China's GDP Growth Slows to a 17 Year Low

This clip states that China's GDP growth grew at a mere 6%, its lowest rate since 1992. The growth decline has been less global demand for Chinese made products with exports declining 20% from this time last year. Domestically China's (USD) 600 Billion dollar stimulus is contributing to heightened domestic growth with China's stock market up and auto sales growing to record levels. But as the former blog post shows, growing consumption of auto sales has its own social and long term economic impacts.

China's Environmental Challenge will equal a Talent Challenge

Less than a year since Science Magazine placed the title, 'China's Environmental Challenges' on its cover, the New York Times reports that China is cutting back on its environmental projects and instead focusing more resources on creating economic growth in an effort to smooth the impact from the global financial crisis.  Obviously China's leaders need to continuously create employment opportunities for its enormous population and sustain social stability. However the Government should continue to invest in environmental protection and green projects because they can ensure higher efficiency, GDP growth and lower health and environmental costs.  Critically important a clean environment will ensure the flow of global human talent required for China's future economic and technological advancement.

The China Price is especially high for the environment and its inhabitants.   The photo above shows the personal effect that Beijing's pollution had on me during an hour motorcycle ride behind scores of smoggy diesel trucks.  When I returned to my Beijing apartment I coughed up dust and blood.  A book titled The River Runs Black: The Environmental Challenge to China's Future by Elizabeth C. Economy states that the cost of being the world’s largest manufacturing center is that China is now the leading contributor to climate change. The River Runs Black states that air pollution contributes to the deaths of 300,000 Chinese people a year. In 2006, Economy delivered a grave report to U.S. gov. officials titled, China's Environmental Challenge, that states 75% of 340 monitored cities in China have unclean air.

The Wall Street Journal reported that environmental science professors at Peking University estimate air pollution killed 25,000 people in Beijing and cost 7% of city GDP in 2002 alone.  China's capitol, Beijing, has consistently led China's Environmental Protection Agency as having the fewest days that meet China's air quality standards. 

Air pollution not only kills people, but it also deters the world's top talent from moving to Beijing.   Richard Florida details in his book Flight of the Creative Class, that today's top innovators relocate globally to places that provide the best local environments, business opportunities and overall quality of life. 

Modern day Silicon Valley in California would not exist without the top innovators from around the world such as Google co-founder Sergey Brin of Russia, Sun Microsystems co-founder Vinod Khosla of India, or Intel co-founder Andy Grove.

  As long as Beijing residents face choking traffic, burning lungs and itchy eyes, the creative class of the world who can collectively fuel the high value service economy that China's government leaders yearn for, will stay at home.  

 

China leads World in Traffic Deaths

Any driver or passenger on China's roads will see that traffic rules are systematically broken.  The result is that China leads the world in traffic deaths since 1987.   Last year, 81,000 people died on China's roads according to the China Automotive Technology Research Center (CATRC).  

After the 2008 Beijing Olympics and Space launches, the world community awoke to China's concrete aspiration to become the world's next super power.  But to accomplish this feat, the citizens of the country will need to develop respect for the regulatory laws that can enable world-class development.  Countries whose citizens respect intellectual property rights, uphold workers safety and obey civil regulations have shown sustained growth that have withstood the economic downturns of time.  

The China Price

The China Price is an enlightening read into the lives of the people behind the label, and exposes the corrupt practices of some of the local manufacturers and western multinationals. Recently Financial Times journalist Alexandra Harney discussed her book The China Price, which discusses the experiences of everyday Chinese who toil in poor conditions to produce products often sold to the West. Alexandra candidly answered questions and used real life examples of the people she had met during her investigations. At one point Alexandra shared how some dishonest Chinese manufacturers run two factories. The first factory is clean and presentable for western inspectors. A second shadow factory is located nearby where working conditions are worse and production rates much higher, which means employees must work illegal over-time to meet demand.

The book also states in 2006 the China Government moved to strengthen legal protection for workers, but both the American Chamber and European Chambers of Commerce representing multinational firms warned that the law would greatly reduce employment opportunities for PRC workers and hurt China's competitiveness for foreign investment (p. 258-259). One day maybe firms operating in China will learn that the best way to sustainable global economic growth is to raise the bar for the well being of all people regardless of geography. That will require meaningful China innovation.

