A conversation with Shaun Rein on China
(On January 5, 2012, I sat down with Shaun Rein, founder and Managing Director of the China Market Research Group, to talk about China. He gave us his insights into major events of 2011. In this hour-long interview, we touched on many topics: pollution, CNN and Christian Bale’s recent run-in with Chinese police, food safety, Weibo, and so on.)
YinYang:2011 was another eventful year for China. Just when her bullet train seems unstoppable, a fatal collision left the whole country in doubt. China achieved space docking, something only the U.S. and Russia have managed. Then there was Tiger Mom.
I have invited a real China expert to weigh in on these events and other events that mattered to China. What were the Chinese narratives? How did the Chinese feel about them? I couldn’t have found a better person to do this with. He actually lives in China. And his firm provides strategic market intelligence to Fortune 500 firms. He is the founder and Managing Director of the China Market Research Group. Public sentiments and consumer sentiments are his firm’s forte.
Shaun Rein from CMR. Welcome to Hidden Harmonies, Shaun.
Shaun:Very nice to see you YinYang. [Video was too laggy, so we soon opted for audio only.] Thanks for inviting me.
YinYang:Sure. And I should add, Shaun is the author of the upcoming book, “The End of Cheap China: Economic and Cultural Trends that will Disrupt the World.”
Okay, Shaun, here we go.
Tiger Mom. She certainly created a storm in the U.S.. She did too in China, didn’t she? So, ah, was it about Chinese moms beating American moms as how the Wall Street Journal framed it?
Shaun:Well, the Tiger Mom phenomenon hit the entire world. You know, a lot of people were wondering the “Chinese way” as defined by Amy Chua is better. But, actually I really want to break it down, YinYang, from two points. The first side, actually, Tiger Mom is not something that you run into that much in China anymore. I think part of it is you have this whole generation of parents who were raised during the Cultural Revolution, and because of the horrors of those times, they were unable to go to school, choose who they wanted to marry, and to get the types of jobs they wanted. So, you have created this generation of parents who really coddled their children. So you have 22, 23-year old’s who really are immature. They are unable to overcome challenges and difficulties. One of the things we find when we talk to human resources executives is as soon as they start to do constructive criticisms with the young employee, the young employee often gets angry, then quits the job then and there.
It’s very common for 25 year-old people still living at home and have their parents cook and clean for them, and even to do their laundry. So, you know, one of the issues with Tiger Mom is that it doesn’t actually really exist in China in the same way it does in the overseas Chinese communities. And just from a standpoint within China, it’s a problem because you have a lot of very spoiled younger executives that have never really had to deal with challenges and overcome hardships. So, that’s one bucket that I am concerned about, YinYang.
But the second point that sorts of pop up, and I talk a lot about this in chapter 9 in my upcoming book, “The End of Cheap China,” is that the educational system in China is a complete mess. And that is sort of what Amy Chua is looking at; is how do you train people to think analytically. And I think in China right now, the education system is doing a disservice to young people and not training them to think creatively, how to think analytically. There is too much rote memorization in the classrooms. Class sizes are just too large. And that’s why you have Xi Jinping’s daughter studying in Harvard right now. Xi Jinping is most likely the next president of China.
So, going forward in 2012, I hope you are going to see more reforms in the education system because they are really needed. And you are going to have a little more of Tiger Mom within China and little less spoiling of younger generations.
YinYang:Food safety. 2011 we saw stories after stories of fake meat, contaiminated drinks, and even gutter oil. When will we see an end to such kind of stories in China?
Shaun:Unfortunately, YinYang, I see this madness recurring. I am not sure if you are scared of the “Made in China” label when it comes to food. But I am. And so are most Chinese. And most people here know that I am very supportive of the Chinese government at the central level. But there are a lot of problems at the local level at oversight of food safety; a lot of corrupt officials; a lot of unsavory businessmen that are willing to cut corners.
