Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
China's society is changing fast, and the rising popularity of new values, and traditional religious are a feature too often ignored in contemporary journalist. Ian Johnson is well positioned to give a nuanced look at the massive cultural change happening since 1949. More details about his book tour your can find here.
His book tour is pretty busy, and it seems unlikely he can book more speeches during this tour, but it might be a good way to suss out what his book is about, and how it might fit into your conference or meeting. Are you interested in having Ian Johnson as a speaker, do get in touch or fill in our speakers' request form. Are you looking for more experts on cultural change at the China Speakers Bureau? Do check out this list.
If Bill Gates is a standard, getting an education degree is no measurement for later wealth. The Hurun China Rich list discovered that half of its listed 2,000 rich did not finish with a degree, says chief researcher Rupert Hoogewerf in Global Times. Partly that is caused by the chaotic times during the Cultural Revolution.
Global Times:
The annual Hurun University of Life Rich List 2017, released on Tuesday, shows that half of 2,000 Chinese entrepreneurs with assets of at least 2 billion yuan ($300 million) have no degree.
Rupert Hoogewerf, chairman and chief researcher of the institute, said that "these people might not succeed in accordance with current social standards; however, they made it and created great enterprises, which taught me that a hero may rise from nowhere."
The report listed the top 100 heroes, with Zong Qinghou, chairman of Wahaha Group, one of China's biggest beverage producers, ranking first.
According to Hurun, Zong, 72, from East China's Jiangsu Province, ranked No.41 in the Hurun Global Rich List 2016 and No.5 in the China Rich List 2016 with his wealth of $19 billion. Zong ranked No.1 in the China Rich List in 2012 with wealth of $12.6 billion.
The report said that Zong started work after graduating from middle school and established Wahaha beverage factory in 1988. Over the past 20 years, he built up his drinks empire and is a deputy of the National People's Congress.
Also on the list are Chinese tech entrepreneur Jia Yueting, chairman of LeEco, who was born in 1973 in North China's Shanxi Province and became an Internet worker after graduating from a vocational school, and SOHO China Chairman Pan Shiyi, a property tycoon, who was born in 1963 and graduated from a vocational school.
Compared with those who obtained a degree, the average wealth of the top 100 entrepreneurs without a prominent education background is 24.9 billion yuan, 9.6 billion yuan less than those who went on to further education.
The report said that the average age of the latter is six years older than the former with eight entrepreneurs over 70. However, only one of the top 100 "well-educated" entrepreneurs is over 70. "The heroic entrepreneurs are older and deeply affected by the Cultural Revolution (1966-76)," Hoogewerf said.
Western values do not match with Confucian values, but what does Confucian countries like China, Vietnam and Korea tick? Marketing expert Tom Doctoroff lived for two decades in China, and defines on his LinkedIn page what makes the consumers in those countries different.
Tom Doctoroff:
Whenever I am asked what makes Confucian countries -- China, Korea and Vietnam -- really different from the West, it’s not just the lack of individualism—it is the level of ambition. In China, for example, everyone is ambitious. Women want their piece of the sky, just as men do. A study by the Center for Work-Life Policy found that just 36 percent of college-educated women in America described themselves as “very ambitious,” compared to 65 percent in China. A further 76 percent of women in China aspire to hold a top corporate job, compared to 52 percent in America.
The “tiger mom,” forcing extracurricular activities upon her child to make sure he gets into Harvard 18 years later, is not a myth. Not all mothers are like this, but ambition remains a palpable force in Confucian societies. They were the first to become socially mobile societies; engrained in the Chinese psyche is people can achieve success by mastering convention and internalizing the rules. The desire to get ahead binds people together. From the bourgeoisie in the bustling metropolises of Seoul, Beijing, and Hong Kong right down to the farmers in the fields, all want to be an emperor of their small corner, no matter how modest their origins.
So the relationship between individual and society in Confucian countries is fundamentally different than in Anglo-individualistic ones. Across the Confucian cultural cluster, brands need to do more so cross-market resources should be pooled accordingly.
