Xi Jinping still has to deliver on reforms - Victor Shih

Victor Shih

Much of the first five years of president Xi Jinping's rule saw many promises on financial and economic reforms. But he fell short on delivering on those promises, says financial and political analyst Victor Shih to Quartz.

Quartz:

[W]hile Xi has paid market reforms plenty of lip service, he has yet to deliver on them, as noted by Victor Shih, a professor of political economy at the University of California-San Diego. “From everything we’ve seen, despite his rhetoric about reform and opening, Xi Jinping heavily favors a strong state sector,” says Shih. That raises another possibility: Perhaps China’s chief economic woes stem from Xi’s having too much power, rather than too little. 

“Whatever biases he has will continue to be reflected in the Chinese government’s policies for the duration of his tenure, which now will likely stretch well into the next decade,” says Shih. 

Xi has some good biases—for instance, his seeming commitment to cleaning up air pollution in northern China. But he also has a bias toward heavy state intervention into the economy, as is evident in his efforts to fix problems like dangerous debt levels and deflationary overcapacity—the latter via much-touted “supply-side reform.” During Xi’s tenure, the government took action to control the stock market, bond market, and foreign exchange markets, as well as the supply of coal, steel, and cement, Shih points out.

More in Quartz.

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Why foreign food brands do well in China - Shaun Rein

Shaun Rein

Despite often higher costs, Chinese consumers try to buy foreign brands, when they are looking for food products to avoid the pollution and scandals with domestic brands. Business analyst Shaun Rein, and author of The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia explains to Bloomberg why: they want peace of mind.

Bloomberg:

Consumers in mainland China are demanding foreign brands that promise something many local products can’t: peace of mind. Worsening pollution and several product-safety scares have led to increased sales for imports that are considered safer, from baby formula and facial creams to fresh fruit and live seafood. “The fear of pollution is changing consumer spending,” says Shaun Rein, managing director of Shanghai-based China Market Research Group. “Anything that’s sort of natural is doing really well.”

More at Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. 

Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form. Are you looking for more branding experts at the China Speakers Bureau? Check out this list.

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Maintaining high growth just not an option - Victor Shih

Victor Shih

The ´New Normal´ it is called, the lower (but still considerable) economic growth China is displaying. High growth is over, says political analyst Victor Shih in the Hellenic Shipping News. Maintaining high growth is just too expensive, he argues.

The Hellenic Shipping News:

“The era of easy growth is over,” said Victor Shih, professor at the University of California-San Diego. “It’s increasingly about difficult choices.”... 

With global demand slipping and fewer Chinese entering the workforce, Beijing will need to resort to stimulus spending to get there, analysts said, delaying the reckoning with restructuring. 

“It’s very costly and inefficient to reach these growth targets,” Mr. Shih said. “The political leaders want all these good outcomes, growth, some degree of reform and a high degree of stability,” without recognizing the tough trade-offs these entail, he said. 

One such trade-off is that between pollution and growth. By letting steel and other heavy industries in northern Hebei province ramp up to meet their year-end production targets last year, the government left the capital bathed in toxic pollution, angering the city’s residents, according to Mr. Shih. If Beijing shutters them, growth will fall, leading to more unemployment, which is another potential source of unrest. 

Among the most nettlesome issues is what to do about the state companies that dominate heavy industry and strategic sectors of the economy and wield great political influence.

More in the Hellenic Shipping News.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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The bright side of the pollution - Ian Johnson

Ian Johnson

Beijing underwent for the first time a code red for pollution: officially the worst air quality ever. But the air had been worse before, even a week earlier. Beijing-based journalist Ian Johnson sees a silver lining on the code red: the people and the politicians start to see things have to change, he writes in the New York Review of Books. And that is good new for the Paris talks.

Ian Johson:

This awareness began to result in concrete policy changes. By late 2012, the government had set up its own monitoring stations across China. Two young Chinese app designers came up with what I think is still the best app for measuring air quality,China Air Quality Index. It has measurements for 411 cities across China, allowing one to watch, in almost pathological detail, pollution clouds sweep across the country. 