In fact, YinYang, my firm interviewed 5000 Chinese consumers in 15 cities and the number one biggest concern in life, ahead of concern for being able to pay for healthcare for families or educaton for the kids, was food and product safety. Everybody here is really nervous about eating a toxic bun or fake meat and then die. And that’s why actually another chapter of my book is just on food safety, because it’s such a critical problem and the government needs to address better.
On the good side, for Western brands, there is lot more trust for foreign multinational FMB companies, and so they really have an opportunity to create trust with the consumer; to charge a premium for ensuring healthy and safe food. And really being able to capture more market share. Frankly in the last year, my firm’s food and beverages business has really been soaring because it is really clear that the Chinese companies are trying to move towards the up-market dining destinations.
Food safety is a serious issue. No one can really deny that it is a major problem, and that it needs to be addressed better by local governments and by the central government that needs to get more buy-in from local corrupt officials.
YinYang:Any specific steps the government took to combat this issue.
Shaun:Oh yeah, I guess what you saw in 2011, the government shut 50% of the nation’s dairies. And that was one of the reasons why you saw soaring dairy prices. In 2011 dairy prices went up 25% year-on-year. And so the government is really trying to consolidate that part of the sector. They are really trying to get more state owned ownerships. So you see like COFGO, the big state owned giant in food, acquire a massive stake in Mengniu Dairy. You are seeing a lot more investments going into Bright Foods, which is the owner of Bright Dairy, one of the largest fresh milk producers in the country.
So, the government is really trying to get better oversight that way. They have shut and arrested several thousand businesses and people I believe over the summer of 2011. And I believe they are trying to send a strong message that they are not going to tolerate corruption in the food sector anymore. There has to be a better system in place for the supply chain.
You know, you can take a look at Walmart. I think a lot of Americans, like John Bussey who is a columnist for the Wall Street Journal, saying that China shutting 13 Walmart outlets in Chongqing last year was more protectionism. And, that is just BS. I mean, basically, China was saying here is Walmart that is intentionally labeling meat products wrong, and this is one of the largest hypermarket chains in the country. The government naturally has to shut it down.
They weren’t targetting foreign businesses specifically and trying to be more protectionist. What they were trying to do was to save the health of the everyday Chinese, because that is what Mainland Chinese people want.
I think a lot of the fear-mongering that you get from John Bussey and a lot of these analysts you get from the United States is really misguided when it comes to food.
YinYang:And Walmart China is in a mess. Their China president has recently resigned.
Shaun:Yeah, Chen stepped down. They had major management turn-over aside from the president. They also lost the COO, the head of human resources, and they are really trying to get their mojo back in the country. I think frankly its going to be very difficult. If you look, their market-share dropped from 8% to 5.5% over the last three years. Not, even before the food scandal, really because they are facing a difficult, more competitive environment as prices rise for real-estate and as very fast-moving and aggressive domestic Chinese in the retail sector move up the value chain. And compete head to head with the Walmarts and Carrefours.
YinYang:Shaun, we often hear a housing bubble in China. How real is it? And, is there an imminent collapse of the housing market?
Shaun:I think there’s been a lot of fear about a collapse of the real-estate sector here. I think fears are far exaggerated. We are going into a slow period and maybe prices are going to drop, maybe even 20%. But, that’s actually healthy for the market. And, it’s been caused by the government, because they have been trying to reign in some of the froth in the marketplace. And the reason why I am not overly concerned is that there are still a lot of pent-up demand.
We interviewed several hundred consumers in different cities recently about their house buying habits and whether or not they would sell. We found there is massive pent-up demand. The majority of families told us that they would like to buy a house as soon as some of the restrictions on buying a home ease.
You know in 2009 the government made it very difficult to get loans, to buy multiple properties in many cities.
So I think what you are going to see moving forward is prices are going to drop. You are not going to see panick selling, because most home owners’ mortgages are not under water. Even if prices drop 10%, most of the consumers told us they wouldn’t sell their homes. They really didn’t care. They are just going to hold and wait it off.
