China’s shrinking cities

Hegang, China in 2012

Hegang, China in 2012

China has almost 1,000 cities that are losing people:

The perception that China’s urbanisation is still in full swing is untrue for nearly one-third of Chinese cities, whose populations are shrinking, according to new findings by a Chinese university.

A research team from Tsinghua University used satellite imagery to monitor the intensity of night lights in more than 3,300 cities and towns between 2013 and 2016. In 28 per cent of cases, the lights had dimmed.

China now has 938 shrinking cities, according to Long Ying, an urban planning expert at China’s Tsinghua University, who founded and led the research group, Beijing City Lab. This is more than any other nation on Earth.

The urban shrinkage is related to China’s declining population.

The Chinese cities under the greatest pressure of shrinking include those heavily dependent on natural resources, such as the coal mining town of Hegang in Heilongjiang province.

Also diminishing are cities “in the process of transformation”, such as Yiwu in Zhejiang province, once christened the “largest small commodity wholesale market in the world” and famous for its sprawling networks of stalls selling counterfeit goods.

More about Yiwu here.

Most Chinese city planning is detached from the reality of today, Long said after his team reviewed ambitious urban development plans for more than 60 cities. The plans usually include key infrastructure projects, as well as industrial, commercial and residential developments that may diverge significantly from the demographic trends.

The best-laid plans of mice and men. Anything is possible in China, but Herculean development plans (such as the Greater Bay Area “blueprint”) need to be taken with a grain of salt.

Huge apartment buildings dominate the skylines in most Chinese urban areas. These buildings would be much more costly to tear down should they be vacant than the standard smaller houses in shrinking cities in the US, for example.

These large buildings may also be sparsely occupied – it could be difficult to survey how many homes are empty, Long said. Furthermore, no official wants to face a decision over whether to tear down a building that might just have a few occupants.

Chinese academic Gan Li calculates that some 22% of the nation’s housing stock is vacant, or more than 50 million homes.

However, the desolation that haunts many of America’s decaying post-industrial towns could be replicated in China, if the situation is not managed properly, Long said.

“Although shrinking cities in the US and China are different on many levels, many landscapes in the US rust belt could be the future of some of China’s shrinking cities,” he warned.

Censorship protection racket

People.cn

There’s a lot of money to be made by offering censorship services, at least if you’re China’s main state-owned newspaper:

While most global news companies are struggling to survive in the internet world, China’s official media is having a golden era.

One of the bright spots on the A-share market these days is People.cn, the online version of the People’s Daily, whose shares surged 243% in the past month to a four-year high.

In 12 of the last 15 trading sessions, the shares of the Communist Party mouthpiece surged to a daily limit of 10%. The Shanghai-listed company now has a market capitalization of 34.74 billion yuan (US$5.18 billion), or an incredible 380 times historic earnings. […]

People.cn is tasked with censoring the content of the online media from the major platforms operated by internet giants such as Baidu, Alibaba and Tencent.

This was virtually a licensed insurance business for online media in the age of increasingly tighter control from Beijing.

Apparently, People.cn charges service fees to the internet giants to help them scrub their platforms of content that might be offensive to the Party. Of course, this is a bit circular since People.cn is an organ of said Party. Nice website you got there… be a shame if anything happened to it.

Shanghai repair guy

Hengshan Lu apartment buildingWhen I was living on Hengshan Road in Shanghai, my apartment building had a repair guy. He lived in the dumpster room, which was a nondescript concrete structure that adjoined the building. By and large, you didn’t notice him, and I think that suited him fine. There was also a slovenly middle-aged dude who lived in the building and always seemed to show up and collect a small amount of money whenever anything happened, such as a tenant moving in. You might call him the building manager, except he didn’t really manage anything. He was more of an agent or middleman.

There was, for a long while, a broken toilet that sat next to the elevator on my floor. Nobody seemed to mind this. I don’t remember if it was ever removed. When I first moved in to the building, the sink didn’t work and there was a leak from the ceiling above the shower. We got the sink fixed somehow, but the leak persisted. It turned out there was a crazy old guy living directly upstairs (he was a government official who had been injured in a car accident and literally went crazy) and there was something wrong with his pipes and that was the source of the leak.