Zhang: Every society has prostitution. There is a saying in China: “Bao nuan si yinyu wenbao er si yinyu” — which means once you have food and clothing, you start thinking about sex. I have always been curious about the women who fill this social need.
Chinese society has become hedonistic after Mao’s regime of sexual purity and sexual repression. China has become materialistic, restless. Other reasons for the growing sex industry include growing wealth, relaxed social control and the resulting growth in individual personal freedom. Plus, of course, China’s population is increasingly mobile. Young migrant workers often can’t bring their wives with them or establish a relationship. Imagine a young migrant laborer on a construction site who works long hours and barely leaves the site, where he probably lives too. How could a man like this possibly provide a home for his family in the city, or maintain a relationship outside the workplace?
I met many women like the characters in the novel. I met women like Xia. They are old but still in the trade. They are not always sexually appealing, but they know all the tricks of how to flirt and attract men. So everyone finds clients in some way. The oldest sex worker I met was a woman in her mid-60s. Another middle-aged sex worker had a grown-up daughter who was married. Some women really get stuck in the trade and cannot get out.
The women have to stick together, but there is jealousy there too. They will comment on appearances: “She is so flat-chested, how does she get clients?”
Prostitutes are real people, and I wanted to expose that. Like any job, there are drawbacks. But their lives are not totally bleak either.
When she becomes a prostitute, Lotus has no idea about sexual health. Her clients pay more for sex without a condom, and one man even washes out an expensive condom for later use. What are the pervasive attitudes toward sex education, and what is being done to challenge them?
Legislation says sex education should be part of the curriculum in schools, but it is not compulsory and it is not enforced. It is not on the government’s list of priorities. There aren’t calls from the public for sexual education, but there are non-governmental organizations providing information on a wide range of things, from HIV/AIDS clinics to promoting openness about sexuality.
Many prostitutes are not educated about sexual health. Their bosses often tell them that it is OK not to use a condom because they get more money that way. They will say “It looks clean” (referring to the man’s penis) and make them agree to sex without a condom. Many men will refuse to wear a condom.
One NGO promoting sexual health suggested prostitutes start using “femidoms” (female condoms) because then the women themselves could have control of the contraception and they don't have to rely on their clients wearing a condom. But the prostitutes said they cannot use femidoms because they are too big. In a raid, they will often swallow the condoms they have on their person because condoms (used or unused) will be used as hard evidence by police. But femidoms were too big to swallow so they would not carry them or use them.
The details about Family Treasure (a character in the book) washing out the condom for later use are true. I heard lots of stories like that. That brand “Golden Gun — Never Flops” is a real brand of condoms, you know!
Asian nations want predictability and stability in their relationships with America. (Peter) Navarro (director of the US National Trade Council) especially is one who causes unease throughout the region — he has not visited mainland China in more than a decade and does not speak Mandarin. His criticisms about China keeping its currency artificially low and stealing American manufacturing jobs in light industry is outdated. If anything China is blocking capital outflows, raising interest rates in order to strengthen its currency, the Yuan. South-East Asian nations now are exporting to China as that economy transitions to one based on consumption.
The reality is most low-end manufacturing has already moved out of China to countries like Vietnam, Indonesia and Sri Lanka. Officials in those nations are worried that Navarro will convince Trump to turn criticisms to them once he is done criticising China
Going forward, Trump needs to show nations in Asia that America is ready to continue to be a long-term predictable partner that will support them in times of danger. By 2050, China's and India's economies most likely will have surpassed America's. Smaller nations are deciding now whether to align with China or the United States. Trump can no longer stay silent on his intentions in the region.
China´s first tier cities seem to be getting out of breath, while second and third-tier cities blossom. Business analyst Shaun Rein has been predicting the shift already for a long time, he tells the South China Morning Post. The rising prosperity of lower-tier cities may boost tourism to cheaper destinations like the Philippines and Thailand, he adds.