So the proof in my point you seen housing prices have dropped – you seen 20% – 30% discounts in certain properties – that’s really coming from sales made by developers directly. When you take a look at the second home market, prices have remained very stable, because people are just not panick selling. There is a lot of pent-up demand there.
I am lot more concerned about the commercial sector. You are seeing a lot of stupid developments that are being launched by developers – you don’t need 60, 80-story buildings, you know, in basically farmland.
There’s too many luxury malls that are sprouting up across the country that are trying to have Louis Vuitton sell. You know, Louis Vuitton is very popular here, but there are only so many consumers who can afford a Louis Vuitton handbag.
So, I think you are going to see a wash-out in the commercial sector. I hope you are going to see some major realestate developers go bankrupt and go bust. Because I think you need lot healthy of a market.
So, will it be a weak real-estate sector in 2012? Absolutely. Is there going to be a systemic risk? Absolutely not. You just don’t have the same debt problems you have in the United States. And you just see a lot of pent-up demand here.
Sports and Li Na
YinYang:What would you say about sports, Shaun? For example, Li Na won the French Open. I suppose when a country grows more economically, it can build more tennis courts. What’s your take?
Shaun:Yes, sports are getting much bigger here. When I first came to China in the 90’s, a lot of people were very skinny, and part of it was just that people didn’t have very good nourishment. What you see in the last 10 to 15 years increase of food has really made a much healthier population. And now that people aren’t worried about starving and shelters over their heads, they are starting to spend lot more time on sports leasure. And you see basketball and tennis is really popular.
And what I like about Li Na specifically is Nike is now her sponsor and is really doing an excellent job in using home-grown celebrities to promote their products. And I think that’s going to be one of the keys going forward for Western brands is that they can no longer just use some blond haired blue eye-ed girl to pitch their products in China. They have to create local celebrities and by doing so they will create more emotional connections with everyday Chinese.
Steve Jobs and Apple
YinYang:Apple is huge in China. With the passing of Steve Jobs, I think there was a lot of outpouring of sadness from Chinese consumers.
Shaun:Yeah, Steve Jobs is one of those guys that you know even if he may not be one of those nicest guys according to rumors, he is beloved by Mainland Chinese. He created innovative products that made life better and happier for just about everyone who touched it. What you have seen more specifically towards Apple is Apple is not just looking at China as the market to produce in but a market to sell in. And in my upcoming book, “The End of Cheap China,” I talk a lot about Apple actually in how they are selling so well here.
Their sales quadrupled from 3 billion to 12 billion (USD) in the last 13 months. It’s now become their second largest market. In the book I talked about Apple and some of the strength they have and some of the mistakes they also made. Because I actually think they can sell a lot better here than they currently are. But that is something that is exciting.
YinYang:Ok, Shaun, last year there were tons and tons of traffic accidents. And the story I remember the most is in Gansu province they had a van carrying 19 kindergartners, and that van crashed with a truck. And these 19 children died, including the driver and another adult on the bus. I saw the picture of that van. I mean – my gosh – I mean with U.S. standards that van is for probably 8 or 9 people max. They jammed all these kids in there. It is just terrible and sad.
Shaun:I actually drive myself, YinYang, and it scares me every day. I don’t have a chauffeur. I drive myself, and almost every day I feel like I almost get into a car accident. Because the road system is absolutely chaotic. A lot of it comes from the scooters and mopeds. When you are driving down the street, you can get a guy on a bicycle, or a guy with chickens, a guy on a motorcycle, a scooter, a truck, or a car. There are just too many different types of vehicles and nobody is obeying the laws.
You saw Shenzhen just announced they are gonna fine cars 500 RMB if they don’t allow pedestrians to cross in cross-walks. They are going to charge pedestrians 100 RMB for jaywalking. I hope that people are actually going to adhere to these new regulations, and that the police actually enforces them. Frankly, not sure if that’s gonna happen.
YinYang:Yeah, and every time I see a picture of a moped with a whole family on it just makes me cringe. What more can the government do?