Together with my landlord (a cretin), the repair guy and the “building manager,” we visited the crazy old guy upstairs and identified the problem, which promptly failed to be solved. There was a big argument between the three parties who were supposed to be helping me fix the leak and somehow they just couldn’t reach an agreement about how or whether to fix it.

Finally, after a long and exhausting struggle, I figured out that the problem was that the repair guy wanted a small sum of money, like 40 yuan (about $6), and either the landlord or the “building manager,” or both, refused to pay him. So I shrugged and paid the man. And you know what? He fixed the leak. He fixed it but good.

A new bloc on the block

Sergey Karaganov

Sergey Karaganov

The day (in 2000) when Putin suggested that Russia would be willing to join NATO if it was treated as an equal partner seems like a very long time ago. Of course, the offer was never made, and NATO proceeded to expand eastward to within 100 miles of St Petersburg.

In retrospect, shutting Russia out of the Western alliance was a colossal mistake, possibly one of the great strategic blunders in all of history. Because now Russia is hellbent on forging an alliance with China:

Russia’s view of China has shifted significantly over the past five years. Moscow has abandoned any hope that the Chinese economy is an example it might emulate. Instead, foreign policy experts now talk of how Russia can use China to further its geopolitical goals.

There was no doubt at Valdai that China knows how to do economic growth, and that Russia does not. Russia’s elite — always so ready to resist any sign of Western hegemony — have no problem admitting China’s economic superiority. Their acceptance reminded me of the way Britain gave way to the United States as the world’s dominant economic power.

Seen from Moscow, there is no resistance left to a new alliance led by China. And now that Washington has imposed tariffs on Chinese exports, Russia hopes China will finally understand that its problem is Washington, not Moscow.

In the past, the possibility of an alliance between the two countries had been hampered by China’s reluctance to jeopardize its relations with the U.S. But now that it has already become a target, perhaps it will grow bolder. Every speaker at Valdai tried to push China in that direction.

Both Russia and China have obvious shortcomings, but the fact is that the US, Russia and China are the world’s foremost military powers; and an alliance of two of those powers against the third could prove to be a geopolitical game-changer.

This alliance, if it becomes concrete, would overturn how we do global politics. Imagine an international crisis in which Russia and China suddenly emerge as a single bloc. The impact would be considerable, and to some extent unpredictable: Psychologically, in the mind of the West, it would combine the fear associated with Russia with the apparent invulnerability of China. Washington would feel under attack; Europe, intimidated and unsettled.

The old Continent would also face the threat of a split between Western Europe and the nations of Central and Eastern Europe, which could turn their focus east under the influence of a cash-happy China ready to invest in the region.

The author, a former Europe minister for Portugal, describes a scary meeting between former Putin adviser Sergey Karaganov and some Chinese officials and think tank people:

There, a number of Chinese participants said they doubted Russia’s assertions that the world is in the midst of a new Cold War.

Karaganov dedicated himself to convincing them otherwise, arguing with increasing passion that China is deluding itself if it thinks issues between Beijing and Washington can be conveniently resolved to the benefit of both sides.

If Beijing places its bets on peace and cooperation, the great Chinese adventure will come to an end, and China will have to live in the shadow of the U.S. for another generation — perhaps forever, Karaganov said. Chinese authorities, he argued, have no more than five years to make a decision.

The clock is ticking.

Social credit system in action

China’s dystopian social credit system is in full swing, and the results are… sweeping:

Skipped paying a fine in China? Then forget about buying an airline ticket.

Would-be air travelers were blocked from buying tickets 17.5 million times last year for “social credit” offenses including unpaid taxes and fines under a controversial system the ruling Communist Party says will improve public behavior.

Others were barred 5.5 million times from buying train tickets, according to the National Public Credit Information Center. In an annual report, it said 128 people were blocked from leaving China due to unpaid taxes.

