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China Diary

Pramit Pal Chaudhuri January 11, 2012

Back in Beijing

Wandering through the central business district of China’s capital is to experience construction superfreakonomics.

There’s the 51-storey CCTV headquarters, cantilevered so a huge 13-storey section hangs out over space. But it is largely empty, still waiting for clients. Next to it is the burnt-out hulk of the Mandarin Oriental. It was put to the torch by its owners because even this venerable brand was bleeding money – and the insurance was tempting. Then there was a big chunk of empty land, marked only by a single construction crane. Beijing authorities confiscate prime land left fallow. So the solitary crane helped build residences for migrant workers and then knocked the huts down again. And it isn’t just in a big city like Beijing. In faraway Hunan, a provincial leader has announced a plan to spend $11 billion on a new financial hub, built around two lakes, and in a state whose financial sector is primitive at best.

Money to repair

China seems to be so economically wrong in so many ways. Yet it perseveres, its economy booms and its accomplishments in infrastructure are the awe of the planet. I always figured it was because it exports so much and its people save so much. When you have three trillion in foreign exchange reserves, one can afford to just drown each difficulty in cash.

But real estate, according to one Tsinghua University professor — its purchase, land use, development and so on — is the driver of faction politics in the ruling party today. Crudely, each state leader derives resources, street cred and followers from land.

Which is why the Middle Kingdom continues to struggle to rein in its investment-driven economic engine. “China always has a plan,” said the Indian rep of a major US newspaper. But when it comes to the political economy of transition, it has yet to develop a coherent roadmap. And it’s worse when it comes to political liberalization.

Hyper hyphen

In Beijing for the third round of the Aspen Institute of India – China Reform Forum strategic dialogue, it was obvious that the two Asian giants are far from natural partners. Even at the level of what is supposedly civil society, the conversation is still stilted. And a bit baffling, especially for an Indian who can never be fully certain what is a private Chinese statement versus an official government line.

What did come through in two days of talks was that at least some elements in Beijing wanted to work out a modus vivendi with India – but were blocked by hysterical reactions from all-weather friend Pakistan. “You should resolve problems with Pakistan,” the Chinese side began urging. “It will make it possible for us to work closely with both countries.” Déjà vu – this was the tune of the United States for decades – until George W. Bush broke the hyphen. China needs to do the same, but it will take some time for that to sink in.

Lake of sharks

Bars and restaurants, bright with neon lights and crowded with Chinese, snake around Houhai and other linked lakes in north Beijing. Early writers speak only of the original Houhai lake. Now not an inch of lakefront anywhere is not home to a bar, disco and a tout urging you to taste his establishment’s wares and otherwise separate you from your money.

Chinese rock music has many stages of evolution to go before it has a global market, but its enthusiasm at least is evident. And I predict an awful car parking problem in a few years if the efficient Beijing municipality doesn’t step in at some point soon. Almost a parable of China today. Animal spirits among it people, leashing and tying tendencies with its state.