Shaun:I think everybody knows that it’s a problem. It’s scary out there. Part of it is the rules. When I took my driver’s test, it said, when you are turning: do you, A, let pedestrians go first in a cross-walk, B, do you just keep driving, or, C, do you make sure you don’t hit them. Now, the answer is C, something to that effect, just make sure you don’t hit them. But there is too much leeway to what exactly that means. I think they need more definite laws. Like, no turning or they have the right of way.
Wenzhou bullet train crash
YinYang:The Wenzhou bullet train crash. I guess the back drop, you know, China in this past decade has been building out railroad infrastructure at a really fast pace. Chinese companies are building rail road and bullet train systems around the world. So, the stake is really high. Anyways, the Wenzhou train crash left 40 people dead. And I remember watching CCTV, and as the rescue and investigation was going on, panelist were really critical of the Ministry of Rail in how they handle the situation. So it was a really big news.
Shaun:Sure. The railway disaster was a disaster. It’s aweful. I think what comes from that clearly is the government needs to do a far better job of policing some of the local officials. And officials within the ministry are just corrupt. I mean the head of the ministry got into trouble for stealing, I don’t know, hundreds of millions of dollars. Just some ludicrous number. So, there obviously has to be much better oversight. I think the government has done a OK job at being able to crack down on this disaster and investigate the 54 people as you mentioned. But it becomes an issue of credibility.
I think going forward in the next ten years you are going to see a lot more social instability with Chinese who are angry, seriously angry at corrupt local officials. And I think the central government, who generally garners the support of most Mainland Chinese really needs to do a better job at fixing problems at local level before they emerge like the train disaster.
Once the problem happens they need to make it very clear the process of arresting and investigating people is very transparent. We need to do a better job of knowing what the punishments are, because there is going to be a credibility issue, especially at the local levels.
The second part of this though, YinYang, you know, a lot of people say the bullet trains are not good for China and that it’s going to be something that loose a lot of money for the country and will end up causing the country to be like Japan. You know, creating a lot of infrastructure projects that are not needed.
That is just not true. I think when you really analyze, most of these railroad programs are not boondoggles. These are legitimate, very good infrastructure investments that are not only going to create jobs in the short term but they are also going to create more business efficiencies over the next ten years.
You know, taking a train ride in Shanghai, where I am based, to Wuhan, only takes several hours. You know, three years ago, it took 11 or 12 hours. So what you are seeing is lot more business trade and productivity taking place throughout the country because of the rail system. It’s not like bridges to nowhere where you had in Japan, where you have Tokyo building up multi-billion dollar train tracks to prop up a hamlet of people in the middle of nowhere. These investments are really quite good.
In general we need to take a step back. Fix the problems in the government system. Fix the corruption at the local level; lack of oversight and lack of transparency.
But we really shouldn’t let some terrible tragedies stopping us from investing in high speed trains and other rail networks which we really need as the country continues to urbanize.
YinYang:What about the criticism that the Ministry of Rail is pushing forward bullet train systems too fast?
Shaun:I think it’s valid to say that maybe it is spending too fast and we need to take a step back and look and make sure. You know it’s never bad to cross all your t’s and dot all your i’s to make sure that the spending is as efficient as possible. And to root out the corruption.
But, you know, China if anything is actually under-investing in infrastructure. And you know, this is where I totally disagree with people like Nouriel Roubini. Right now the country is at about 50% urbanization rate. That’s up from 30%, you know, just 15 years ago. And that’s going to continue. And so in order to relief congestion in cities, in order to have good living environments for people, you need to have better trains, you need to have better subways and roads. You can really open up the country better.
Because right now if you look at it, Shanghai for instance, has one of the densest city population in the world. You got 24 million people who are crammed together. If you are someone who aregue China doesn’t need to have a more spread-out Shanghai, I don’t understand what planet you are living on. You really need these investments.
But again, I think it is criticism the government needs to double-check, tripple-check, and quadrupple-check are very valid. We need to make sure that this clear demand and construction doesn’t go so fast that we put public safety at risk.