The South China Morning Post:
“For years I have been persuading people to focus more on China’s second and third-tier cities,” said Shaun Rein, managing director of China Market Research Group. He said people in lower-tier cities are more optimistic about their future and therefore more willing to spend money than their counterparts living in big cities.
“First tier cities are becoming pretty much depressing these days, with some of the big companies cutting their budgets. The middle class is feeling the pain of reduced payments,” Rein said.
He reasoned that with more affordable housing and basic necessities in lower tier cities, residents there are “much more confident” than their first-tier city counterparts and thus feel more comfortable as consumers...
The rising prosperity of lower-tier cities may boost tourism to cheaper destinations like the Philippines and Thailand, according to Rein.
The efforts by China´s financial authorities to reduce the outflow of capital has already reduced many investment plans by the China. But financial analyst Victor Shih sees a few more holes in the country´s policies that might be stopped soon too: education and tourism, he tells Sourceable.
Sourceable:
Still, the Chinese determination to choke cash outflows appears to be serious, and could have implications that extend far beyond property and into other sectors whose payrolls and future plans are increasingly dependent on Chinese money, like universities and tourism operators.
What China is doing with capital controls is similar to its management of the Internet, which Beijing has accomplished with great success. Access to censored websites “is not impossible from China, but it’s just a big hassle, and because it’s a hassle, very few people manage to do it on a regular basis,” said Victor Shih, who specializes in Chinese fiscal policy at the University of California San Diego.
The goal with currency conversion restrictions “is exactly the same – to create enough friction to deter the vast majority of people from converting sizable amounts of money,” he said.
There is much more, too, that China could do, Prof. Shih said. Every month, Chinese people spend between $15-billion and $20-billion (U.S.) abroad on services like tourism and education. It’s a huge cash drain, and one that China could pare back by restricting the number of people who can travel and study abroad.
“I really think this is where it’s all heading – dialling back the clock to the early eighties when all flows, including visits, were tightly regulated by the government,” Mr. Shih said.
“The leadership would like a certain combination of outcomes – stable growth, and also currency stability, and also no financial risk,” he said. “In order to accomplish that, you just have to control more and more stuff.”
Author Zhang Lijia of the much-acclaimed book Lotus: A Novel on prostitution in China discusses with Eric Fish on the weblog of the Asia Society how Chinese women end up in this trade. While triggered off by inequality, it is a way to improve their lives, she says.
The Asia Society:
How had the women you met usually ended up getting into sex work?
Quite a few women I interviewed worked very hard on production lines in factories for very little money. Then they talked among their friends and found out about jobs in massage parlors. In the beginning, the line is often blurred — some places offer legitimate massages and also sexual services, so women will start off doing normal massages and gradually start adding on sexual services when they see how much more money they can make.
Most women are migrant workers from rural areas, some are laid off workers from small towns, especially in Dongbei (China’s struggling northeastern region that’s now often referred to as a rust belt). There are also quite a few older women who are divorced or left abusive husbands and cannot otherwise support themselves. When they leave the countryside for the city, very few plan to get into sex work. It’s a hard decision in most cases. Sometimes it’s because of tragic personal circumstances.
Almost all of the women I knew sent money back to their families — it is out filial duty. One woman I met told me her brother was sent to prison so she supported her sister-in-law and her children for years. I think many of the women need something like that to feel good about themselves and the work they’re doing, so they send a lot of money home. I'm sure they struggle to come to terms with the work, especially since most rural Chinese women grew up with a very conservative upbringing.
I spoke with one woman who said in the beginning that she always used the phrase chi kui (to get the short end of the bargain) when talking about getting paid for sleeping with men. But then an older more experienced women told her, “Don't think like that, we're making use of them.” So she came to terms with it and now tells other women the same thing.
What role do you think gender inequality plays in fueling China’s sex trade?
