PRC Economy and Industry: News and Discussions

[Theo_Fidel]

This not over building. This only building, nothing more.

All the money that should have been spent on patiently learning how the technology for HSR works has been spent on $3 Billion station buildings.

Those who think China is a modern country should remember that.

[Singha]

http://www.nytimes.com/2010/12/15/busin ... f=homepage

the story of the spanish wind turbine maker gamesa.

[amit]

In my post above I had written this:

You point to the fact that almost all major companies are represented in China. However, have you paused to check what the common refrain is from these foreign companies? Everyone of them complain that it is very difficult to do business in China on their own and they need partners and in most cases the partners cannot be trusted with intellectual property.

Singha's link above has a real life example:

But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China’s lucrative business means playing by strict house rules that are often stacked in Beijing’s favor.

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader.

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

It's easy to get swept off our feet seeing China's spectacular advance (yes it is spectacular no doubt). But it pays not to be too starry eyed as ultimately only hard realism will allow us to understand the phenomenon that is China today. And understanding is the first step that is needed to ensure that we are not swept away.

[Pratyush]

Amit,

The learning form the wind turbine link is simple. If the Chinies want to dominate the global markets (Not just applicable to wind turbines). The export markets will have to make the Chinies play by the rules with which the chinies have played in their home market. That is the best way of deflating the Chinies manufacturing proweress.

JMT

[DavidD]

In my post above I had written this:

You point to the fact that almost all major companies are represented in China. However, have you paused to check what the common refrain is from these foreign companies? Everyone of them complain that it is very difficult to do business in China on their own and they need partners and in most cases the partners cannot be trusted with intellectual property.

Singha's link above has a real life example:

But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China’s lucrative business means playing by strict house rules that are often stacked in Beijing’s favor.

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader.

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

It's easy to get swept off our feet seeing China's spectacular advance (yes it is spectacular no doubt). But it pays not to be too starry eyed as ultimately only hard realism will allow us to understand the phenomenon that is China today. And understanding is the first step that is needed to ensure that we are not swept away.

Sounds like China is making out like bandits. Yes, pun intended

[shyam]

There are so many reports where Chinese companies stole technologies from western companies. But why don't we see any coordinated action by the western governments to nail down China for the continuous theft? What is the game going on?

[zlin]

There are so many reports where Chinese companies stole technologies from western companies. But why don't we see any coordinated action by the western governments to nail down China for the continuous theft? What is the game going on?

Someone gave an answer. China has already paid what she got. Westerns just playing sour grapes.

108.watchingchinaShanghaiDecember 14th, 20108:12 pm

The article fails to mention, or misleads, on two important factors.

One, for almost all serious technology, China pays real money for that transfer of know-how. For e.g., with the high-speed trains, China paid Kawasaki, Alstom, Siemens and Bombardier more than 3 billion dollars for the technology and training.

Chinese engineers spent months in France, Germany and Japan, and the foreign companies sent armies of technicians to China to advise on building the factories, ets. That technology, and the IP to go with it, was all bought and paid for. To suggest otherwise is dishonest.

Two: Once again, we have the pot calling the kettle black. The US is now, and has always been, the most protectionist of all countries, preaching free trade at home while practicing ruthless mercantilism abroad.

From agriculture to ethanol to autos and aerospace, the US has always written the rules in its favor.

At least, to be honest, you can't accuse China of changing the rules every time the game goes against it - the way the US does. All the rules in Gatt, NAFTA, and the WTO were written by the US to be strongly in its favor. Then when someone proves better than you at something, you whine and cry 'foul' and want to change the rules.

And anyway, Why should China want to spend the rest of its life making running shoes and toasters? There is no future in being a Wal-Mart supplier. None of us would do it any differently.

[Prem]

http://www.businessinsider.com/pictures ... -12?slop=1
And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China

The hottest market in the hottest economy in the world is Chinese real estate. The big question is how vulnerable is this market to a crash.One red flag is the vast number of vacant homes spread through China, by some estimates up to 64 million vacant homes.We've tracked down satellite photos of these unnerving places, based on a report from Forensic Asia Limited. They call it a clear sign of a bubble: "There’s city after city full of empty streets and vast government buildings, some in the most inhospitable locations. It is the modern equivalent of building pyramids. With 20 new cities being built every year, we hope to be able to expand our list going forward."

