I want to share with you a short story that I wrote at the end of on my travels in China. It helps me to explain some of the major lessons that I learned on this trip.
I entitled it "The Club".
In this large and important city there was mainly only one high rise building that had more than 50 stories high. It was an impressive and well-recognized building. Very few people in the city knew what was on the very top floor. The fact is that it was a very old and exclusive private club where only the highest business and government leaders came to mingle, talk and sit around and have a few leisurely drinks. The rooms were decorated with high mahogany panels and thick velvet curtains. The seats were plush and the many wall painting there were original expensive oil paintings. This was the place to be if you were on the Who's Who list of the city. It was a great honor to be a member of this very exclusive and distinguished club. Those who were members enjoyed the many privileges that the Club provided. Some members can recall when their great grandparents became members.
One day a man walked into the club and proceeded to walk to the center of the room. He addressed to everyone that he had some important announcements to make. The members began to look at each other and wonder who this unfamiliar man was. No one seemed to recall seeing him before. Was he possibly a new member and simply did not know the proper protocol for meeting and conversing with others in the Club?
The man standing in the middle of the room continued. "My full name may be hard for you to pronounce in Mandarin so you can just call me Mr. Lam." He continues. "Fine gentlemen and women of this illustrious Club. As of tomorrow the annual membership rates will double. All current members will have to begin reapplying to be considered for membership over the next 30-days. Additionally, if you decide to use the chess boards you will now need to limit your game to an hour. We are also going to bring in new chairs and tables to ensure that we can accommodate more persons in the rooms."
As you look around the room you could see the faces of the members listening to all this. Some are showing signs on their faces as you see them getting flush and turning red. Others have a look of disbelief. Others are just confused and seemed quite surprised.
Mr. Lam continues with his direct presentation. "I want to also share that some new board games will now be played here and that even though they may seem new and foreign I want to assure everyone that the games are quite ancient and played by many persons throughout the world. It's true that the designs on the playing pieces may look odd at first but in time you will get to recognize them and will be able to join in the games."
A person who has been a long-term Club member finally speaks out and states aggressively. "What makes you think you can just walk in here and tell us what to do?"
Mr. Lam calmly responds calmly. "I am now the new Club owner."
The senior club member is taken in momentarily and responds. "This is an outrage! We won't stand for this! As a matter of fact, I and others here in the Club will move this entire Club to another floor in the building."
Mr. Lam states. "Then I recommend you go immediately to the main executive building leasing office on the 10th floor. Ask for Ms. Wong and she may be able to offer you a good rate. She is now handling all the new building leasing agreements since we recently also acquired and purchased this entire building."
"By the way", Mr. Lam continues, "I strongly recommend you also schedule a meeting with Ms. Wong to get information on other leasing arrangements in buildings in the area. We may soon have some newly decorated luxury space available in other nearby sites. Just to let you know, we are now in the final negotiations to purchase all the buildings on the block."
I wrote this story to answer a question that kept running through my head throughout the trip. I kept asking myself, "How do Chinese strategize financially and where did they get all this money that they are using to modernize their country and to invest in major projects throughout the world?
Well, one approach is to look at the expenditures of their national budget. One major item is the amount of money they spend on their national military. They spend, in comparison to the US, very little! China does not maintain any military bases on foreign lands. It does not have any military conflicts in foreign countries (Tibet is part of China). China's entire military budget adds up to only one-fifth of the amount the US spends yearly ONLY on the Army! As a matter of fact, the combined total annual military budget of China, Russia, U.K., Japan and France don't add up to exceed the entire annual budget of the US Army.
At the domestic level, the majority of China's population are farmers and 90% of the entire population own their own homes. When they buy businesses and properties in the country or in foreign countries, it's usually an all cash transactions.
In the US we are well aware of how much we spend monthly on purchasing, maintaining and using our private cars. In China, the population mainly uses public transportation or MANY small two wheel motorcycles (Many are electric. The going joke throughout places we visited was that traffic lights and street signals are mostly regarded as beautiful ornaments. In one city someone said that traffic red lights were viewed by drivers as merely recommendations. We saw many examples where this concept seemed true). Thus, their household budget dedicated on transportation is minimal and have more money in their budget.
Another major item is the nation's one-child policy also greatly alters the family's spending patterns. Birth control medication is cheap and readily available to all. This means less overall household expenses on child care and raising them.
Preparing the children to take an entrance examination for college is highly stressed and a major expense Those few that we saw on the streets as parents with a child seem to be in their high twenties or early 30s. In this culture grandparents become responsible for the child while the parents went to work. If there is no child, they have a great deal of time to go meet others in the senior centers. I believe I heard that senior citizens can use public transportation for practically free or no-cost at all. Again, minimal household expenses.