YinYang:Ok, Shaun, on pollution. Last year one big story that broke – I guess in Beijing, the local government has been publishing air quality reports since around the time of the 2008 Olympics. The U.S. Embassy in Beijing publishes one too. A Chinese Weibo, microblog, user took the U.S. Embassy results and published it on his microblog. And that created a stir because the U.S. Embassy result showed it much worse than the Beijing local government’s version. So, as a result, the Ministry of Environmental Protection, I guess the ministry responsible for publishing such reports, they are now going to revise their monitoring system. Anyways, Shaun, give us your take on what is going on in terms of dealing with air pollution.
Shaun:Yeah, you know, it’s one of – pollution is a serious problem here. It’s ridiculous for anyone to say it is not. It’s ridiculous for anyone to say it is getting better. You know, when I talk to wealthy Chinese, a lot of them are trying to get foreign passports right now because they are worried about health-care and pollutions for their families. And they are worried about getting access to better education for their kids. And they also just want to have more ability to just move around. You know, if you have an American passport, you can travel more easily and pretty much do anything while Chinese passport there are still a lot of restrictions of traveling into other countries.
So when you take a look at this big concern in the Western media about rich Chinese going abroad is really not because they dislike the government. It is because they are very uphappy with pollution and some of the quality of life issues.
But there is one key point, YinYang, I want to highlight here. We interviewed these wealthy Chinese. Most of them are remaining in China. Or at least the husbands are staying here, the fathers, in order to continue their business. But they are putting their kids and their families abroad because of worries about pollution and the health-care system. You know, pollution is really bad.
Whenever I travel abroad, my face feels better. My eyes feel better. My lungs. And then when I come back to China I get rashes, start to cough right away until my body adjusts.
YinYang:And pollutions impact to society is increasingly more measurable isn’t it?
Shaun:Yeah. It’s really a serious issue that is starting, actually, just from a political standpoint, it’s becoming a problem. There are still so many Chinese who are still covered by the state-owned health-care system, pollution is starting to affect budgets of hospitals. What you see now is – in the 1950’s – only about 10-12% of deaths were due to heart disease and brain disease. That number has topped 40% in 2011, because of the pollution and fattier diet. So what’s happening is the state-owned health-care system is starting to creek under the increased expenditures needed to take care of pollution related illnesses. It’s something the government need to do a much better job at addressing.
The other thing to keep in mind is a lot of people are saying the Chinese leaders somehow have clean air. You know, that is just ridiculous. They are breathing the same air that everybody else is. And I can assure you they don’t like the pollution either.
YinYang:What do you think the government is doing to combat this pollution issue. I mean do you see China moving the more polluting industries to outside China to poorer countries?
Shaun:Well, it’s starting to happen. You are seeing the government over the last 5 years has made it very difficult for high polluting high water-usage industries to get business licenses in China. You know, even in the height of the great recession, I have a client in the chemical sector that was trying to invest in a 1 billion USD factory, but the government wouldn’t give it the permits, because they said it was too high polluting.
So what you are starting to see are a lot of light industry and other high polluting sectors are starting to move out of China to go into markets like Vietnam and Indonesia that is willing to take little bit more pollution right now because they need more of the capital.
There are far more needs to be done, and you know, I am not a pollution expert, and I don’t quite understand why there are so much pollution here. I don’t know if it’s because of the cars, which I tend to doubt, because it’s been bad for 10, 15 years when there weren’t even a lot of cars here. If it is factories, if it is just even peasants burning, or if it just all of the massive construction. I have heard reasons for all of it. I don’t know.
I think the government needs to make it #1 on the national agenda, and they need to get the best scientists coming together to figure out what needs to be done.
Bailing out Europe
YinYang:There were talks about China possibly bailing out Europe.
Shaun:No. I don’t think China should be Europe’s white knight. You know, I don’t think bailing out Europe is even possible by buying few Italian bonds. I think the problems within Europe are far more serious than China alone can help fix. The problems in Europe really needs to be fixed by Europe. The governments there need to come together to cut down the size of bureaucracies, cut down on the social welfare benefits that are strangling the future of the countries.