[shyam]

My question was why western governments don't plan some coordinated action because Chinese companies take away their technologies. Once Chinese companies get these latest technologies, they later will obviously sell those same product overseas at much cheaper price. The companies who exposed their technologies will be the losers in the long run. This is pure common sense. These companies and their governments are smart enough to figure this out, and yet we don't see any action from their side. Either Chinese have them by b@lls (I would like to know how) or some other game is going on.

[zlin]

Simple. If they don't sell, they will be immediate losers and there will be no long run any more. And they know Chinese peers will make their technologies sooner or later. Wind power turbine is not something that others couldn't figure it out forever. 2% market share is better than nothing, and probably better than 30% market share in a much smaller market size.

Who else is building 6000 kms HSR, or 30+ nuclear power stations, or 13GW wind turbines/year in these days?

Competition is just competition. Losers shouldn't blame others for their own fault. GM and VW won't recover so quickly without Chinese market. That's why Merkel and Sarkozy become China lovers from China bashers.

[putnanja]

Most of the technologies shared with Chinese was for the chinese to be sold within China only. Like the pakis painting a missile and calling it their design, the chinese made some superficial changes and are selling it everywhere else as their own. It is the same in India where the chinese companies are selling their bought/stolen power technologies as their own. I believe at least one power company is looking at suing the chinese.

The reason many western companies don't sue in China is that the chinese judiciary isn't really independent and toes the govt line. And since China is also a big customer for their products, they don't want to be shut out of chinese market which the chinese govt will do, given their penchant for strong-arm tactics.

Many companies have now realized that and are refusing to share the core technologies with the chinese

[Rahul Mehta]

My question was why western governments don't plan some coordinated action because Chinese companies take away their technologies. Once Chinese companies get these latest technologies, they later will obviously sell those same product overseas at much cheaper price. The companies who exposed their technologies will be the losers in the long run. This is pure common sense. These companies and their governments are smart enough to figure this out, and yet we don't see any action from their side. Either Chinese have them by b@lls (I would like to know how) or some other game is going on.

China is threatening sale of nukes to Iran and host of other nations.

[amit]

There are so many reports where Chinese companies stole technologies from western companies. But why don't we see any coordinated action by the western governments to nail down China for the continuous theft? What is the game going on?

Someone gave an answer. China has already paid what she got. Westerns just playing sour grapes.

108.watchingchinaShanghaiDecember 14th, 20108:12 pm

The article fails to mention, or misleads, on two important factors.

One, for almost all serious technology, China pays real money for that transfer of know-how. For e.g., with the high-speed trains, China paid Kawasaki, Alstom, Siemens and Bombardier more than 3 billion dollars for the technology and training.

Chinese engineers spent months in France, Germany and Japan, and the foreign companies sent armies of technicians to China to advise on building the factories, ets. That technology, and the IP to go with it, was all bought and paid for. To suggest otherwise is dishonest.

Two: Once again, we have the pot calling the kettle black. The US is now, and has always been, the most protectionist of all countries, preaching free trade at home while practicing ruthless mercantilism abroad.

From agriculture to ethanol to autos and aerospace, the US has always written the rules in its favor.

At least, to be honest, you can't accuse China of changing the rules every time the game goes against it - the way the US does. All the rules in Gatt, NAFTA, and the WTO were written by the US to be strongly in its favor. Then when someone proves better than you at something, you whine and cry 'foul' and want to change the rules.

And anyway, Why should China want to spend the rest of its life making running shoes and toasters? There is no future in being a Wal-Mart supplier. None of us would do it any differently.

Like I said before, it's always nice to believe your own propaganda.

You seem to have forgotten This case among several dozen others.

Cisco Systems Inc accused Chinese telecoms equipment vendor Huawei Technologies Co Ltd of unlawful copying of Cisco's intellectual property in a lawsuit filed in the Eastern District of Texas yesterday.