The ruling party says “social credit” penalties and rewards will improve order in a fast-changing society after three decades of economic reform have shaken up social structures. Markets are rife with counterfeit goods and fraud. The system is part of efforts by President Xi Jinping’s government to use technology ranging from data processing to genetic sequencing and facial recognition to tighten control.

How long before China adds social credit incentives to boost its lowest-in-the-world fertility rate? Have another baby, get “points” that you can redeem on Taobao!

And before you get complacent, the Western democracies are not far from implementing “social credit systems” of their own.

Fuzzy GDP math

It’s hardly a secret that China’s reported GDP growth figures are less than reliable; premier Li Keqiang actually acknowledged that the numbers are “man-made and therefore unreliable” more than a decade ago. A new study from economists at the Chinese University of Hong Kong and the University of Chicago estimates just how inaccurate those figures are:

China has overestimated its nominal and real growth rates by about 2 full percentage points on average between 2008 to 2016, with the miscalculation increasing each year, according to a new study published on Thursday.

The results indicate that the actual size of China’s economy at the end of 2018 was well below the government’s official estimate. […]

Using the study’s findings and applying them to government figures starting with the level of nominal gross domestic product (GDP) at the end of 2007 and the growth rate for 2008, calculations by the South China Morning Post show that the current nominal size of the Chinese economy is about 18 per cent lower than the official level of 90 trillion yuan (US$13.4 trillion) at the end of 2018. […]

SCMP calculations show the adjusted nominal GDP level in China is about US$11.5 trillion using current exchange rates, still more than twice the size of Japan’s economy at US$5.16 trillion, but well below the economy of the United States at US$20 trillion.

“The editorial equivalent of clubbing a baby seal to death”

South China Morning Post

The best part of waking up is hilariously bad writing under your cup

That is how one commenter aptly describes this brutal deconstruction of a column by Tammy Tam, editor-in-chief of Hong Kong newspaper the South China Morning Post. Keep in mind as you read it that the SCMP is the most prestigious English-language newspaper in Asia:

It was while I was in the thick of deciphering the intended meaning of Tam words and rewriting them into coherent utterances that I gained a sense of Tam’s ineptitude as a writer: whatever Tam had applied herself to in the past, toiling at the keyboard – so necessary a part of any writer’s growth – wasn’t one of them. So, just as some people think any able-bodied person can lift her leg and “dance”, Tam probably approached column-writing assuming any literate person can string sentences together and “write.” […]

How did someone with Tam’s shoddy English got herself installed as the chief editor of an English-language paper in a cosmopolitan city? In recent years, Beijing has made many moves to curtail the freedom of expression in Hong Kong; Tam’s appointment can be understood as just one of such measures. And from Beijing’s point of view, the need to have a loyalist helm the SCMP is so pressing that the optics of Tam dancing like Dean’s sister in the paper every week is of negligible importance.

Tam’s column is really, really bad. The critique of it, on the other hand, is a delightful act of editorial cruelty.

While we’re on the topic, here’s China’s state media lecturing Canada about journalistic ethics:

Canadian Prime Minister Justin Trudeau announced on Saturday that he had “asked for and accepted John McCallum’s resignation as Canada’s Ambassador to China,” after McCallum told the Toronto Star Friday that “if (the US) drops the extradition request, that would be great for Canada.” Joanna Chiu, assistant managing editor of StarMetro Vancouver, directly triggered the resignation after making McCallum’s words public. On Twitter, Chiu described how she got the exclusive interview with McCallum and showed off her scoop. But Chiu’s behavior made her look like a paparazzo instead of a serious journalist. It’s not hard to imagine the serious consequences if such important news is reported in a “paparazzi” way. […]

Canada’s current public opinion won’t help the country resolve [Huawei CFO] Meng’s case reasonably. Some Canadian media and reporters, especially Joanna Chiu, have played an irresponsible role. They are pushing the Trudeau administration further into a dilemma, leaving Ottawa no choice but to stand against Beijing. This is not what a professional journalist would do.