Around that time I talked to the developers. They said that most of the downloads were probably from foreigners, but they noted that more and more Chinese seemed to be downloading. This feeling was reinforced in 2013 when I spent a couple of weeks in what was then China’s most polluted city, the steel city of Handan. The dubious distinction has since moved slightly north to Baoding, but both cities are similar for lying in the middle of the highest concentrations of steel production in the world, all powered by coal. As I wrote in an article then, discontent was growing even among steel workers—the people whose jobs were on the line. 

I was especially struck by an official I met from the local Communist Party school. She told me that the party realizes that discontent is growing and is instructing officials to make sure that factory pollution controls really were being used—and not just purchased and switched off to save money and increase production. 

Does any of this have relevance for the Paris climate talks? I think so. The (overwhelmingly) men who run the Chinese government may be authoritarian, but climate-change deniers they are not. They are too technocratic for that; for them, it has always been a very hard-nosed political calculation: burning less coal and shutting down industry is costly and potentially destabilizing. If you—the West—want this done, you help us pay for it. It matters more to you than to us. 

This is still China’s position, but the wave of pollution sweeping through the capital makes it harder for Chinese negotiators to play hardball. If the negotiations are seen to fail because of China’s intransigence, that will filter back to Beijing through the haze of censorship and, slowly, create resentment. It won’t lead to a political code red, but will be another cause for dissatisfaction in a country where the economy is already slowing. As perverse as it might be, the Chinese capital’s airpocalypse may be in its best long-term interests.

More in the New York Review of Books

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The search for quality. Ian Johnson discusses what China´s Yuppies are looking for

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China creates ´green´jobs, but is still far from green itself - Sara Hsu

+Sara Hsu 

China is ahead of Europe and the US in creating ´green´ jobs, but environmental enforcement is still lagging, writes economic analyst Sara Hsu in Triple Crisis. Critical failures make big parts of the country uninhabitable.

Sara Hsu:

China continues to lag behind in some critical ways. While environmental law enforcement has improved, as is evident in the number of environmental violation cases being brought to court, it is improving over very low levels. Air and water pollution levels are high, so high that air in Beijing is virtually unbreathable, and water in some industry-intensive locations is undrinkable.  Carbon emissions are increasing.  Agricultural and industrial production have had an adverse impact on the environment, including on levels of biodiversity. 

So yes, China is on its way to creating thousands of “green” jobs, but there is so much more that needs to be done for China to be truly “green.”  The extensive damage that has been wreaked on the environment by years of polluting industrial activity needs to be reversed, and this presents a very costly and time-consuming task.  China also needs to go beyond acting as the solar photovoltaic panel-producing hub of the world to incorporate green energy and green living into its most populous areas.  More “green” jobs can be created to implement pollution-controlling and greening technology in the industrial sector, ensure environmental health and safety, increase energy efficiency, better process waste, and research green technology. 

When China starts to win its “war on pollution” and creates “green” jobs that reflect an underlying beneficent attitude toward the environment, the world will have cause to celebrate.  Until then, we raise a glass to China in the hopes that the nation will push forward even more vigorously on its present course.

More in Triple Crisis.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form. 

Are you interested in more stories by Sara Hsu? Do check this regularly updated list. 

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Smog debate shows government takes pollution serious - Ian Johnson

+Ian Johnson 

Finally the government takes pollution serious, long after its citizens noted the dangers, concludes journalist Ian Johnson in ChinaFile, after a smog documentary was taken off the internet. But censors acted after 200 million Chinese watched the much-praised movie, that sparked off an unprecedented debate.

Ian Johnson:

In 2013, I spent a month traveling with the photographer Sim Chi Yin through southern Hebei for a piece that eventually appeared inThe New Yorker later that year (“In the Air”). What struck me most was the sense that ordinary people really got it—they knew their region had become one of the most polluted in the world, and in their own way they were pushing for change. One of the people Chi Yin and I spent days and days with was a second-generation steelworker named Han Zhigang. He had started an outdoor activity club so his daughter could go out to the mountains and get fresh air, and was building gliders to fly off the Taihang Mountains. One of the club’s member was a member of the Handan Party School—the Communist Party’s training wing. She was a really smart cadre in her early 30s, also with a young daughter, and she was highly critical of Party policies. She said the local Party school had already begun training cadres in pollution control and told them that they would be held to concrete standards. 