The suit was filed against Huawei Technologies as well as its subsidiaries Huawei America Inc and FutureWei Technologies Inc.
Click here to find out more!

Cisco claimed that Shenzhen, China-based Huawei "unlawfully copied and misappropriated Cisco's IOS software including source code." Cisco also claimed the Chinese company copied Cisco documentation and other copyrighted materials.

Amongst other claims, San Jose, California-based Cisco said portions of its IOS source code found its way into Huawei's operating system for its Quidway routers and switches. Cisco claimed the Huawei OS included text strings, files names and bugs that were identical with Cisco's IOS source code. The suit alleges that Huawei is infringing at least five Cisco patents.

Of course the fun part is Huawei counter sued Cisco in a Chinese court!

Now of course Huawei is the cutting edge of Telecom tech as far as China is concerned and they are mighty pissed off that the Indian govt has virtually banned Huawei on account of its links with the PLA.

Boss, in many ways what China has done is indeed spectacular, nobody disagrees with that. But don't try to peddle propaganda, untruths and half truths here. A lot of folks here keep tabs on what is happening.

[amit]

Sounds like China is making out like bandits. Yes, pun intended

To be frank David, I don't think the issue is that simple or just black and white.

I can understand from your perspective as a Chinese that you support this kind of get the IP at any cost and replicate it motive that drives much of Chinese business, backed by the government.

However, the point has always been what will the Chinese do when the rest of the world says enough is enough. We gotta see the end game.

[amit]

Who else is building 6000 kms HSR, or 30+ nuclear power stations, or 13GW wind turbines/year in these days?

The question is for how long and for what kind of RoI. Do you think the US, Germany or Japan wouldn't have crisscrossed their countries with HSR technology which they pioneered if they could justify the investment needed (as opposed to the investment needed in to build a similar capacity in air flight)?

You know I read somewhere a few years ago a very pertinent comment by an US architect who was designing one of those gee whiz buildings in Shanghai. He was asked why his firm couldn't or didn't design such grand and sexy looking buildings in the US. He said candidly that nobody would finance such buildings in the US as the RoI wouldn't/couldn't justify it.

He added that China was the last place on earth where heroic architecture or architecture for the sake of architecture (never mind the cost, sounds very Pharonic, I know!) was still appreciated! And I'm sure he and his firm appreciated the clicking noise in their bank accounts!

PS: Now go back some posts to have a look at that super duper Museum in Ordos which has no visitors to understand what the architect meant.

[jamwal]

Reminds me of an alien monster of a Hollywood movie that I saw a very long time ago. It even has slime/liquid discharge to match with the scene.

On the other hand, constructing buildings (beautiful ones) is not a bad thing, if they are of some use. Maybe if Chinese had constructed it at a batter location or done something to promote it, story might have been different.

[jamwal]

Talking about empty townships, what steps authorities are taking in order to prevent the buildings from deteriorating ? Any building will turn into a ruin within 3-4 years if left empty. Why not sell them at cheap prices to middle class or poor ? Even a small return beats them going to ruins.

[Theo_Fidel]

You are thinking of 'Evolution' starring David Duchovny. That creature came to a particularly sticky end if I remember.

As far as maintenance, these apartments are just empty shells. No heating and cooling even. So I'm sure they freeze in winter, (Yes, it snows in Shanghai) and bake in the summer. Even 10 year old blocks look like they are 50 years old now. Nice distressed look.

Last week fooling around with Google earth I put some sheets together to illustrate whats going down. This is not difficult at all.

This is Wuhan. I visited this place for 3 days 4 years ago and there were miles of empty developments even back then.
Shows about 1/20th of town. Estimate about 800,000 apartments visible in this view. As you can see from the date on the old town photo's, the Chinese are wisely not moving. Note the disturbed area on the right to double the amount of apartments.



Here is Shanghai West. Shows about 1/50th of the area. I estimate 1.5 Million apartments in this image. Again the Chinese people appear to be smarter than the Panda overlords and are wisely not moving. One wishes the people had been given the money to renovate/expand their beautiful towns. Very pretty. Guess not much H/D there.



