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. 

Fires Happen in China, so unlock the Doors!

Visitors to China may be frustrated by countless exits being locked for no credible reason.  This photo was taken at a busy shopping mall in Xidan, Beijing. Customer after customer walked to the exit which was locked and then searched for a open exit. Beyond the inconvenience is the danger of death  if a fire were to occur.  In a panic people would not be able to calmly find the way out, but would run to a locked exit and perish from smoke inhalation and burns. How many casualties would be suffered here if there was a another shopping centre fire, like the blaze last year in Xinjiang, China?  

The Shopping Mall blaze killed three firefighters and two others on Jan 2, 2008.   Most recently, on Feb 9th, 2009 during the Chinese New Year celebrations,fireworks caught the newly completed Mandarin Oriental Hotel on fire in Beijing. The fire caused over 700 million US dollars in damages and left one firefighter dead.   

The same attention to developing China's infrastructure and technology needs to be given to enforcing the existing health and safety regulations that protect the China's people.  Developing new processes and methods to hold people accountable for ensuring safety would represent meaningful innovation.  

The Future Fusion of Fashion in China

Last year I met a famed make-up artist and the entreprenuerial founder of Tony Studios named Tony Li. Tony shared that he left China to San Francisco where he studied hair styling and returned with new skills and dreams to open a chain of hair and photo studios across China.  The billboard shows that his business has been flourishing for nearly a decade. 

Works by Chen Man, Beijing's top rated photographer. She has shot ads for Lenovo, Vision and popular nightspot Bling.  

Above is Chen Man, Tony Li and popular model from Poland, Marta Wojcicka.  This photo shows East and Western artists collaborating to produce new forms of innovative artistic expression. 

Morning Traffic in Beijing from Cory Grenier on Vimeo.

Weekly Chinese Idiom Last Chinese New Year I gave a box of Chunghwa cigarettes to a close friend named Liú Jié 刘杰. The expensive brand of cigarettes, Chunghwa, are sold in a soft pack, while cheaper ones are sold in a hard box. Shanghai Tobacco Co. has been producing Chunghwa branded cigarettes for over 50 years and currently exports to 30 countries on five continents. Chunghwa cigarettes have long been a prized gift among businessmen and government officials along with Wuliangye "bái jiŭ ". Bái jiŭ 白酒 literally means white alcohol, and clocks in at 80-120 proof, or 40-60% alcohol by volume, which compares to vodka with a measly 35-40%. Wuliangye 五粮液 bái jiŭ can cost up to 27,000 Chinese renminbi (US$3,900) or roughly 9 months wages for a full-time Beijing taxi driver. To be frank the Chinese don't mess around when it comes to smoking or drinking.

A 2002 study by members of the University of Sheffield and the Univ. of Michigan found that China leads the world in male smoking. Globally, 43% of men above age 15 smoke, yet in China more men smoke than don't. Maybe a smoking ban would help slow global warming? By 1999 the World Health Organization stated one in three cigarettes smoked in the world were in China. The Worldmapper.com , which uses cartograms to re-size 200 countries according to the variable being mapped, shows the global smoking population in 2002. The map below illustrates China's male smoking use relative to the USA, and the rest of the world. But the USA can still claim to be number one, ...in cigarette exports. According to a 2003 Congressional Report titled, "U.S. Tobacco Production,Consumption, and Export Trends", US annual exports were estimated be 127 billion cigarettes in 2002 alone. One firm, PhilipMorris International, stated in its 2002 Annual Report that non-U.S. shipments totalled 723 billion cigarettes!

In true Chinese tradition, when my birthday rolled around, Liú Jié gave me a gift - a 3,061 page dictionary of Idiomatic expressions with Chinese/English translations. Liú Jié knew that I enjoyed quipping Chinese idioms in a desperate act to show off my feeble command of the language. Once I ventured to China's northern city of Dalian where my host brought out a high-walled, cold glass plate topped with green lettuce and live prawns soaked in alcohol - a dish aptly named "drunken shrimp". My host and friends kicked back the bái jiŭ and ripped the live heads off the prawns. Next they stripped the dancing legs off the tails and dipped them in small sauce dished and ate them. I paused for a second watching the decapitated prawn whiskers still moving about as its torso was being digested. I wasn't fond of drinking white alcohol or eating live sea animals. But I feared disrespecting my hosts even more and joined in. Had I received my book of Chinese idioms sooner, I would have been able to say 入乡随俗 pronounced 'rù xiāng suí sú'! The idiom translates into, 'When in Rome, do as the Romans do'.

