Thursday, June 23, 2016

May Letter: China

     June 11: I am visiting professor in China. Even though I am not really a bucket list kind of guy, doing something like this would be in my top ten.
     The university I am teaching at is the Anhui University of Finance and Economics (AUFE). AUFE is in the province of Anhui and in the city Bengbu. There are 28,000 students in this university. North Park University’s School of Business and Nonprofit Management (SBNM), where I am on the faculty, has an on-going relationship AUFE’s departments of Industrial Economics and International Trade.  I am here with Professor Pam Schilling. We are the fourth and fifth professors from SBNM to teach summer courses at AUFE.
     My term here is a short month: May 15 – June 15. I am teaching two courses. One is an undergraduate course, Marketing Channels and Supply Chains, and the other is a graduate course, Quantitative Methods. There are 47 students in the undergraduate class and 25 in the graduate class.
     What amazed me first and foremost about China? It was much greener than I had expected even in the middle of heavily populated cities. Second, I had heard that the air quality in many cities was so bad, people wore surgical masks while outdoors. While I saw some folks with masks, I did not find the air quality so bad. I recall it being worse in Mexico City when I used to routinely travel there.
     My fascination with China goes back to my junior year of high school. I was in a social studies class called Current Affairs. One of the topics we studied was Red China as it was known back in those days. I was amazed to learn that the population of China was 1 billion people. The global population at that time, 1970, was 4 billion. I recall thinking, “wow, one in four people in world is Chines and I know nothing about the country and culture.”
     Well the Current Affairs class was a good place to begin the learning journey. As it was a class called Current Affairs, we studied the establishment of the People’s Republic of China and how Mao Zedong (though he was Mao Tse Tung back in those days) forged a new country out of what had been multiple spheres of European and American interest. The called it foreign control and imperialism. The country, through rather harsh means, eliminated opium usage and imposed a strict one child policy.
     Of course, I read Mao’s Little Book. I was a little disappointed. I expected some kind of amazing revelation. It just was not there.
     On the plane coming over here, I read a Wall Street Journal article on the legacy of Mao. He was made out to be a despot responsible for the death of thousands. His darkest period was during the Cultural Revolution which began Mao was 73 years old in 1966 and lasted until 1976 when Mao died. The article portrayed Mao as an old man trying to cling to power. He thought the Party had was influenced by too many bourgeois members and he wanted to get basic to what he believed were the basic tenets of his form of communism. The result was brutal and chaotic. It took the country backwards, even though President Richard Nixon visited, in 1972, and normalized relations between the two countries.
     The only place you see Mao’s photo these days is on the currency. He is on every denomination. There is also his large portrait on the Gate to the Forbidden City (The Tian-an-men) facing Tiananmen Square. No one would refer much to Mao. If I try to bring him up in conversation, and believe me I was more curious than anything, people would just say he was our First Leader or the Father of our country. The few students would simply say, “I can’t talk about that.” Needless to say, I would drop the subject and any further inquiry.
     In my modest study of China in high school and college, I learned enough to sense a pattern. Throughout the 2200 years of Chinese history, there were long periods of great prosperity and short periods of foreign occupation or chaos. Mao ended the most recent period of foreign occupation with the creation of the People’s Republic in 1949. The chaos, however, was not over. Mao forged a country with an iron fist. The communal system resulted in mass starvation during a period called The Great Leap Forward in the late 1950s. It ended with the Cultural Revolution and Mao’s death.
     When I was in high school and college, it appeared to me that Mao threw off the shackles of foreign occupation and influence. I speculated that, if the right moves were made, China was on the brink of a new era of stability and prosperity. It seems looking back that my prognostication was correct. But here, the First Leader is not given that credit. Most believe here that the country we know today started in 1981. The architect of the transformation was Deng Xiaopeng. While he did not hold any official office such as President or General Secretary, he was considered the Paramount Leader. From 1978 to 1989, he led the country through the market-economy reforms that created the economic powerhouse that is today’s China.
     I have not heard his name mentioned nor have I seen a photo of him.
     On one of tours, the tour guide was very knowledgeable. She would refer to Mao as “Our first leader.” She did not say much else. I gave her my little soliloquy about Chinese history being long periods. She was relatively unimpressed. I suggested that we were in the front end of an era of great prosperity. She might have been mildly impressed. Then, I floated this idea out there. I wondered if a century from now, historians might refer to this government as a dynasty. She looked at me like I had three heads and said “This is not a dynasty.” Of course it isn’t a blood line dynasty but it sure a party one.
     So much for the history that no one really wants to or can talk about. I will have to read up more on this when I get home.
     How much planning is appropriate in Free Market System?: While in China, Professor Schilling and I discussed the China miracle and whether their approach to the market-economy was better than ours. Professor Schilling was definitely on the side of the freer markets which are basically the underlying philosophy that American business and business schools are based on. I took a slightly different perspective. I look at a continuum of the free – planned spectrum and wonder what the optimum point on that spectrum may be at any given time and set of economic conditions.