I'm very conflicted by the cultural destruction I see. It would be sad to see India go down this road just to 'keep up' appearances with panda.

I have several more but don't want to dump them all at the same time.

[Bade]

Is it because of the 70 yr lease restriction that people are not motivated to move ? If given for free then they might take up the offer.

[amit]

The problem is, I think, pretty simple. In normal countries civil construction for urban renewal is a means to an end.
The end is better living standards. The side benefit is to give a nice kick start to the economy.

However in China civil construction for urban renewal has become an end in itself.

The kick start effect to the economy became more important than better living standards.

And so like I wrote in a previous post, the entire construction industry in China bought a ticket and got up on one of the HSR trains our Chinese friends like to show off and went for a ride - with the CCP's blessing of course. The problem is it's only after the train hit its top speed everybody realised that they forgot to put in a braking mechanism (perhaps wily Siemens held IP for that tech back?) and so the train cannot stop unless it crashes into something.

So the end result is the construction industry is merrily chugging along at 300 km per hour (or whatever speed these HSRs travel at) and building ghost town like Ordos and several others that we've seen. Just can't stop till it crashes.

[Bade]

The thing is that with the PRC style the high speed train does not have to crash, it can keep going in circles with a cycle of 20 yrs. By then the first of these will need maintenance and in PRC style a complete rebuild and then the train chugs along. The crash can only come if the people decide to take things in to their own hands after a serious disagreement. But, if I have to believe my sources everyone is too busy catching this train so do not expect any attempts to wreck it.

There is no economic principles here to be understood or applied, it is the way the feudal system operated for ages in many societies across the world.

[Theo_Fidel]

Deep inside that reptilian brain is a fear of losing that fastest growing economy tag. Without this irrational over construction they would still grow fast, but at a more sedate 6-7% or so per annum. Most countries would be over joyed by this growth but not panda.

The other thing to remember is that this is not a new phenomenon. Even as far back as 1998 they were building 10 Million or so apartments a year. Right now it is 15 million, officially. Their growth is definitely addicted to this 'easy' making of the numbers.

There is one other thing, China's rural residences and existing cities are actually of quite high standards. Unless shoot at sight orders are issued, it is going to be hard to herd the last 30% or so remaing into the cities.

This is about average for rural areas. These people are not moving.



This maybe a bit above average.



Bit below average.

[shyam]

...Edited...

My bad, thanks for pointing it out JEM. May be I was awake too late in the night.

But I had seen a video that my friend recorded during his China trip where we could see the long walls on road side, and the bad condition behind the wall were visible through the gaps.

[JE Menon]

Boss, either I'm blind or I don't see the walls... Can anybody else see these walls? Or are you referring to the row of good buildings on either side of the road, covering the next row of below par construction/slums...

[Bade]

I do not see it even if it is hidden too. Hey, what is wrong with hiding ugly slums anyway. It is far better than exposing all the ugliness along even the ORR in B'lore. We should get over this more than necessary honesty to paint a real world. Cosmetics has to begin somewhere even in India to make it presentable to outsiders and livable for locals.

[Singha]

one thing I see in PRC is that most urban areas seem to have banned 2 wheelers - either take public transport, walk, run or buy a car seems to be the onlee options - so no ugly mess of unruly 2 wheelers and autos in the lakhs like India or cambodia or vietnam. tractors , thelas or bullock carts happily run on every road here, but would earn a instant heavy fine and seizure of assets probably...but then since urban villages engulfed by expanding cities are bulldozed and relocated there wont be any bulls or tractors nearby.

bangkok traffic is pretty bad in rush hrs but I didnt see any bulls, thelas or tractors there atleast. and people everywhere OBEY THE DAMN RULES - trying to enforce that in India is like "herding cats" . even in rural areas of thailand and malaysia, with no cops for miles, not so well educated or rich people - everyone still OBEYS THE DAMN RULES.

that kind of reduces the chaos I would imagine.

valkommen to Hanoi traffic
http://www.vietnamnews.biz/images_store ... /26721.jpg
http://hanoigrapevine.com/wp/wp-content ... raffic.jpg

[ArmenT]

Looks like the Congolese aren't exactly welcoming the Chinese presence in their country.
http://www.bbc.co.uk/news/world-africa-12030051
Basically, TP Mazembe lost 3-0 to Inter Milan in the club world cup final. Therefore, hordes of angry congolese decided to attack Chinese owned businesses, simply because the referee "looked Chinese" (the ref was actually Japanese).