The Trudeau government must properly deal with China-Canada relations, or it should be prepared for Beijing’s further retaliation.

Pork

This is an interesting thread by investor Adam Townsend about agriculture and US-China trade that sheds light on China’s monumental takeover of Smithfield Pork in 2013. What happens when you sell domestic farmland to a Chinese government-supported company? Worth reading in full, despite the terrible formatting (thanks to its origins on Twitter):

1/ This is a kick a*s thread about China, tech theft, its food supply and its pollution. You are about to become an expert, lets begin…
Technology…
CFIUS (Committee on Foreign investment in the US) is made up of 32 different federal agencies…
2/ that review foreign purchases that could affect U.S. security such as access to technology, military contracts, installations or other sensitive information. Agriculture isn’t part of the CFIUS mandate nor is the USDA or FDA.
3/ The committee isn’t required to review any deals, relying instead on outsiders or other government agencies to raise questions about the appropriateness of a proposed transaction.

The most common foreign investor that hits the CFIUS radar is China. Let’s peel that onion
4/ President Obama stopped a Chinese investment fund from acquiring the U.S. subsidiary of a German semiconductor manufacturer
In September 2017, Trump halted a China-backed investor from buying the American semiconductor maker Lattice
5/ A Chinese company’s plan to acquire the American money transfer company MoneyGram fell apart after CFIUS expressed their concerns that the personal data of millions of Americans would be exposed
6/ CFIUS advised against a Chinese group’s attempt to buy Xcerra, a Massachusetts HQ’ed tech company
Trump blocked the purchase of the chipmaker Qualcomm by Singapore-based Broadcom Ltd.on the advice of CFIUS

Now we gotta talk about Chinese pollution. Buckle up…
7/ Only (about) 11 percent of Chinese land can be farmed. Most of its tremendous land mass is inarable, degraded by erosion, salinization, acidification, industrial effluent, sewage, excessive farm chemicals and mining runoff.
8/ Chinese rivers have been drying as demand from farms and factories have depleted them. Of the ones that remain, 75 percent are severely polluted, and more than a third of those are so toxic they can’t be used to irrigate farms,

Now we gotta talk about food…
9/ Chinese authorities have encouraged companies to gain greater control over the entire supply chain for imported agricultural products.

Enter the United States…China’s average annual water resources are less than 2,200 cubic meters per capita. The United States, by contrast
10/ is about 9,400 cubic meters of water per person
The United States has six times more arable land per capita
Pork
The Chinese currently eat 88 pounds per capita annually (Americans eat 60 pounds) They produce and consume half of the world’s pork, so…
11/ when there are fluctuations in their domestic production – even small fluctuations – it can really increase their need for imports.

To meet the growing demand, China’s hog farms have grown and multiplied, and more than half of the globe’s pigs are now raised there.
12/ But even so, its production can’t keep up with the pork emand
US pork exports to China went from about 57,000 metric tons in 2003 to more than 2.31 million metric tons (mt) in 2016 which converts to $5.94 billion

It’s cheaper to produce pork in the US than in China.
13/ Our meat industry churns out hogs for about $0.57 per pound, versus $0.68 per pound in China’s new, factory-scale hog farms. The main difference is feed costs. US pig producers spend about 25% less on feed than their Chinese counterparts. We have more abundant land, water…
14/ …and grain resources.
“Control oil and you control nations; control food and you control the people.”
So, China buys Smithfield Pork…

In an effort to cut out the middleman, China is trying to circumvent the American farmer. Instead of buying food from farmers who…
15/ … work their own land, they want to own and operate these American farms themselves—as well as the livestock barns and slaughterhouses.

Chinese consumers, pay a large premium for US pork as it is viewed as higher quality due to our strict food safety laws.

Shaunghui,…
16/ a Chinese meat-processing company in 2013, purchased Smithfield for 30 percent over its market value. It was the largest purchase of a U.S. company by a Chinese firm and the first acquisition of a major American food company by a Chinese business.