In Chinese idioms are called 'chéngyǔ' 成语 or "set phrases", which commonly consist of four Chinese characters, as in my previous example. Chéngyǔ are probably nearly as old as Chinese language itself, and my idiom tome probably has over 20,000. My highly valued book is published by China's top academic institution - Tsinghua University press. Tsinghua University is where my former and current boss, China's current sitting President Hú Jǐntāo 胡锦涛, and Liú Jié each graduated. The University also lies about three miles from Lenovo China's headquarters.

Today I would like to offer readers with a weekly idiom, 安渡难关 ān dù nán guān, which translates: TO PULL THROUGH, or tide over a crisis. An appropriate idiom for these financial times, but an idiom that also demonstrates eastern and western cultures have both overcome difficult times and share similar phrases to express it. Photo Credits: Mao Smoking by Michael Feat on Flickr; Cartogram chart by Worldmapper.com; Book of Chinese Idioms by Cory

Authors Note:

*A useful website to translate Chinese characters into romanized 'pinyin' is http://www.hanzitopinyin.com/converter/ .

*To translate between simplified Chinese/English and English/Chinese you can use Google Translator.

On Sept. 25, 2008 China successfully launched the Shenzou VII spacecraft. Two days later a five-yellow star flag waving, 'made in China' spacesuit wearing Chinese astronaut, Zhai Zhigang, made history by becoming China's first space walker. Only two other super powers, Russia and the United States, have ever sent humans to walk in space. On Sunday, Sept. 28, the Chinese astronauts returned safely to a heroes welcome in Beijing.

The compressed development of China means that in just 30 short years the country has risen from a depressed Maoist-planned economy to fulfilling the same goals of science and exploration that JFK and the USSR sought as world powers during the space race of the 1960s. By 2020 China plans to launch a moon orbiter, complete a space station and land humans on the moon. The recent spacewalk strengthens the Party's credibility to execute large scale projects such as the hosting of the Beijing Olympics. After the success of the Shenzhou 6 in 2005, the Chinese government announced China would launch humans into space to perform a spacewalk in 2008. This week the Chinese Government delivered the result.

What about the United States credibility to deliver results for large scale projects that it commits to? How does the democratic USA measure up against an autocratic state controlled government to deliver upon its public commitments in space science and technology?

Nearly five years ago on Jan. 14, 2004 US President George W. Bush announced that American astronauts would return to the Moon by 2015, develop a new manned vehicle, and use the experience to land Americans on Mars by 2030. The new NASA Moon landing alone was estimated to cost $12 - $50 billion dollars. One of the rationales for renewed interest in space exploration is over 1,300 new technologies were derived from the space industry leading to useful products such as satellite communications and heart monitors. In addition rare minerals may also be found.

All those things sound great! I love my mobile phone and generations of elderly and wall street bankers value heart monitors. Lets look at where the US is at meeting its milestones. The 2009 NASA budget rose 1.7% from '08, but leaves the agency $500,000,000 short of where NASA was told it would be by 2009 when Bush proposed the Moon mission. Wait, $500M short? The Moon is only 384,000 km away from Earth, how will Americans make it to Mars, which lies 490M kilometers away, a distance 3Xs times farther away than the Earth lies from the Sun on an underfunded budget?