     I asked that question in the pit of the Great Recession. Should the US attempt to define what we wanted to be in the next five or ten years? If other countries, like China which is poised to become the world’s largest economy, are beating us by planning their free-market economy more than we are, maybe we should consider about taking a step or two in that direction? I realized I was basically suggesting that we set and implement a Five Year Plan which to me was synonymous for failure in the old Soviet system.
     These were not epic debates with Professor Schilling but rather discussions over breakfast or while walking to and from AUFE. She is more steadfast in her view and that makes sense given that she has an MBA from the University of Chicago’s Booth School of Business. My perspective came into focus after two weekends of tourism in which I took China’s affordable and very efficient trains to Xian and Beijing. The train to Xian was an old fashioned train that rumbled along probably at an average of 50 mph. It took 14 hours and that trip will be the subject of another letter. It was efficient at what it did. The train to Beijing on the other hand are modern high speed trains that cruise ever so smoothly at 185 mph. That trip was 3.5 hours. I was really impressed.
     Then I was kind of depressed. We have been hearing about high speed or bullet trains in Japan, France, and now in China for over 30 years. Our passenger rail system is a joke be comparison even
to China’s regular old slow trains. There have been occasional discussions about testing a bullet train system between a couple of cities but nothing has ever come of it. Nothing. Thirty years later, we have a decrepit and inefficient old train system. In half of that time, China has really cool and affordable high speed trains between all of its major cities. Bengbu is not a major city but it has a high speed train station for travel to Beijing and Shanghai for certain. There is a plan to provide high speed service to Xian. And us?
     This point was hammered home on a walking tour I took in Beijing. It was with a company called Urban Adventure which is based in Australia. The COO of the company was visiting their Beijing office and was on the tour with us. During lunch, the topic of trains came up and he lamented that they would be a great addition in Australia especially between Sydney and Melbourne. They have been discussing such a route since the 1980s but like the US, nothing has happened.
     I did Google “bullet trains in the US.” Actually, I Yahooed it since Google is not allowed in China. There seems to be two classes of articles in 2015 and 2016. One basically asks “Why is there No High Speed Rail Network in the US” and the other is reporting on being close to starting on projects in California. Of course, there are articles on Amtrak’s Acela which is considered higher speed (medium speed if you will) and not the high speed or bullet trains found in Japan, China, and Europe.
     It seems we are creeping towards a pilot in California. There is $68 B project on tap to link Los Angeles and San Francisco with a 200 mph train. It is scheduled to be completed in 2029.  2029? That seems like a long time.
     Apparently, the automobile, aviation, and highway construction lobbies want to protect their turf. The Republicans with the Cato Institute and the Koch Brothers behind them seem to think that privatization is the only way to do this which makes the prospects of this happening in any meaningful and impactful way… slim.
     Chinas biggest cities also have amazing subway systems and commuter rail. The US has the same in the a few cities but only Washington DC’s has the modern look and feel of China’s.
     The difference? Some central planning. The government decided that the have 1.4 B people. They have to figure out some way to provide good, safe, fast, and reasonably priced transportation to move people around the country and to and from work. They looked at the US (I am guessing) and decided that if they relied solely or mostly on autos, the roads would be ridiculously congested. As a result, even in Beijing, the traffic seems to flow.
     Keeping things tidy: China is a pretty green place. Even in the biggest cities there are parks with beautiful flower and landscaping. There is an army of folks tending to these parks and, at least in Bengbu, basically sweeping the sidewalks. I have seen more street cleaning vehicles then I might see in the US in five years (oddly they all have speakers playing “It’s a small world after all” for some reason). By plan, they have invested in civic beauty and order. Sounds OK to me. Things look pretty nice.
     I remember in the 1960s when the Southfield Expressway was built in Detroit. It was a beauty when it opened. The undulating north-south expressway went under the main east-west roads from 9 Mile Road in the north to I-94 in the south. The banks of the expressway were beautiful grass that was kept well maintained. When the city and state slid into economic troubles the maintenance of the road followed a similar trajectory. It was disappointing to say the least and more so indicative of the erosion of civic pride that I thought existed in my childhood.
     I like the free market system. But, I think there has to be a bit more planning in the US. When it comes to competing with a country like China, it seems one of us is playing checkers and the other chess.

Some of our undergraduates at AUFE

The East Gate of Anhui University of Finance and Economics

1 comment:

  1. The focus of the US has been pouring untold billion into the sucking black hole of the defense system(of profit, looking where to invade next, creating wars on false pretenses, and attempting to control the world for US interests. Whereas China has invested in infrastructure, education, technology, science, it's own markets and economy. Sadly the US efforts produced Trump, marinate on that.....