Already, you could see signs of improvement (mainly because the bar was so low): piles of coal now had to be fenced in so dust couldn’t blow around so easily, and filters were being installed (and used). Within a few months, Xi Jinping had announced that cadres would be judged by metrics other than economic growth, and leaders also promised to spent hundreds of billions cleaning up that region. 

I’m not defending China’s system, but when it works, this is how it works. Obviously this way of doing things has its limitations. As Chai Jing noted, one problem is that it’s harder to take on politically connected vested interests. Hansteel, for example, seemed like a model company inside the city limits of Handan, but it had simply pushed its dirtiest coking factories to the foothills of the Taihang Mountains, ruining villages and good cropland. (You can see some of this in the photo essay by Chi Yin in The New Yorker.) Seeing how Hansteel had skirted the regulations made me skeptical that a mainly top-down approach would work in the long run.

More debate in ChinaFile. 

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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China´s declining coal industry - Sara Hsu

+Sara Hsu 

A declining economic growth and stiff anti-pollution measures hit especially the coal industry in China hard, as prices fall in an industry suffering from overcapacity, writes financial analyst Sara Hsu in the Diplomat. The trend will continue. although "the transition to a diminished reliance on coal is difficult."

Sara Hsu:

For one, improved environmental standards around the world have reduced orders for this heavily polluting resource, and China has forced smaller mines to close or be purchased by state-owned companies. About 1,000 small coal mining companies were shut down in 2014. In the past four years, 5,920 coal mines have been closed. Most Chinese mining companies, about 70 percent, incurred losses in the first 11 months of 2014, as national governments have adopted climate change policies that attempt to transfer the reliance on polluting fuels to renewable and cleaner energy. Second, China is also very slowly decreasing its demand for coal as part of its five-year energy strategy for the 2016-2020 period, from 64.2 percent of total energy consumption to below 62 percent by 2020. Use of some highly polluting types of coal have been banned. As the world’s largest coal consumer, China’s declining demand for this natural resource bodes well for the environment and for the health of its population, as coal plant emissions alone result in hundreds of thousands of premature deaths due to particulate and heavy metal pollution. Coal miners themselves frequently suffer from pneumonoconiosis, or black lung disease, due to inhalation of coal matter. 

The transition to a diminished reliance on coal is difficult, however. Chinese regulators have attempted to maintain coal contract prices in order to maintain economic stability, but even so, coal prices declined 20 percent in 2014. Stockpiles of the fuel at coal mining companies increased 2.6 percent year on year, to 87 million tons, while stockpiles of coal at power plants rose by 17 percent. Excess inventories and overcapacity will likely maintain the pinch in the coal sector over the next year. To combat this, Shanxi province in northern China, one of the biggest coal producing regions in the nation, stated that it would not approve new mining projects until 2020. This represents a dramatic move toward increasing efficiency in coal markets.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more stories by Sara Hsu? Do check this regularly updated list.  

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Why water pollution is China´s largest challenge - Sara Hsu

+Sara Hsu 

China´s list of environmental problems is mind-boggling, but the water pollution might be the worst, writes urbanization expert Sara Hsu in the Diplomat. For many pollution induced cancer is coming too close, time is running out.

Sara Hsu:

Much has been said about China’s air pollution dilemma, with smog so thick in many urban areas that simply getting to and from work can pose a health hazard. Less has been written about the pollution of China’s water. In fact, water pollution in China is at least as bad – so severe that it has been proven to cause gastrointestinal and other types of cancer in some villages. Although these “cancer villages” have been around since the nineties, the government only recently recognized their presence. Many times in these cases, the pollution is caused by chemical dumping from nearby factories.

Dumping of industrial chemicals, agricultural waste, and urban waste water has contaminated China’s water resources such that over half of all rivers in the country are unsafe for human contact. About 70 percent of the water pollution nationwide comes from agriculture, particularly runoff from fertilizers, pesticides, and animal waste. The presence of heavy metals in seafood and rice has become increasingly common, passing on water contamination to the food supply. At the same time, while most water use comes from the agricultural industry in rural areas, poor households in the same areas find themselves increasingly disadvantaged when it comes to securing clean water. For these households, clean water has become progressively scarcer.