U.S. Treasury Department
17/ allowed the purchase to go forward after assurances from Smithfield CEO Larry Pope that there was no connection between Shaunghui and the Chinese government. A year later it was discovered that the Chinese government did have a connection to Shaunghui.
18/ he Communist Party supported the Smithfield purchase with “preferential policy”, as well as “investment,” Zhang Taixi, the government-appointed president of WH Group (the corporate name Shaunghui adopted in 2014), told reporters!
19/ The WH Group advanced the China Communist Party aims to own the entire production chain for pork with the least geographic distance between U.S. pork production and the Chinese market.

One of the benefits to owning every aspect of production from feed through packaging…
20/ is that you can increase production on demand.

ChemChina, a China Communist Party owned company, recently bought Syngenta, a Swiss agrichemical company, for 43 billion dollars, and this creates a bigly foothold in feed production.
21/ What if the Chinese government becomes of the largest players in American agriculture.

We’ve handed over a vertically integrated system to a foreign government.
22/ Side effect of that is the damage left in its wake, production leads to more barns being built and, in turn, waste coming out of those barns. You need more feed for those pigs, so you’re raising more row crops and putting more of that waste onto the fields.
23/ Between 2007 and 2012, Iowa had the largest increase in hog and pig sales of any state in the country, a jump of $1.9 billion. The number of polluted Iowan waterways increased 15 percent between 2012 and 2014. Not only do the waste pits used to capture manure…
24/ …from large hog operations produce antibiotic-resistant bacteria, the pathogens can travel miles away. When a foreign investor buys land, local population loses farming rights, which can lead to people losing their homes, livelihoods, and access to resources like water.
25/ …to preserve its well-being, Iowa outlawed selling farmland to foreign buyers. The median age of the American farmer is 55, in the next five years about 92,000,000 acres will go up for sale.

Rail of fail

Nearly 420 million people are reported to have used China’s high-speed rail system during the annual Spring Festival holiday that has just wrapped up. Late last year, China opened the Vibrant Express, Hong Kong’s first bullet train, which zips passengers from the Special Administrative Region to Guangzhou in 48 minutes.

Meanwhile, in the US:

California Gov. Gavin Newsom announced Tuesday he’s abandoning a plan to build a high-speed rail line between Los Angeles and San Francisco, a project with an estimated cost that has ballooned to $77 billion.

“Let’s be real,” Newsom said in his first State of the State address. “The current project, as planned, would cost too much and respectfully take too long. There’s been too little oversight and not enough transparency.”

The idea long championed by Newsom’s predecessor, Jerry Brown, is years behind schedule. The latest estimate for completion is 2033.

Newsom, though, said he wants to finish construction that’s already underway on a segment of the high-speed train through California’s Central Valley, arguing it will revitalize the economically depressed region. He’s also replacing Brown’s head of the state board that oversees the project and pledged more accountability for contractors that run over on costs.

One can’t really blame the new governor for this, as the promise of an LA-to-SF bullet train, which California voters approved in 2008, has always been a huge scam:

When California voters approved construction of a bullet train in 2008, they had a legal promise that passengers would be able to speed from Los Angeles to San Francisco in two hours and 40 minutes.

But over the next decade, the state rail authority made a series of political and financial compromises that slowed speeds on long stretches of the track.

The authority says it can still meet its trip time commitments, though not by much.

Computer simulations conducted earlier this year by the authority, obtained by The Times under a public records act request, show the bullet train is three minutes and 10 seconds inside the legal mandate.

Such a tight margin of error has some disputing whether the rail network will regularly hit that two-hour-40 minute time, in part because the assumptions that went into those simulations are highly optimistic and unproven. The premise hinges on trains operating at higher speeds than virtually all the systems in Asia and Europe; human train operators consistently performing with the precision of a computer model; favorable deals on the use of tracks that the state doesn’t even own; and amicable decisions by federal safety regulators.

And let’s not even get started on the New York City subway.

Actually, let’s.