The Whitehouse has stated that the US has been in a recession since 2001 and the fighting costly wars will require sacrifices. President Bush publicly committed to the American people and the world to a goal. Bush correctly stated, "the fascination generated by further exploration will inspire our young people to study math and science and engineering and create a new generation of innovators and pioneers." Yet unlike the years following the Kennedy address to land a man on the moon and return him safely to earth, in the years since Bush's speech, the Republican controlled Executive and Congressional(until 2006) branches did not commit the necessary resources to achieve the goal. Using historical budgetary figures adjusted for inflation, during the 8 year Clinton Administration NASA received a total of $131.76 Billion or $16.5 Billion dollars a year. During the 8 year Bush Administration NASA received less at $130.125 Billion dollars or $16.3 Billion per year. To date the Iraq and Afghanistan Wars have cost $604 Billion dollars, enough money to fund NASA for the next 35 years at current NASA spending levels. In fact, when adjusted for inflation, the Wars already total 75% of the entire 50 year budget of NASA since its creation in 1958.

Was it science or politics that led to the Bush announcement to pursue Moon and Mars missions when America is fighting two Wars, an unfunded health and social security system, and rising unemployment. Four years later unemployment figures are at a seven year high, and today President Bush signed a $700 Billion dollar bail out of America's largest banks and insurance firms. OK, the sub-prime mortgage crisis hadn't occurred, yet in 2004 America had just witnessed its seventh largest firm Enron declare bankruptcy - a sign that US businesses needed more robust assets and businesses models. The recent Financial Bailout represents nearly 7% of the total annual US Federal Government Budget, yet NASA's budget only consumes 0.6% per year. Since 2003, the CIA WorldFactbook states the US economy has grown an average of 3.1% a year. In 2007, China's economy grew 11.4%, its largest increase in 13 years.

In an Orwellian way, maybe the public perception is being used by two large state governments in different ways. China is opening up its media and reporting on the space missions with unprecedented transparency, which is promoting national pride and government allegiance. At the same time the US government is using its power to interrupt American TV broadcasting for President Bush to deliver state messages of fear and urgency to give tax-payer money to financial institutions NOW!

At the same time, Intel Chairman Craig Barrett cannot believe that the US Government failed to increase funding for Research & Development in Science and Technology by $1.2 billion, as authorized by the America Competes Act, which President Bush signed in August of 2007. Barrett states, "A big part of the world is still investing in infrastructure, China, Russia and India. Those regions are seeing good growth rates. ....I’m not against bailing out Wall Street, because they are bailing out individuals. But when you look at the agricultural subsidies and the bailouts and the earmarks it’s hard to believe the government can’t come up with $1 billion to fund innovation. We as a country have chosen not to compete." To put this in perspective, Congress approved a $487.7 billion 2009 budget for the Defense Department, including a single Navy Destroyer at a cost $1.5 billion, more than required to fully fund the America Competes Act. Since 2003, President George W. Bush's missile defense spending has run about $10 billion per year, and the FY 2009 is the highest missile defense request on record at $13.2 billion. In my opinion, military spending has shown a poorer return on investment relative to spending on scientific research and innovation. Regardless of where you stand on military spending, the issue is about prioritizing. We cannot engage in global wars, bailout entire financial industries - including five large banks this week alone, and expect to remain dominant in science and technology, including space exploration. The trend suggests that the current US Government can identify an issue, yet like the inadequately funded Space Exploration Program, does not supply the resources to bring the project to completion. In business we frown upon blue sky thinkers who have ambitious plans, yet do not follow-through with execution to achieve the stated result. A plans without action is irresponsibility.

During the 2004 Moon and Mars announcement, Bush stated, "We choose to explore space because doing so improves our lives and lifts our national spirit." Bush is right, investments in Science and Technology, embodied in space exploration can enhance our collective innovation, produce new products and services and instill us with pride. By delivering on its goal of a spacewalk in 2008, the Chinese Government has enabled Chinese citizens to celebrate in the exploration of space and associated boosts in national spirit. Sadly like Intel's Chairman observed, the US is not investing in our competitive future. The every day person living in the BRIC countries are as hungry to succeed as Americans were during the Industrial Revolution. The recent Chinese space walk demonstrates the world has changed. The US Government and millions of Americans are failing to acknowledge that developing countries are focusing on developing systems of internal innovation and delivering sustainable results through investments in science and technologies that matter. We must do the same, otherwise there will be 45 less stars on the cover of Time Magazine for generations to come.

Photo Credits: China Daily, Xinhua News, CNN, NPR