Within China, you know, politically, a lot of Chinese say, why on earth should China, which is still a relatively poor nation on a per capita basis bail out much wealthier nations like Italy and Greece? It’s just doesn’t make sense to pour Chinese farmers tax money to do that. And I think politically it would be very difficult for the government to be able to do it.
What I do see happening is two things. The government is going to use the weakness in Europe to buy more hardcore assets. You know, machinery, you know, maybe airplanes from Airbus that China needs in the long term. And I think they will ultimately give more money to the IMF and other multilateral organizations like that. But I really don’t see them doing too much by buying bonds, or shouldn’t they.
Rule of law
YinYang:Okay, Shaun, this next one involves China’s Got Talent judge, Gao Xiaosong. So, he was in a car accident. Actually, he was drunk, and he caused a four car pile-up. So, as a result, he was put in jail for 6 months. Celebrities definitely help build awareness about crime and punishment, don’t they?
Shaun:And just like the Li Gang incident, YinYang, and I think what’s critical here is a lot of people say Mainland Chinese hate rich people. That is just not true. I mean they idolize people like Jack Ma, the founder of Alibaba. Or Robin Li, the founder of Baidu. They actually like rich people, but those, there is a difference, these people seen they have build their businesses and worked hard and did it from talent and skill.
The issue that is sort of bubbling up is a lot of discontent towards people who they feel make their riches by being corrupt and by cheating people and by feeling they are above the law. And that’s one of the issue you run into when you get, say, the son or a daughter of a local official who sort of misbehaves. And that’s something that can cause confraglations very quickly because there is a lot of anger. And probably truthfully these people are probably corrupt. You know, it always amazes me when you deal with a vice mayor of a small village or a small city and he is driving a Mercedes or even a Bentley. You know, where does he get the money?
So, something I think the government needs to address better is ensuring punishments that are metted out to these corrupt people are transparent and they are harsh. And that there is no feeling that just because you are wealthy or well-connected that you are above the law.
So I think in this specific case of the judge, that was a good thing. You know, it was good that Gao was caught and put in jail just like everyday people would. Because it shows that we need to move toward more rule of law rather than rule of brute power.
YinYang:And more than just the ordinary public, the traffic police and the police officers themselves need to be fully aware that everybody is equal under the law.
Shaun:Yeah. Exactly. I think it’s very clear that police officers need to know there is a law for the whole country, not a law for the everyday Chinese and then a law for the well-connected wealthy people.
The one time I was at Pudong, sorry, at the Hongqiao Airport, and there was a truck parked right in front of the terminal blocking everybody. And a policeman came by and said, “sir, you can’t park there.” And the driver said, “I can park anywhere I want, because my boss is a high military official.” That is just an inappropriate behavior and needs to stop. The police officer, I have to give him credit, said, no, these are the rules; you need to leave. And pretty soon hundreds of people came by and really crowded around this driver. And the police, actually, I gotta give him gumption, he had a tow truck come and say that they were gonna tow the truck away, oh, the car away. Because it was just inappropriate behavior.
So it needs to be very clear there needs to be more of a rule of law that fits the entire country.
Weibo, China’s microblogging phenomenon
YinYang:Weibo, China’s microblogging platform has become an integral part of Chinese society. 2011 we saw more signs of that.
Shaun:The platform, YinYang, is incredibly important. You know, when I talk to a lot of Westerners, they feel that China is an Internet blackhole. Because everybody knows Facebook and Twitter are blocked. And it’s really not true. The online community in China is extremely vibrant, and especially Sina. And I think with Weibo, it’s very vibrant, because a lot of people are using it for gathering news information. And I think because of the restrictions in traditional media, a lot of younger Chinese look to Sina to get their more first accounts of what’s really going on. And it’s a blooming area.
