Andrew Singer Talks About China
Andrew Singer Talks About China
Vol. 1, Issue 24
China continues to dominate the news. The reports we see in the West generally have an international flavor concerning how a stronger and more assertive China is and might affect the wider world. But what about China domestically? This is important because what happens inside the country is not only impacted by what happens outside the country, but even more so, what happens inside the country impacts and will impact what ultimately happens outside the country. This Issue looks at some of the big issues currently percolating and popping in China.
China’s Domestic Headaches
Chinese Pagodas
One More Thought
China’s Domestic Headaches
China is being buffeted by domestic swells that seem relentless.
None of them suggest easy solutions.China’s Power Grid has recently been hampered by acute energy interruptions that have not only forced factories to close up to several days a week and restaurants and retail shops to temporarily shutter or dump inventory in different parts of the country, but have also raised concerns about meeting home heating needs during the fast-approaching winter. For all that China is a world leader in renewable energy, such power is not yet widespread or completely reliable, and the vast majority of this large and varied nation still runs on coal.
It is coal, and a question of inverted economics, that is the principal reason for the current power problem. Coal has long been an unregulated commodity, while power supply is a regulated industry. Thus, as the price of the material resource coal has skyrocketed this year due to increased pandemic and post-pandemic (in China) demand and short supply, the amount that can be charged for the resulting electricity remained capped.
When it is cheaper for an energy producer to limit or stop production because selling less at an increasing loss results in, well, less loss, cascading problems are a natural result.
The government has just recently announced an intention to regionally experiment with trying to reign in coal prices on the open market along with tentative relaxation in the regulated price of electricity. At the same time, China is importing significantly greater amounts of coal and electricity directly from Russia to try and cover the crisis.
China’s Real Estate Industry has been the source of much of China’s growth, expansion, and wealth during the go-go years. Once capitalism and private ownership were authorized during the 1980’s, ordinary Chinese latched on with zeal and the real estate boom began in the 1990’s. Do you want to get married? Owning real estate made grooms more attractive. Do you want to invest to provide for yourself and your family? Real estate was the ideal vehicle as an asset that had the additional benefit of not being taxed.
At present, more than two-thirds of China’s household wealth is tied to real estate.
Many large real estate development companies emerged, and pre-construction purchasing became the norm of close to nine out of every ten sales. Price rises and FOMO were in the driver’s seat. This worked great for the longest time, but recently, not so much.
Several large real estate development companies, including Evergrande Group, Fantasia Holdings Group, Modern Land (China), and Sinic Holdings Group, each way over-extended and have already or are soon to default, respectively, on nine-figure interest and/or principal payments on bonds and other outstanding loans. There are tens of millions of empty apartments dotting China, many in so-called Ghost Cities.
Sales are down, and Chinese citizen investors are nervous about leasing and making mortgage payments on their existing holdings or even receiving title to units that have not yet been built and turned over to them. Renewed debate on a hotly-contested proposal to institute a national real estate tax is not making the situation any less unsettled.
China’s Natural Disasters. Following up devastating floods, damage, death, and destruction in Henan Province this summer, the northern province of Shanxi has recently been hit with its own calamity. Four days of torrential rains caused substantial or total destruction to thousands of cultural and historic heritage sites. 17,000 homes collapsed. Hundreds of thousands of acres of crops were destroyed. Coal mines and chemical factories have been shut down. Millions have been displaced. The disruption and damage, including death, have been severe.
China’s Covid Containment remains a zero-sum, no tolerance policy. This has worked remarkably well to stamp out Covid whenever and wherever it reappears. But it too has consequences. For example, shipyards are closed and cities are quarantined when even a handful of people test positive. The resulting economic disruptions to manufacturing, shipping, transportation, and more spread like a spiderweb throughout the country.
China’s Population and Employment remain long-term flashpoints of concern. Marriage and birth rates continue to plummet. This has mid- and long-term ramifications for society and the economy. One county government recently proposed a campaign to persuade rural women to stay and marry local men. It did not go over well. Cities and industries have a need for (the right kind of) workers to keep growth moving. In one example, the demand for cybersecurity talent outstrips the supply. On the flip side, China mints millions of new college graduates each year, and they need employment. Yet, unemployment, underemployment, and misemployment are chronic.
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As the Chinese government is discovering with its Common Prosperity program to respond to social ills (see Vol. 1, Issue 21), management of the above domestic issues, separately and in combination, will have unintended consequences. So often in life, a) when you begin the process of trying to address one area of concern, you are likely to create ripples in another, and b) as one issue becomes another becomes another, the potential snowball effect can become a runaway train. Or is maybe a bucking bronco a better analogy? In either event, holding on tight is recommended.
Chinese Pagodas
From Provincetown to Paris to Prague, I enjoy climbing monuments, towers, and temples. China has its own brand of beckoning towers--pagodas. I have only climbed one, but there is always tomorrow.
Pagodas evolved from the Indian Stupa. Buddhism originally traveled from India to China almost 1,000 years ago, and these reliquaries for relics of the Buddha followed as well. They were in most instances modified to fit Chinese cultural and architectural tradition, being extended up and transformed from a wide dome body with a narrower spire to a generally thinner, tiered structure often with an odd number of levels and a top finial.
The first pagodas were made of wood, but stone and brick also became popular. The famous (and long ago lost) early fifteenth century porcelain pagoda in Nanjing was made with multi-colored tiles and white-glazed porcelain bricks that were said to reflect the sun’s light. Well more than 100 lamps were hung to light the tower at night.
The central, vertical column of a pagoda symbolizes the connection between earth and heaven. Some pagodas have solid cores, while others contain small rooms at different levels. If you have the opportunity to climb a pagoda, watch out for rough and hard low ceilings and funky protrusions.
Pagoda shapes have evolved over time, from square to hexagonal to octagonal and occasionally circular. These striking structures became noted features of the landscape and also offered expansive views from the higher levels.
The Five Pagoda Temple (五塔寺) in Beijing is based on an Indian diamond-throne pagoda and dates from the Ming Dynasty in the early fifteenth century. It is constructed of brick and marble, and the five pagodas on top are set on a masonry terrace. The outside walls are carved with more than 1,000 Buddhas, Buddhist symbols, and animals. An interior hallway on the first floor allows for passage around the square, central core and past the four Buddha statues situated facing the four directions.
Pagodas in China served as sacred Buddhist sites as well as physical reminders that following the path of the Buddhist dharma leads to salvation. They were sites for prayer, seeking wish fulfilment, and protection.
One More Thought
Here’s a provocative thought…might the ancient Greeks have assisted the craftsman of Emperor Qin Shihuang’s Terracotta Army? A new, joint BBC-National Geographic documentary explores this idea. In the words of Dr. Li Xiuzhen, Senior Archaeologist at the Emperor Qin Shihuang’s Mausoleum Site Museum, “We now think the Terracotta Army, the acrobats and the bronze sculptures found on site, have been inspired by ancient Greek sculptures and art.”
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Except where otherwise noted below, photographs are by the author:
A. Ocean waves by tim-marshall-qKlD2QlK-CY-unsplash;
B. Shenzhen housing by darmau-lee-4D3EC2VF5CE-unsplash;
C. Flooding in Shanxi Province from bbc.com-gettyimages; and
D. Porcelain Pagoda (Johan Nieuhof) from https://www.amusingplanet.com/2016/06/famous-porcelain-tower-of-nanjing.html.