Fuling

Originally posted on Nov 11, 2013

Fuling China market

This summer I traveled to Fuling, a district of the vast Chongqing Municipality in central China. It was disappointingly easy to get there: flight from Shanghai, then van ride from the Chongqing Jiangbei International Airport to Fuling. A former colleague and her boyfriend greeted me at the bus stop where the van left me, and that was it.

Getting to Fuling was a little tougher for the noted American journalist Peter Hessler, who taught there for the Peace Corps from 1996 to ’98 and wrote a lyrical memoir about his experience, called River Town. For him, the journey involved a seven-hour ferry ride down the Yangtze River from Chongqing, at the time administered as a separate city. As you might imagine, people in Fuling didn’t leave much.

Fuling Chongqing China map

Fuling is now a district of Chonqing

Not long after Hessler finished his Peace Corps service and left Fuling, a new highway was built, reducing the journey to an hour-and-a-half transit over smooth asphalt. Fuling now has an abundance of highways and train lines linking the once isolated town to the outside world.

Many other things have changed too. The absolute poverty that Hessler witnessed in the ’90s is receding fast. The students he taught at Fuling Teachers College were the children of peasants and they wrote essays describing the indignities and hardships of rural life. But the middle-class students I met in Fuling seemed to belong to a different world, both materially and psychologically. Whereas most of Hessler’s students went on to become rural schoolteachers after graduation, many of the students I met were aiming for comfortable civil service jobs. One guy, whose English was excellent, enthusiastically questioned me about the U.S. (he seemed to know more about American pop culture than I did). Another student complained about having lost her iPhone on a bus.

Fuling China senior citizens

With a group of students at Yangtze Normal University – the new name for Fuling Teachers College – I strolled around the university’s new campus and headed downtown to explore. We toured the Underwater Museum of Baiheliang (White Crane Ridge), which bills itself as the first subaqueous museum in the world. Visitors descend a 300-foot escalator to a viewing gallery 130 feet below the surface of the Yangtze River. Through three-inch-thick portholes, we peered at the White Crane Ridge, a long strip of sandstone celebrated for its ancient fish carvings and calligraphic inscriptions.

Fuling China Yangtze River

The White Crane Ridge used to surface during the winter season, but it’s now permanently submerged under the waters of the Yangtze, thanks to the Three Gorges Dam, the colossal barrier a few hundred miles downstream that has tamed the world’s third-longest river. Now the ridge and its inscriptions can be seen only through murky water, like a sunken shipwreck.

Fuling China Apple store

My Fuling friends and I ambled around the town, where we played a street ring toss game, checked out the wares on display at a bustling outdoor market, and ate lunch and ice cream at KFC. The poor and sleepy river town of Hessler’s teaching years now has a clean and modern town center, an upscale department store, and cars crowding the streets – visible signs of an exploding GDP. Fuling does not yet possess that important benchmark of development, a Starbucks (Shanghai has well over a hundred), but it will – I’m fairly sure of that.

Fuling China bookseller

Unsurprisingly, foreigners are still a rarity here, and I received my share of dumbstruck looks and excited greetings on the street. The manager of the guest house near the university where I stayed burst out laughing the instant he saw me. “Foreigner!” he shouted with delight, pointing at the comical figure that had just walked in. (As it turned out, he and his family were extremely hospitable and, on the day of the traditional Dragon Boat Festival, they cooked lunch for me – one of the most delicious meals I have ever had in China.)

The students took me to their university’s old campus, which has the feel of a ghost town. It’s apparently up for sale and is mostly deserted, though we saw a handful of students playing basketball and using the library. Thick vegetation grows everywhere and some of the rundown buildings have windows missing or are choked with weeds. It occurred to me that the campus would be an apt setting for a post-apocalyptic movie.

Fuling China night riverside

But across the street from the main gate, new buildings are rising under red construction cranes. On the opposite side of the campus, huge concrete walls are materializing on the banks of the Wu River (a tributary of the Yangtze), along which a new road will soon appear. I took it all in, carefully, because I know things will be different whenever I come back.