Now while this is a totally ridiculous situation and my sympathies are with the Chinese businessmen, it shows that there is some underlying tension with the local Congolese and it only needs a tiny spark to set off.

[Theo_Fidel]

Guys! those arn't slums! There is plenty of that around. esp. in the cities. Some of the interior cities are much much worse.

For instance about 60% of Shanghai is still like this. Esp. in the peripheral areas.







There is probably enough apartments built to move this entire population out. But these people can not afford those apartments. I doubt even Americans can afford them. That is why they are not moving. Such is China.

There doesn't appear to be an express ban on motorcycles in these areas. You do see them around. Motorcycles are definitely banned on Freeways however. You never see them there. This probably prevents their real utility. Main reason you don't see them is people with motorcycles can not afford these apartments. If you have a motorcycle you live in the cheap seats out in the sticks. In any case the Kinetic type Scooters are more popular than motorcycles for some reason.

I can say yet another thing. 95% of Chinese roads, esp. when you get away from Shanghai & Beijing look like this. Yes without even a black top. These are the roads 90% of the population uses. Notice the motorcycles. These are the roads that link all the little towns. Even 2-3 KM out of major cities. That last image is just out side Shanghai and most of the roads people actually live on look much worse.







There is a definite policy to ignore what we would call the millions of rural roads, in favor of the 2-3 major highways people really can not use, at least not yet.

Most definitely there is a deliberate policy not to improve existing roads. Only roads to new developments or modern apartment blocks are being improved. Rest are being completely ignored.

[Bade]

It seems there is huge unemployment problem among the educated young in PRC, something like 80% of graduates. Is it true ? Apparently the recent expansion of the university system is producing more graduates in professional disciplines than they have openings in mostly state controlled industry, small business entrepreneurs being non existent in China. If true that could also explain the empty apartments, as most stay back with their parents with no purchasing power.

[shyam]

Hey, what is wrong with hiding ugly slums anyway.

Nothing wrong in covering up the eyesore, but don't claim to be TFTA when they really exist.

[Singha]

I think the step-through 100-150cc mobikes are very popular in east asia because man or woman anyone can step over and ride it easily - makes sense if both man and woman of house want to use the same vehicle. unlike in India where men will probably make an H&D issue out of it and hence we see the segmentation into 'proper' bikes and scooterettes for women.

[amit]

It seems there is huge unemployment problem among the educated young in PRC, something like 80% of graduates. Is it true ? Apparently the recent expansion of the university system is producing more graduates in professional disciplines than they have openings in mostly state controlled industry, small business entrepreneurs being non existent in China. If true that could also explain the empty apartments, as most stay back with their parents with no purchasing power.

Bade saab,

There are haazar reports about this unemployment problem among the graduates which is a major cause for khujli among the TFTA CCP types in Middle Kingdom.

A couple of years ago I read a report (have been trying to retrieve the link but to no success yet) that quotes some Chinese official as saying that any growth less than 7 per cent would result in more graduates coming into the workpool than there are jobs for them. I would think the situation is getting even worse.

Hence the Chinese obsession with GDP numbers. Do note the demographics of these unemployed graduates mirrors to a large extent the protesters at Tienanmen Square all those years ago.

[amit]

The thing is that with the PRC style the high speed train does not have to crash, it can keep going in circles with a cycle of 20 yrs. By then the first of these will need maintenance and in PRC style a complete rebuild and then the train chugs along. The crash can only come if the people decide to take things in to their own hands after a serious disagreement. But, if I have to believe my sources everyone is too busy catching this train so do not expect any attempts to wreck it.

