Life in the Very Fast Lane

Notwithstanding some of the worst pollution problems of any country on earth, China is moving at warp speed to modernize its economy and infrastructure, spending at a level that the world has never seen before. This need to “get there fast” may well be born of Chinese history. Until the 1800s, China pretty much saw itself as the biggest superpower for the last two millennia. The word for China in Chinese means “Middle Kingdom,” but it really translates into the “center of the earth without rival anywhere else.”

In the early 15^th century, the Ming Dynasty Emperor Zhu Di (also known as the Yongle Emperor and pictured above) exemplified the power and reach of the Middle Kingdom. His treasure fleets, consisting of hundreds of ships, each holding as many as 500 men in the first boats with water-tight compartments (making them very hard to sink), sailed the earth looking for “tribute,” wealth easily extracted from local leaders who did not want a confrontation with this obviously superior naval force. While his efforts explored Africa, the India and the rest of Asia, he made no effort farther west. He noted that aside from some interesting religious experiments, the people living from the Middle East and into Europe were just too barbaric with little to offer.

In fact, China did not even receive ambassadors from other countries until the late 19^th century (after the Opium Wars where they came up on the short end of the stick), because that would have implied that other countries were the equal of China. They only accepted tribute ambassadors, bringing gifts to the emperor. The underlying arrogance is deeply embedded in the Chinese psyche, and in many ways China really did have the most powerful nation on earth for centuries.

The degradation of China really began with modern and very successful Western military attacks on coastal Chinese ports in the middle of the 19^th century (the Opium Wars, where the West forced China to accept the drug as a trade good to balance England’s massive trade deficit from the tea market). Attempts to reassert Chinese power, like the failed Boxer rebellion at the turn of the century aimed at ousting Westerners, were literally the nails in the coffin. The Manchurian Dynasty (Q’ing), the last such political structure to rule China unraveled in the late 19^th century, collapsing in its entirety in 1911.

The subsequent battles with war lords, the Japanese invasion before and during WWII and the crushing repression of Maoist China left China a sad comparison to the obviously superior lifestyles and military power of the West, particularly the United States. If the Chinese were truly the most powerful and relevant nation on earth, Chinese wondered, how could this happen? So when China modernized after Mao was gone, the feeling in every Chinese soul was to recapture the glory of the past and ascend to the perceived pinnacle of humanity that was believed to be China’s birthright. Chinese believe that there is nothing that the West can do that China cannot do better, cheaper and more efficiently. Nothing. Understanding this underlying feeling is essential in understanding modern China and Sino-American relations.

It is also basic to understanding why Chinese leaders believe that their mandate is to reconstruct China to its past glory as quickly as possible. We’ve seen how the economic miracle had radically altered the Middle Kingdom, but even with trillions of dollars in currency reserves, China’s infrastructure ambitions are biting off such massive costs – and concomitant debts – that many economists are worried that China is expanding too fast, that there is a very big bubble waiting to burst that would shake the rest of the world with an economic tsunami. That much of this effort is municipal, where finances are not subject to the same level of international scrutiny, is particularly worrisome to some of these global economists.

The level of such infrastructure construction is staggering: “As municipal projects play out across China, spending on so-called fixed-asset investment — a crucial measure of building that is heavily weighted toward government and real estate projects — is now equal to nearly 70 percent of the nation’s gross domestic product. It is a ratio that no other large nation has approached in modern times… Even Japan, at the peak of its building boom in the 1980s, reached only about 35 percent, and the figure has hovered around 20 percent for decades in the United States… China’s high number helps explain its meteoric material rise. But it could also signal a dangerous dependence on government infrastructure spending.” New York Times, July 6^th.

To put this level of expenditure in perspective, the Times examined the level of activity of a mid-China industrial town (on the Yangtze River), Wuhan, the ninth largest city in the country: “In the seven years it will take New York City to build a two-mile leg of its long-awaited Second Avenue subway line, this city of nine million people in central China plans to complete an entirely new subway system, with nearly 140 miles of track… And the Wuhan Metro is only one piece o f a $120 billion municipal master plan that includes two new airport terminals, a new financial district, a cultural district and a riverfront promenade with an office tower half again as high as the Empire State Building.”

China consumes about 23% of the world’s energy (the U.S. about 19%) with parallel consumption of commodities across the board. Her impact on global prices, currently massive, continues to grow. Her economy will soon pass that of the United States. When China sneezes, the rest of the world comes down with pneumonia. Remember when they said that about us?

I’m Peter Dekom, and understanding feelings thousands of miles away is essential for Americans to plan their own future.