China's Demand for Salmon Grows

During the first nine months of 2008, China's global seafood imports increased 50% to total over one million tons of fish. Recently I ate at a Chinese buffet where I saw customers going for bowl after bowl of Shark Fin Soup and the Sushi chef worked hard to keep enough salmon on the serving tray.  No sooner had he thinly sliced a long fillet and set the red meat out, then the first two customers would take the entire platter between them.   As I stood in line I began to wonder what a increasingly affluent population of 1.3 billion seafood consumers mean for today's salmon population and fisherman.  

In 2006, the USDA reported that China was the second largest single country to consume US salmon products, after Japan. Between 2005 and 2006 US salmon exports to China grew 25% to reach 36,000 tonnes, worth nearly $110 million USD.   During the same period the US imported 22,000 tonnes of salmon from China at a value of $80 million. Evidently salmon is one commodity that the U.S. enjoys a favorable balance of trade with China.   But is this sustainable?  In California officials have cancelled the Chinook Salmon fishing season because of low fish populations caused by over fishing and environmental impacts from dams, pesticides and pollutants from cities.   The message is clear, China's growing consumer purchasing power will continue to grow demand for salmon imports and other seafood.  However as California has demonstrated, nature is increasingly unable to sustain the market's demand for salmon.    Please click this link for a useful Sustainable Seafood Guide from the Monterrey Bay Aquarium to learn how you can help conserve dwindling fish populations.  

Edward Burtynzsky Photo Exhibit at Paris Beijing Gallery

Edward Burtynsky shows Globalization's Physical Impact on China

The People behind China's Development

China's Electrifying Car Strategy

Last year a number of electric cars were shown at the Beijing auto show, but most were being manufactured by Japanese firms. Mitsubishi's urban car, the iMiev, (above) plugs into a standard 110 volt power outlet and is capable of 80 miles per charge.  The car is powered solely by electric lithium-ion batteries. However the global economic crisis is hitting the Japanese auto makers hard. 
General Motor's all electric Volt, (above) was scheduled for production in Nov. 2010. But last December, GM announced that it is halting development of the Volt due to the financial crisis. This is not the first time. In 1996 the US had the lead in electric car technology, but GM similarly abandoned the effort and destroyed its fleet of EV1 electric vehicles despite public protests.  The Obama Administration is stressing that GM should keep the Volt project alive, despite its unprofitable outlook in the short-run.  The Volt project has already cost GM $1 billion in research and development, and represents the USA's only fighting chance to wrestle a piece of the electric car market from its competitors in Asia. Today the United States is up against a more formidable competitor than Honda or Toyota. China.  

Last year as Detroit auto manufacturers were closing, China's passenger car market grew 10% in 2008, and is continuing to expand. China's 'compressed development' has seen people go from no telephone to mobile phone, from no PC to wireless laptop and now masses of people are going straight from bicycles to cars.  The reason why China might leapfrog its Japanese and Western counterparts in electric car adoption is because the habits of the middle-class are still being formed. In addition, the centralized government is throwing its support behind electric cars.  China's Minister of Science and Technology is a former Audi engineer from Germany who in April 2009 states, "We need to be sustainable in different sectors, particularly in the auto sector".  To meet this objective domestic firm like BYD (Build Your Dreams), a local battery manufacturer for mobile phones and notebook PCs, is producing battery powered cars.  In addition, the Chinese Ministry of Industry and Information Technology has signed an agreement with Nissan to develop electric cars.  The Government has set a target to have 500,000 non-gasoline cars on the road by 2011.  China's Olympic and Space program have proved that the country is capable of meeting ambitious project deadlines.  Western auto firms can only see the future by looking out the windshield and not staring listlessly in the rear view mirror.   

China now the World's Largest Car Market

Above, an international model named Marta Wojcicka attracts more attention from Chinese spectators than the convertible SAAB car behind her. 

