing. Good thing! We were all getting tired of proxy servers and their pop-up ads!

Saturday, December 20, 2008

NY Times Blocked in China

Its all over the news in the outside world, even on the Times own website, but you can't read all about it here in Beijing. Altho accessible early on Friday morning, the New York Times' website soon blanked out. Concerned expats who check in on the website regularly were soon checking in with each other to find out whether they were the only ones with access problems but soon found that they were all in the same boat. A quick experiment with any number of proxy servers, which allow access to banned websites by bypassing the government's web filters, showed the Times' website to be functioning perfectly. Mobile access was, curiously, still unblocked as of Saturday evening. In addition, the Times global edition, the International Herald Tribune, was also freely accessible. In the memorable words of Kurt Vonnegut, "And so it goes . . ."

Thursday, December 18, 2008

Chinese Dogs in Jeopardy Again

A few years ago, you may remember, dogs around China were in jeopardy for being, well . . . dogs. If you don't remember all of this, here's a link.

We're getting reports that, at least in Beijing, the police (or, in this case, what we might call "the Dog Nazis") are at it again. Beijing's "finest" (that's the guys in the dark blue uniforms with the shiny badges & the walkie-talkies) are entering living compounds in urban Beijing and strictly enforcing the dog rules regarding size (no medium or larger dogs) and number (only one dog per household). According to information we've been given, foreigners' dogs are not immune to this. Apparently, dogs have been unilaterally seized by the cops. As we get more information, we'll pass it along.

Monday, December 15, 2008

The Fab Four


These are four models showing acupunture spots. I saw them in the panjiayuan market in Beijing a few weeks ago. A favorite haunt for savvy tourists, local expats & Chinese alike, the market opened a few years ago at its present location. Prior to its move, it was known as the "Ghost Market" or the "Dirt Market" because it regularly disappeared. Operating only on Saturday & Sunday mornings, it was a sprawling empty lot where vendors came in from the countryside and spread their wares out on blankets laid on the dirt. In its early years, most of the stuff you could find was either worthless junk or genuine artifacts of a bygone era, peeping out from whatever hole they had hidden in during the Great Leap Forward, the Hundred Flowers Campaign, & (of course) the Cultural Revolution. My always overactive imagination assumed that the sellers had carefully hidden all these things away from the Red Guard and whomever else might covet them. Along with that fantasy, I looked at all the vendors themselves as survivors of the vivid history of modern China. Surrounded now by the sterile towers of post-Olympics Beijing, some of the old-timers are still there. Whether their goods are genuine or not, you'll have to decide for yourself. People say they still find the occasional gem. Altho its now much less of a ghost market & is housed in a sprawling semi-permanent complex of old-style buildings & open air shelters, it still retains some of the flavor & atmosphere of the old market.

It All Depends on Where You Sit!

Listening to people talk about today's economic debacle is very interesting. The Pragmatists seem to be saying, "To hell with Theory; let's do what it takes to save ourselves!" (meaning, jobs, investors, Wall Street, Main Street, bondholders, politicians . . . Whatever section they may be sitting in). At least they're not just thinking of themselves.

Then there are the Moralists who want to stay true to the sentiments of Andrew Mellon, former Treasury Sect'y (1921 to 1932, an auspicious moment in economic history) who famously said, "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate . . . People will work harder, live more moral lives." In today's terms, that translates as "No bailouts! Let the miscreants suffer for their misdeeds!" Many of the Moralists, of course, seem to have enough resources to weather the storm. Some may even benefit from it. And some, regrettably, seem to me to be living in an alternative universe, oblivious to the ruination they welcome.

And never mind who gets crushed in the aftermath!

The Limits of Econometrics

Altho it doesn't explicitly say so, what we're actually talking about in this article is the limits of econometrics. The idea that economic behavior can be predicted with precision and accuracy using mathematic models. In fact, altho a clearly useful tool, uncertainty can and will raise its unpredictable head. The arrogance of delusion is, all too frequently, ready to assume a leadership position.
-Mike
From the New York Times
December 14, 2008
The Way We Live Now

The Remedist

Among the most astonishing statements to be made by any policymaker in recent years was Alan Greenspan’s admission this autumn that the regime of deregulation he oversaw as chairman of the Federal Reserve was based on a “flaw”: he had overestimated the ability of a free market to self-correct and had missed the self-destructive power of deregulated mortgage lending. The “whole intellectual edifice,” he said, “collapsed in the summer of last year.”

What was this “intellectual edifice”? As so often with policymakers, you need to tease out their beliefs from their policies. Greenspan must have believed something like the “efficient-market hypothesis,” which holds that financial markets always price assets correctly. Given that markets are efficient, they would need only the lightest regulation. Government officials who control the money supply have only one task — to keep prices roughly stable.

I don’t suppose that Greenspan actually bought this story literally, since experience of repeated financial crises too obviously contradicted it. It was, after all, only a model. But he must have believed something sufficiently like it to have supported extensive financial deregulation and to have kept interest rates low in the period when the housing bubble was growing. This was the intellectual edifice, of both theory and policy, which has just been blown sky high. As George Soros rightly pointed out, “The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil. . . . The crisis was generated by the financial system itself.”

This is where the great economist John Maynard Keynes (1883-1946) comes in. Today, Keynes is justly enjoying a comeback. For the same “intellectual edifice” that Greenspan said has now collapsed was what supported the laissez-faire policies Keynes quarreled with in his times. Then, as now, economists believed that all uncertainty could be reduced to measurable risk. So asset prices always reflected fundamentals, and unregulated markets would in general be very stable.

By contrast, Keynes created an economics whose starting point was that not all future events could be reduced to measurable risk. There was a residue of genuine uncertainty, and this made disaster an ever-present possibility, not a once-in-a-lifetime “shock.” Investment was more an act of faith than a scientific calculation of probabilities. And in this fact lay the possibility of huge systemic mistakes.

Read the rest of Skidelsky's article here.