The main problem with China’s environmental control system has been one of enforcement. Water resource management involves many government institutions and insufficient coordination among them. What is more, local officials, who have been required to support local enterprises, have also had to uphold environmental laws. Because of the emphasis on generating GDP, the environment has been seriously neglected. Decentralization has led to taking into account the economic needs of the local area or province only. Decentralization of the coastal zone has also led to inattention to environmental needs. China’s coastline is extensive, divided into twelve units that are administered by separate bodies. Because of a lack of coordination and a beggar-thy-neighbor attitude, residents of these provinces have suffered as the environment has grown steadily worse...

There is hope that China’s “War on Pollution,” declared at the National People’s Congress this past March, will eliminate some of the worst water pollution. The National Development and Reform Commission has announced that it will address agricultural pollution this year. In addition, RMB2 trillion ($330 billion) has been pledged to tackle water pollution. The best that the leadership could do would be to ensure proper incentives for economic agents not to pollute. They must be aware of the fact that they cannot win the war on pollution without fundamentally changing how the war is fought and who is leading the battles. With climate change settling in, the stakes are high and the pressure is immense; time is running out.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more articles from Sara Hsu? Here is a regularly updated list.  

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Why I left China - Marc van der Chijs

Marc van der  Chijs

Foreigners have always been leaving China, but every now and then a high-profile departure hits the headlines. In CNN formerly Shanghai-based entrepreneur Marc van der Chijs explains why he left for Vancouver, Canada.

Marc van der Chijs:

Over the years, doing business had become more and more difficult for a non-Chinese. Although many areas have opened up for foreign investment, outsiders are not always able to do business on equal terms with Chinese entrepreneurs. 

For example, foreigners need more capital to set up a business. Once you have a business up and running, it will be more closely scrutinized than Chinese firms. There are still tons of business opportunities available in China, but I generally felt less welcome in recent years as a foreign entrepreneur. 

Much more important than this, however, was the fact that air pollution and food quality were getting worse in my adopted home. 

I have a family with two young kids, and found myself wondering about the health effects of long-term exposure to hazardous air. Without children, the pollution may not have been as important a factor to me, but I want my kids to grow up in a healthy environment. I also missed being able to exercise outside, having been forced to run indoors on a treadmill for several years -- even while training for marathons.

More about too slow internet connections and pollution in CNN.

Marc van der Chijs is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

In one of its earlier sessions, in September 2012, the China Weekly Hangout discussed why foreigners are leaving China, with three China veterans, two of whom left China. Andrew Hupert joining us from Chicago, Richard Brubaker from Shanghai and Fons Tuinstra from Lausanne, Switzerland.

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How affects the pollution your life? - China Weekly Hangout

Chinese New Year fireworks (Photo credit: bluepoppy6)

The China Weekly Hangout resumes coming Thursday January 24 with a discussion on how the rampant pollution affects the life of people living in China. Are they using masks when pollution is strong? Do they use purifiers? Do they change their habits? Will they be lightening fireworks during the upcoming Chinese New Year?
Is the pollution an extra reason to leave China during the New Year celebrations? Or are you even thinking of leaving China for cleaner places.

We have read a lot about the figures, the health effects on the population, and the growing pressure on the government to act. But what does it mean for your life. Join us on Thursday January 24, at 10pm Beijing Time, 3pm CET (Europe) and 9am EST (US/Canada).
You can register at our event page (you can register here), and let is know in a comment or email what your story is.

Last year, the China Weekly Hangout already had two installments on 1. why foreigners are leaving China, (with Andrew Hupert and Richard Brubaker) and 2. why Chinese are leaving China (with Isaac Mao, Li Meixian and Richard Brubaker). You can view them here.

Update: Richard Brubaker shared this useful infographic about what the people in Beijing are actually breathing: http://www.guardian.co.uk/environment/graphic/2013/jan/15/what-in-beijing-polluted-air?SOCNETTXT8763I?CMP=SOCNETTXT8763I

Some of the early debate is already developing at my post at my Google+ account if you are interested in having an early start. :-)

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