There is no economic principles here to be understood or applied, it is the way the feudal system operated for ages in many societies across the world.

Don't think it's as simple as that.

This model works in a infrastructure deficit country like, say India or China 10-15 years ago. However, now IMO China is fast approaching the point that it is infra surplus. Now it's simple to just stop building. However, what happens to the mega downstream industries that have been built up to feed this building craze? China produced more steel than the next 10 producers (and that includes US, Japan and Korea!) producers combined, more cement, more...

You can't turn the switch off these industries and it's unlikely that China can divert the production to overseas if they stop building at the pace they are now. I don't see anyone taking the stuff and killing their own industries. Only place perhaps where they can send the stuff is Sub-Saharan Africa but the folks there don't have the money to pay. However, they are mineral rich and so some bater system can be arranged. And I'm sure you've noticed the intense Chinese interest and activities in these countries.

It's because of these industries which support the construction eocosytem that I wrote the HSR analogy. China can't go on building forever as they are no longer such a low cost economy and cost will only go in one direction: UP. And if they pull the brake, it's likely that things could get messy, despite, as you correctly pointed out, the feudal system in operation.

JMT and other disclaimers!

[amit]

Here's a must read article which compares the development of Seoul with Beijing and Shanghai.

However, one finds the most striking evidence of how politics shapes the new Asian megalopolises in the differences between Seoul, South Korea’s capital, and China’s leading cities. After all, the Korean and Chinese cultures are similar. Both are founded on the hierarchical Confucian philosophy; both have been influenced by Buddhism. But Seoul is democratic, and the political debates of an open society have profoundly influenced its development. China’s cities, by contrast, reflect the autocratic and corrupt rule of the Communist Party.

Take Shanghai, China’s largest city, with a population of more than 19 million. Originally built by Europeans for Europeans, Shanghai has preserved some of the streets of its West-in-the-East past and boasts a lively, nearly tropical ambience that endears it to foreign visitors. But the Chinese government has, unsurprisingly, sought to transform the city into a glittering showcase of China’s rising power—above all, to lure foreign banks and investors away from Hong Kong. The tactic has yet to succeed: Hong Kong remains more attractive, though less because of its impressive buildings (Shanghai’s can compete in height, if not in architectural quality) than because of its commitment to the rule of law.

{I know of a few cases where US companies moved Asian HQ from HK to Shanghai and then a few years later back to HK!}

Most of the following paragraph is well known here but it bears repeating nevertheless:

Shanghai is a “costly facade to maintain,” confesses Yan Hansheng, its deputy mayor for finance. The city’s primary financial resources are still its traditional factories, owned mostly by the government, which continue to grind out steel, cars, and textiles. These industries, located west of the city center, remain hidden behind the costly facade; few foreigners ever travel that far. To protect Shanghai’s gleaming appearance further, the government also keeps tight control over the population. Officials view the peasant migrants who work menial jobs in Shanghai as a stain on the Western-oriented city and prevent them from living there or sending their children to local schools. To live permanently in Shanghai, one must be born a Shanghai citizen. (The mother transmits citizenship—a system in effect throughout China.) There are some exceptions, based on merit—holding a university degree helps—or on securing a fake identity card. All other migrants who work in Shanghai, though, must return by night to the shantytowns or shoddy workers’ dormitories at the city’s periphery, far from the cosmopolitan city center.{Paging Theo on this point, mirrors with the pictures you have been diligently posting to bust the myth!}

Travelers to Beijing should not expect to find any traces of the ancient and beautiful imperial capital, whose debasement began immediately after the Communist revolution. In October 1949, from Tiananmen, the monumental gate leading to the imperial palace, Mao Zedong proclaimed the “liberation” of China and demanded that factory chimneys replace pagodas and temples. About 1,000 religious buildings, many of them hundreds of years old, were soon destroyed or transformed into belching factories. {I pray for the soul of real China, and the great civilization} By the early 1960s, Beijing looked more like mid-nineteenth-century Birmingham than like the capital that European travelers had once nicknamed the “Holy City.” Unmoved by the pleas of some older scholars, Mao also demolished the walls surrounding Beijing, which had stood since the seventeenth century. The ostensible purpose was to ease traffic, but there were few cars in the city at the time.