 
Last year Beijing hosted one of the largest Auto Shows in the world.   Tens of thousands of people were pushing and shoving to take photos of the gleaming cars and attractive women surrounding them.   As the U.S. economy is slowing, in Jan. 2009, China outpaced the U.S. to become the world's largest car market. Monthly car sales in China totaled 735,000 cars, nearly 12% more than in the U.S.  
The Beijing car show was chaotic.  One photographer from San Francisco stated he had to leave early because there were just too many people.  Since then many of the people at the 2008 Beijing Car Show have bought new cars.   Reuters news reports  in the first two and a half months of 2009, Beijing is adding an average of nearly 1,500 new cars each day to its roads.  Ironically  the Chinese Government is restricting 930,000 cars from driving each week day in Beijing, in an effort to curb the pollution and traffic caused by the Capitol's 3.6 million vehicles.  Car manufacturers should also practice some restraint of their own, and consider marketing more ecological vehicles that enrich the total experience of their customers lives.  Sadly the glamorous car dreams promoted at the Beijing Auto Show do not match the polluted and restrictive experience that motorists and residents live with in Beijing.  

The World's Largest Car Show

Two Minute Walk at the Beijing Auto Show from Cory Grenier on Vimeo.

Motorcycle Mania - China's Mechanized Cash Crop

Driving a motorcycle in China can be deadly.  Above a motorcyclist in Shang Di District lays helpless after on an accident.  But last year on a trip to Henan my colleague and I saw two dead motorcyclists lying unnaturally motionless across their motor bike.  Seconds earlier the two riders had collided with a blue farm truck. Neither rider was wearing a helmet. 

But with the right regulatory framework motorcycles, especially electric powered, could be used to curb pollution, reduce gasoline consumption, and ease traffic. Taiwan is a good example where thousands of scooters share the roads with cars.  Imagine the traffic jams if every scooter rider in Taipei were driving a car!  In Beijing, millions of new middle class car drivers, construction and transport trucks, and low-income motorcycle riders share the same roads.  But motorcyclists are restricted from many areas of the city. 

Despite the large motorcycle riding population in China, driving a motorcycle in the country carries enormous risk, especially in the southern city of  Shenzhen.  After a series of crimes were committed by thieves using motorcycles, the Shenzhen government confiscated nearly 600,000 motorcycles since 2003, and publicly destroyed 14,000 last year.  This would be unthinkable in Taiwan, for countless people use motorcycles and scooters as their primary transportation.  But at the same time that China is destroying motorcycles at home, the country's motorcycle production continues to grow.  The Chairman of China's giant motorcycle firm Lifan states that the company is seeking to use China's rural stimulus support to expand motorcycles into the countryside.  Also global exports continue to rise.  In 2008, according to China Economic Net nearly 90 Chinese firms exported over 9.7 million motorcycles.

According to the China Daily, in 2006, China was already the world's largest motorcycle manufacturer - producing half of the world's motorcycles. However premium motorcycle firms like Ducati have not entered Mainland China, although Ducati is present in Hong Kong.  Most large motorcycles are banned in Beijing, and nearly all foreign motorcycles have been brought into China illegally and are using falsified registration and fake license plates. The photo above shows a Ducati dealership in Taiwan.

Driving a motorcycle as a foreigner is especially challenging. The China Transportation authority does not provide a traffic rule book in English, so a person must go to FESCO and purchase a traffic manual that has been translated into English for $22. You must also have copies of your home license, and a document that translates this information into Chinese, along with passport size photos on a white background. The traffic exam is 100 questions in English with a 45 minute time limit.   Many foreign citizens have been seriously injured in motorcycle accidents, and are consistently questioned and even pursued by police.

Soon it may be time to hang up the helmet. Below is a clip of what driving my Ducati is like on the commute to work in Beijing.

The Ducati Diaries - risky streets of Beijing

The Ducati Diaries - risky streets of Beijing from Cory Grenier on Vimeo.

Motorcycles in Beijing often have an 'A' plate which is the registration code of Hebei.  To drive legally within the inner ring roads of Beijing, one must have a proper 'B' license plate.