The people can additionally receive government assistance to obtain their own condo. To sweeten the deal the government subsidizes their utility bills. I think its great that the government offers the tenants the option to eventually buy their condo outright, after living in it after several months, at a substantially reduce purchase rate, and then be able to sell it on the open market. One minor note here is that when they buy a brand new condo, it's absolutely empty. There is nothing inside but bare walls. It's only a shell. Utility lines and connections are already in the walls. In some cases even the windows are not provided.
I left China with more questions than answers. I made it a point to not compare China to the US. I kept reminding myself that this is a country with a very long and complex history and they have learned to do things very differently than in Western civilization. China has always had a population larger than other countries for thousands of years. They, like nations throughout the world, have had their series of civil wars. In spite of their long history I don't recall ever reading or hearing about them focusing on military exploits and domination in Asia or Europe.
The one major issue that will continually confront China is the size of their population. Throughout its history has had to contended with dealing with a large population that is primarily agrarian based. Their administrative bureaucracies must have been traditionally very large in order to continually manage the affairs of state.
Even though India will very soon surpass China and have the world's largest population.
China is making strides to open opportunities for its youth to get an education and raise their social condition and status. While higher education financed by the public is available, the issue is that many more students must complete for the few seats into top universities. I look forward on doing additional research on this topic but from what I understand their isn't any community college system. Either you have the high scored to get in or you don't. It's pretty much an in or not college admission system.
On the political front at the international level, China's primary focus seems to be on becoming the leader in the 21st Century and bring along their people. It's not just working on being part of the superpowers; it's positioning itself to be the new leader. My opinion is that their strategy for influencing other nations is done primarily through investments and business norms rather than utilizing military involvement.
In closing, let me refer back to the story I shared at the beginning of this article. In my story the old and established members are enjoying the comforts of being part of the Club. Who was making sure the Club would continue running the way it had throughout the past years? Did the new owners have the right to change the rules of membership and which rules the Club would now play by?
The old members got too comfortable and simply assumed business would be business as usual.
When we started the trip and I was in Shanghai one of the fellow travels asked me why I was visiting China? I told him, in what seemed as a small joke back then, that I wanted to visit the bank that now owned the mortgage on my investment properties and my home.
When I started this trip the US government had just decided to reopen the government and extend the time it had to find a permanent solution to avoid another shutdown. I read an article in the Wall Street Journal that China was quite perturbed that we would consider suspending the payment of the substantial debt we now owe them.
We would greatly benefit from studying how China is expanding its influence in the world and in our own back yard. They are not seeking conquest, they are creating and taking advantage of opportunities. Opportunities that others are slow to recognize or act upon because it would disrupt their comfort.
Our government openly sells treasury notes and bonds; China buys them. Wall Street seeks profits and sells its wares; China buys them. Our people want the items cheaper; China provides them.
I want to take a moment to recognize and thank the US federal department Environmental Protection Agency (EPA). After being in China for 18-days and seeing what unregulated energy producing industries can do, I have a greater appreciation for the work and responsibility of the EPA. In China, the main health issue is lung cancer and given the need for them to keep producing even more energy with coal burning generators will be a grave matter impacting their population that they can not ignore.
I am thrilled and feel honored to have traveled through China. I foresee me someday revisiting Shanghai and Hong Kong. The interior of the nation had to be visited but that darn "haze" was difficult to deal with. I found their food nutritious but with a different taste and cooked in ways I was not used to. I don't think their water buffalo burgers will ever be a popular item in the US market. I am quite surprised that China does not yet produce its own cars but it would not surprise me if sometime very soon they will introduce them on the world market place. I predict that when they do, they will be mainly electric or running on hydrogen.
I realized that Chinese are truly wonderful people. We could not communicate with them in Chinese but they would constantly smile and invite us to join in their events. They would not run into us on purpose, it was that we would constantly be in crowded areas. We easily blended into the crowds and no one really took notice of us. We felt safe and there were no incidents. We did not see police or soldiers around us (except government building areas) and otherwise people all around just went on with their normal lives and business.
What is happening in China is affecting everyone in the world either directly or indirectly. The terms "China and Chinese" is constantly appearing in our national broadcasts, publications and media. We keep filling our households with their many diverse products. What they do now and in the future will have a direct impact on our incomes and the future strategic plans of our government.
I think that when Marco Polo first visited China he saw and realize the wealth of a huge and culturally developed country. Now I have a small glimpse of what he saw with of course a modern twist and I think I now see clearly our future.
I want to thank the persons who read my articles. I enjoyed getting your emails and comments and I welcome your comments and reviews.
Don't think about someday going to China. Go to China and experience it for yourself!