In my book, Lotus has to stop her schooling because the family thinks they'll just end up marrying her off. Since she’s a girl, there's no point in wasting money on her education. Save the resources for the boy — that’s a common attitude in rural China, especially in the poorest areas. So rural women are generally much worse off than boys in terms of education. The political system, of course, is another problem. Because of the hukou residency system, rural residents still cannot apply for certain jobs. Economic reforms brought a lot of opportunities, but uneducated rural women really missed out.
Ultimately, that’s part of why prostitution is such a big industry in China. With growing wealth and gender income inequality, I think concubine culture plays big a role. Men used to keep concubines and mistresses as a way to show prestige, and they still do the same. The growing wealth gap between urban men and rural women really magnifies this.
The still unresolved disappearance of billionaire Xiao Jianhua from Hong Kong has sent shivers among the financial elite. Right-fully so, says political analyst Victor Shih to Today. China´s central government wants to show who is in charge.
Today:
On the economic front, the implications are less clear. While confidence in the city could be shaken, talk of capital flight from Hong Kong might be premature, experts say.
The timing of Mr Xiao’s case ahead of a major party congress later this year suggests an attempt by China to pre-empt any surprises during the meeting.
“Observers like myself had thought Mr Xiao would be safe because he conducted transactions for multiple political elites in China, which is a good hedging strategy,” Associate Professor Victor Shih of the University of California, San Diego told the Financial Times.
“If he does not resurface soon, then this hedging strategy will be shown to no longer be a foolproof way of protecting oneself,” noted the expert in Chinese political economy.
While many analysts expect China to grab chances when the US is changing its global position, eminent China experts Howard French sees the opposite is happening. With a shrinking and aging population, China´s power is diminishing, he argues in The Atlantic. While the US have chances.
Howard French:
Under President Xi Jinping, China has until very recently appeared to be a global juggernaut—hugely expanding its economic and political relations with Africa; building artificial islands in the South China Sea, an immense body of water that it now proclaims almost entirely its own; launching the Asian Infrastructure Investment Bank, with ambitions to rival the World Bank. The new bank is expected to support a Chinese initiative called One Belt, One Road, a collection of rail, road, and port projects designed to lash China to the rest of Asia and even Europe.
Projects like these aim not only to boost China’s already formidable commercial power but also to restore the global centrality that Chinese consider their birthright.
As if this were not enough to worry the U.S., China has also showed interest in moving into America’s backyard. Easily the most dramatic symbol of this appetite is a Chinese billionaire’s plan to build across Nicaragua a canal that would dwarf the American-built Panama Canal. But this project is stalled, an apparent victim of recent stock-market crashes in China...
Not so long ago, conventional wisdom in China held that the country’s economy would soon overtake America’s in size, achieving a GDP perhaps double or triple that of the U.S. later this century. As demographic reality sets in, however, some Chinese experts now say that the country’s economic output may never match that of the U.S.
With American Baby Boomers entering retirement, the United States has its own pressing social-safety-net costs. What is often neglected in debates about swelling entitlement spending, however, is how much better America’s position is than other countries’. Once again, numbers tell the story best: By the end of the century, China’s population is projected to dip below 1 billion for the first time since 1980. At the same time, America’s population is expected to hit 450 million. Which is to say, China’s population will go from roughly four and a half times as large as America’s to scarcely more than twice its size.
Even as China’s workforce shrinks, America’s is expected to increase by 31 percent from 2010 to 2050. This growing labor supply will boost economic growth, strengthen the tax base, and relieve pressure on the Social Security system. At the same time, Americans will continue to enjoy a substantial advantage over the Chinese in terms of per capita income. This advantage in wealth will continue to underwrite U.S. security commitments and capabilities around the world.
Shaun Rein, managing director of China Market Research Group, said he expected outbound investment from China into the United States to drop sharply in the first three to six months of 2017.
“First, the capital controls are very serious. Right now Chinese companies are hesitant to make an acquisition overseas because they’re worried that they won’t be able to get the approval to convert for foreign exchange. That situation should get better in general as fears of a currency collapse are alleviated,” he said.