The old city was a maze of neighborhoods made up of one-story houses built around square inner courts and separated by narrow lanes, or hutongs. These traditional neighborhoods could have been saved or modernized, but the reformers razed them in the name of hygiene (the official motive) and real-estate speculation (the real motive), erecting huge office towers in their stead. The hutong dwellers were moved to shoddily built, city-owned shoeboxes on the city’s edge, where rent is cheap but modern amenities like elevators and proper heating are often lacking. The government is now rebuilding a few of the original hutongs, characteristically seeking to please tourists in search of the authentic Beijing.

This paragraph is priceless:

Hoping to improve its undistinguished and often ugly cityscape before the 2008 Olympics, Beijing officials brought in some big-name architects from around the globe. The Netherlands’ Rem Koolhaas designed a new office for China Central Television; the Swiss firm Herzog and de Meuron constructed an Olympic stadium (the Bird’s Nest, as it is known colloquially); the Frenchman Paul Andreu produced an opera hall, the National Grand Theater. Yet the buildings, whatever one thinks of them aesthetically, could stand anywhere in the world and bear no relation to China’s culture or traditions. (If the Chinese didn’t want his egg-shaped opera hall, Andreu said, he would sell it to Canada.) Like the office towers, these expensive international trophies are absurdly underused. The Beijing opera currently has no program—the city is a cultural void—and the Olympic stadium has idled since the end of the games.

The above should be read in conjunction to the post where I wrote the anecdote by an western architect. None of these building, designed by these Western architects would/will be built in the West as the cost:benefit numbers don't add up.

As in Shanghai, and with the same legal rationale, the authorities deny rural migrants access to Beijing’s better neighborhoods. And this April, the Beijing government added another layer of control to prevent migrants from spending too much time in the city: “sealed management.” In 16 villages in Beijing’s southern suburbs, where most residents are migrants, iron gates slam shut at night and lock the population in, except for those with special permits for night labor. {Welcome to the land of the proletariat} The local Communist Party authorities claim dubiously that “80 percent of the residents applaud this practice, which increases security.”

True, the Forbidden City wasn’t in perfect condition 40 years ago, but the restoration work done on it since then has sometimes been sloppy—garish red concrete beams have replaced wooden ones, for example. American visitors may or may not be pleased to discover a Starbucks there.

Now the example of Seoul:

Seoul, only two hours by plane from Beijing, was also an imperial city until Japan conquered it in 1910. Not much remains of the old Seoul, either, though what destroyed it was not revolution but the Korean War. The city changed hands three times between 1950 and 1953. The former king’s palace and its extraordinary gardens survived, as did the city hall and the main railway station, built in the Japanese “imperial” style of the twenties. Little else escaped intact.

Democratization has helped transform Seoul into a more livable city in an extraordinarily short time. Before democracy, the authorities pursued economic growth at virtually any cost: real estate operated with little constraint, the number of private cars swiftly exceeded street capacity, public transportation was shoddy, and public spaces were basically nonexistent. But Seoul’s mayor during the 2000s, Lee Myung Bak—formerly the CEO of the Hyundai Construction Company—understood that Seoulites wanted a city center, plazas, gardens, and spaces to shop and stroll, and he led a dramatic reshaping of the city, preserving what was left of the past but making huge improvements in urban amenities. He won the nickname “Bulldozer” for good reason.

Among the projects undertaken while he was mayor: the Han’s banks, formerly devoted to parking garages and freeways, became accessible to pedestrians; an ancient stream, the Cheonggyecheon, which once flowed through Seoul until buried by a freeway, was restored, helping vivify the central city; and rapid-transit buses joined the city’s transportation system. During his mayoralty, too, formerly abandoned industrial areas transformed into gentrified neighborhoods, Korean versions of New York’s Meatpacking District. These popular changes helped propel Lee Myung Bak to the South Korean presidency in December 2007.