People are talking about news. Joining friends. And they are looking for jobs. They are trying to share information about products.
It’s a very vibrant community, and contrary to what a lot of Westerners think, China’s government is also quite supportive of it so far. They have been trying to get public security bureaus and other government officials to use it to be able to communicate directly with everyday Chinese citizens. It’s a market that is important from a political standpoint, one from society and also business. You need to have a Sina or other social media networking strategy in place if you are a Western business trying to reach out to younger Chinese.
When you take a look at it, Chinese under the age of 30 on average spend about 22 hours a week online. On the United States, the number is less than 12 hours. So, it’s a much more Internet savvy community here than really in most other markets in the world.
YinYang:It has become a way for ordinary citizens to feedback to the government.
Shaun:Yeah. It’s one major new way. I applaud it. And I think there needs to be lot more. Part of the problem is when some times when people have grievances, they don’t know how to express them. And I think Weibo talking directly, appropriately, with the public security bureau is a good thing.
I support the idea for real name registration. I don’t like a lot of the anonymity, a lot of the, you know, massive attacks on people. And you know, you see like human flesh search engine which have appeared can be a double-edged sword. I mean some time you see a corrupt person and you have this human flesh search engine going after them, that’s great. That helps to right a wrong. But you also get a lot of people who are innocent getting caught up by that by accident. Or by malicious people.
You know, I think there should be a lack of anonymity. There is no need for that. There needs to be a continued support for online spheres. It’s clear that microblogging and social media sites far outweigh any negatives.
YinYang:I was really moved by this story of this veteran journalist. His name is Deng Fei. He launched on Weibo a movement to provide free lunch, free meals, to impoverished children in China. More than 500 journalists joined him. By September of last year, he raised more than 17 million yuan in donations, and they were able to provide free lunches to 10,000 kids in 77 schools. That was an awesome story.
Shaun:It’s great. I mean, initiatives like what he did are absolutely amazing and show the power of microblogging and why the government needs to continue to support it. Because you are able to rally support from Chinese people throughout the whole country to a good cause. Helping impoverished people. Helping child beggars. Helping to expose society’s problems. I think its really great we have such a vibrant online community
Again with the caveate that we need to make sure that we don’t allow for too much rumors to be spread because they can go very quickly and cause a lot of anger, unrest, and social disturbances.
YinYang:What is your take on the Guo Meimei story involving Red Cross China?
Shaun:That was a good one. It’s a mix. Red Cross China seems to have gotten hit. You know there are still questions how closely related she was with Red Cross China specifically. And I think that’s a problem for donations for Red Cross China.
Guo Meimei just goes to show there is a lot of sensitivity by everyday Chinese that people who are in positions of power are abusing them through corruption. You know, making a lot of money for themselves and spending lavishly on girls or luxury products in cars and houses when they really shouldn’t be. It’s a mixed bag. Guo Meimei shows some real issues within society and cleavages that needs to be better addressed by reducing the GINI coefficient and ensuring more income parity.
CNN making news assisting Christian Bale confronting Chinese police
YinYang:Shaun, this is something you have actually written about in your Forbes column. And I hope you don’t mind us revisiting it. And, this is Christian Bale and CNN confronting local police in wanting to see a blind activist who is currently under house-arrest.
Shaun:I think the problem with the situation is not with what Bale did. Ok, you know, in general, I am a firm believer in freedom of speech. And I am a big believer in having the news go around countries and shed light on dark areas and try to right wrongs.
The problem with what happened in this specific case was CNN actually creating the news.
You know, they drove Christian Bale to confront police. They translated for him. And it really made it appear they are not objective any more. The issues is CNN and all Western media outlets when they try to shed light on dark areas in China, I think a lot of people are going to question whether or not they are trying to contain China. Whether or not they are agents or influenced by the CIA. So it was really shameful what CNN did.
Now, in terms of the the specific case with this activist, I don’t have an idea. Okay. Obviously I know what’s happening according to the Western press. But again, how objective is it. I haven’t spoken to any government officials about the issue and not really what I am interested in doing.