Fears that President Donald Trump may implement trade policies that target China will also weigh on investment, Rein said.
“Chinese companies and Chinese tourists both are concerned that they won’t feel welcome in the United States any more. They’re scared that Trump will target them and target China,” he said. That, in turn, would boost investment into other markets like Europe and Australia.
Fast declining foreign reserves have pushed China´s financial authorities into severely restricting the outflow of capital. Outbound investment, like the Vancouver real estate industry, might be under pressure, says financial analyst Victor Shih in the Vancouver Sun.
The Vancouver Sun:
The new edict demands a written pledge that yuan converted into U.S. dollars will not be used to buy property overseas. It also creates a government black list and harsher penalties for violators.
The new rules came into effect on Jan. 1, causing uncertainty in global real estate markets from London to San Francisco and, of course, Vancouver.
Some have been doing back-of-the-napkin calculations to guess at what a sharper chokehold on Chinese funds could mean for a market already reeling from the additional property tax for foreign buyers.
Others wonder how this latest move might compare with past attempts to cool the outflow of Chinese money.
“I think this round of (foreign-exchange) crackdown is much more strictly enforced and (will be) longer lasting,” said Victor Shih, associate professor at the University of California, San Diego, who is researching the impact of elite networks in China. “Prior to the end of last year, even low-level private bank clients for major Chinese and transnational banks can easily transfer money from mainland accounts to offshore (ones.)
Chinese authorities have now stopped this, he said.
“In addition, when exchanging any amount of money in China, one now needs to specify the beneficiaries of the exchanged foreign currency, whether it be an overseas university, a tour group or a hotel,” Shih said.
China’s foreign-exchange reserve has been rapidly emptying since 2015, he added.
“Because money supply in China today is over US$20 trillion, even if a fraction of the money of the money supply were to get out, it can quickly wipe out China’s reserves. Thus, (Beijing) has to impose increasingly draconian restrictions on capital flows.”
Commentator Dan Southerland of Radio Free Asia is clearly touched by the moving bookLotus: A Novelby journalist Zhang Lijia on the life of prostitutes in China. "An uplifting book on a sad subject," he says about the book.
Radio Free Asia:
A second book, titled simply Lotus, is a novel that provides deep insights into the lives of the migrant Chinese workers whose cheap labor has created China’s economic miracle.
Among those workers, thousands of women who feel crushed by assembly-line factory work in the big cities have turned to prostitution. A character named Lotus is one of them.
Author Lijia Zhang creates a sympathetic portrait of this young prostitute, at the same time shedding light on the plight of China’s migrant workers.
As journalist and writer Ian Johnson says in a review, Zhang's book opens a window into “a land of underground sex trade, corrupt police, desperate migrants, and flawed characters trying to make the right decisions.”...
Her sympathetic portrayal of the life of a prostitute named Lotus working at a massage parlor in the economically booming city of Shenzhen also turns out to be a love story and a testament to one woman’s strength.
Lotus’s story begins as a typical one for many migrant workers, the unsung heroes of China’s economic rise.
Her massage parlor in Shenzhen lies hundreds of miles to the southeast of her rural village in Sichuan Province, and she can rarely afford to make a trip home.
Her main aim in life is to send money home to assist her family and ultimately to help her brother Shadan realize his dream of entering a university. He would be the first in his poor village to achieve this goal.
Her family has been told that Lotus is working in a Sichuan restaurant in Shenzhen and not as prostitute.
Like so many migrant workers, she had arrived in Shenzhen to work in a factory outside the city. Her cousin, nicknamed “Little Red,” had talked her into taking the job. But after her cousin died in a fire at the factory, she decided to find work in the city.
When her lack of a high school diploma disqualified her from the best jobs, she turned to prostitution, first as a street walker and later in a massage parlor, often fronts for prostitution.
While officially illegal, prostitution has become an industry in China that would appear to be hard to eliminate, though police do launch periodic campaigns against it. One of the most dramatic scenes in the novel describes a raid on her massage parlor in which some of Lotus’s friends are beaten.