Now here's a very important point and in contrast to China. Theo mentioned the reluctance of people in China to move to the cities. Now see this:

Nearly all younger Koreans want to move to this exciting city, looking for better jobs, better schools, and more fun. Recently built high-speed trains connecting the provinces to the capital have accelerated the urbanization: young couples can move to Seoul but still visit their parents in the provinces on weekends, and thus avoid the sadness of leaving their families completely behind. According to Mayor Oh, if you include the population of neighboring cities like Incheon, which holds the international airport, the Seoul area is home to 25 million people, half of South Korea’s total population. He expects “10 million or more” to join the urban influx over the next decade. This isn’t China: South Koreans live where they want, freely renting and buying.

Read the rest folks, lots of nice nuggets there.

[VikramS]

The law of diminishing returns is soon going to kick in when it comes to Chinese infrastructure investment.
On the other hand, there is still a long way to go in India.

We certainly live in very interesting time. I do wish that the CCP can handle the slowdown without blowing a fuse. If they do blow a gasket or two, they will look outwards to deflect the blast. And India is one obvious place they are likely to deflect the blast. Japan is too close to Uncle for the CCP to make any serious strike.

[DavidD]

Where's the contrast? China kept some historical structures, beautified the cities(didn't the article criticize China for the same thing it praised Korea for?), built infrastructure, and everybody wants to make it in the cities.

[amit]

Where's the contrast? China kept some historical structures, beautified the cities(didn't the article criticize China for the same thing it praised Korea for?), built infrastructure, and everybody wants to make it in the cities.

David,

I can understand your need to rush in for the defense of China. However you'd do a better job if you read the report carefully before rushing in to post.

Here's what the Seoul Mayor did, according to the article:

Among the projects undertaken while he was mayor: the Han’s banks, formerly devoted to parking garages and freeways, became accessible to pedestrians; an ancient stream, the Cheonggyecheon, which once flowed through Seoul until buried by a freeway, was restored, helping vivify the central city; and rapid-transit buses joined the city’s transportation system. During his mayoralty, too, formerly abandoned industrial areas transformed into gentrified neighborhoods, Korean versions of New York’s Meatpacking District. These popular changes helped propel Lee Myung Bak to the South Korean presidency in December 2007.

And here's what they did in Beijing, again according to the article:

The old city was a maze of neighborhoods made up of one-story houses built around square inner courts and separated by narrow lanes, or hutongs. These traditional neighborhoods could have been saved or modernized, but the reformers razed them in the name of hygiene (the official motive) and real-estate speculation (the real motive), erecting huge office towers in their stead. The hutong dwellers were moved to shoddily built, city-owned shoeboxes on the city’s edge, where rent is cheap but modern amenities like elevators and proper heating are often lacking. The government is now rebuilding a few of the original hutongs, characteristically seeking to please tourists in search of the authentic Beijing.

What the Seoul Mayor did was set right the excesses committed during the autocratic phase which resulted in over building. In Beijing we have yet to see any of that. Only a few original hutongs were rebuilt so as please western tourists.

As a Chinese, I do not need to remind you that those hutongs and one-story houses built around square inner courts date back 1000 years as far as architectural style goes.

[Singha]

the MD of volvo india recently mentioned that shanghai has 12,000 volvo city buses in service. thats the scale of investment it takes to move a large city without allowing 2 wheelers in (since not everyone can afford cars).

[amit]

the MD of volvo india recently mentioned that shanghai has 12,000 volvo city buses in service. thats the scale of investment it takes to move a large city without allowing 2 wheelers in (since not everyone can afford cars).

Actually Shanghai has 18,000 buses according to this report. And yes you've guess it, highest number in the world. The Beijing CCP boss must be furious!

But we know Chinese numbers are not the most efficient benchmark. A country with less than half of the US GDP makes more steel than the next 10 top producers in the world combined, is an example of the Chinese benchmark versus normal real life and sustainable benchmarks.

Let's not get seduced by the numbers, that's precisely why our Chinese guests bring them up so regularly.

[amit]

Andy Xie wrote this in September about the real estate bubble. Still relevant IMO.

Again worth a read.