The camaraderie among the girls while under detention, their jokes about their plight, and the offer of one to share what little money she has to pay off the police becomes one of the most touching moments in the book.
It’s hard to imagine that a book on this sad subject could be uplifting, but this one is.
Mr Xiao Jianhua has long had strong connections with the families of Communist party leaders, but he was much more than a bagman by the time he was spirited back to mainland China by Beijing’s agents on the eve of the Chinese lunar New Year.
Living for the past few years in self-imposed exile at the luxurious Four Seasons hotel and apartment complex in Hong Kong, Mr Xiao had become one of China’s richest men, a multi-billionaire in dollar terms with investments focused on banks and insurance.
According to the Hurun Report, the young man who began his business career selling personal computers near his old university was worth US$6 billion (S$8.5 billion) by 2016.
Mr Rupert Hoogewerf, chairman of the Hurun Report, said Mr Xiao had used his knowledge of capital markets and leverage to build a big empire. But, he said, it is extremely difficult to work out his wealth because he has “a myriad highly complex structures”.
“He’s considered to be extremely intelligent and extremely low-profile,” said Mr Hoogewerf. “Within investor circles, he’s pretty respected because he comes from Peking University so he’s not some hillbilly who’s gone into the business of capital markets.”
From his Four Seasons vantage point overlooking the busy harbour of Hong Kong, Mr Xiao held court attended by a bevy of female bodyguards, managed his business affairs and represented the government of Antigua and Barbuda.
The two weeks of volatility since Donald Trump took office have fuelled anxiety that investments in China will be the next victims of his hostile, unpredictable policies, analysts say.
“It’s a fearful time right now,” said Shaun Rein, managing director of China Market Research Group. “When we talk to investors, they don’t know where to put their money.”
International investors have been given a blunt reminder that US presidential pledges can do real harm to the global market....
Trump has vowed to impose a 45 per cent tariff on Chinese imports and label Beijing a currency manipulator. His administration has also angered China by talking tough on Taiwan and the South China Sea disputes – tough stances Rein believes Trump will be maintained in his dealings with China.
“He likes to use chaos in order to negotiate,” he said. “My guess is he is going to take a strong stand and criticise China on trade, currency and its military.”...
Looking at the positives, however, Rein is advising his clients to invest in naval weapons companies, which might benefit from China bolstering its navy to tighten its grip on the South China Sea.
Food producers in Australia, New Zealand and Europe might also see surging demand from Chinese consumers if agricultural imports from the US were reduced, he adds.
“Chinese consumers are still spending a lot,” he said. “There is going to be more tension between America and China. Consumers will have to buy food and commodities from Australia and Europe.”
Meantime, tourism in Asian countries could gain from a sharp decline in Chinese travelers heading to the US, Rein said.
“Many will start to think it’s unsafe because they see all the protests,” he said, and worry they are going to be targeted by “ultra-white nationalists who do not like Asians”.
Billionaire Xiao Jianhua suddenly disappeared this week from Hong Kong, triggering off rumors of him being kidnapped into mainland China. The South China Morning Post says it received confirmation. China´rich list expert Rupert Hoogewerf or Hurun gives in AP some background on this business partner of some of Xi Jinping´s relatives.
AP:
A wide-reaching anti-corruption crackdown led by Chinese President Xi Jinping has snared dozens of executives at state companies. Chinese state media said in 2013 that Xiao controlled nine publicly listed companies and had stakes in more than 30 financial institutions.
The New York Times reported in 2014 that a company Xiao co-founded paid $2.4 million to buy shares in an investment firm held by Xi's sister and brother-in-law.
Rupert Hoogewerf, the Hurun Report's publisher, said Xiao holds the reputation of a "maverick visionary" who makes major decisions on his own and has gone to lengths to obscure Tomorrow Group's holdings, which include banks and securities companies.
"He's one of the kings of capital of China," Hoogewerf said. "There's not many people moving money in the same way."