What’s key here, and at the end of the day is that the Western media needs to maintain journalistic integrity. They need to follow the news, not create news. So I think it would be far better in case if they had just sent a news team to that city and went on their own, rather than translating and creating the news for Christian Bale. I think they are on very slippery slope. And they are not going to win a lot of support from Mainland Chinese who think they are just going to be a tool of the CIA.
YinYang:Shaun, how do you respond to the criticism from some that the government is simply wrong?
Shaun:If the government is wrong, well, then we will have to figure out who is wrong there. [local vs central, specific official, etc.] I think, you know, we need to shed light on that. I am not saying media shouldn’t cover the story of the activist. That is absolutely something that they can do. And if there is dirt, if there is something illegal that is going on that is everybody’s moral obligation to sort of uncover that. But it needs to be done responsibly and in the right manner.
I think Reuters has covered this subject lot better by giving a lot more background info than what CNN did. What CNN did was a celebrity stunt. You know, I think at the end of the day, reforming China needs to be done in the right way. And I think no matter how well intentioned you are as Christian Bale might have been, you know, the way he goes about it might be counter-productive.
You know, I have gotten a lot of criticism for my view on this. It’s clear that I am not saying Bale is wrong. And the issue is not about the activist specifically. It is really about journalistic integrity. All the power go to media outlets that want to go around and cover this activist and to see if he as been wronged. But if they are going to do that, they need to get the two sides of the story, and make sure they are objective in how they cover that.
I think a lot of people has misread what I wrote. And they really didn’t quite understand it. And I have gottened attacked by people who I think very unfairly, in part they don’t understand how to fix things in China.
You see guys like Richard Burger and Charlie Custer who just hate the Chinese government so much. You see Richard Burger liken it to tentacles and afraid and evil. When you start to deal with critics like that you really can’t rationalize with them how to fix things in China, because they start off at a point that China’s government is evil. Anybody who doesn’t say that is a dimwit, ignorant, or cowered into submission. And for somebody like me who is generally supportive of the government, as I might add, most Chinese are, according to independent research firms like the PEW Research Center and the World Health Organization, that, um, I am evil.
YinYang:Well, the main reason I started blogging was actually CNN. Back in 2008, during the Lhasa riot, CNN took this image and cropped it to completely flip the story. Chinese troops were arriving in their trucks and a group of rioters were on the street pelting rocks and bricks at these trucks. CNN ignored first hand accounts of Western tourists of the rampage by these rioters. They cropped that image and took out the rioters. So, when you see that picture, you see a street with debris all over. CNN wanted to paint a picture of a heavy-handed crack down. CNN woke me up to what the Western media were doing – it’s propaganda. I want a better relationship between the Chinese and Westerners.
Shaun:There is very clearly bias in the Western media about China. I think anybody who argues against that is just not thinking logically what a lot of Western media outlets are doing. Again, CNN made mistakes with that. CNN also at some point was using police and label them as “China is cracking down on rioters” when it was really, I can’t remember it was Nepali or Indian police. But, you know, they are using pictures from different countries and they call brutalizing everyday people and then they say that is Chinese.
I think CNN really needs an editorial overhaul. And, again, I want to be very clear, not saying that CNN shouldn’t go and probe for and uncover truths and probe into dark areas. That’s really what a media organization should do. But they need to do it objectively and maintain journalistic integrity. Otherwise you are going to give fodder to dark areas.
Osama bin Laden
YinYang:Last year we saw the U.S. killing of Osama bin Laden. I know China is aligned with the U.S. in countering this idea of terrorism. Can you give us a sense of how the Chinese feel about Osama bin Laden’s death?
Shaun:In general, the Chinese people really were very sympathetic to Americans for 9/11. You know, because it was a terrorist attack. And a lot of innocent Americans died. So I think most Chinese were fairly pleased that Osama bin Ladan had justice given to him. That was just something people here were sympathetic with the United States on.
I think there are questions and those questions are very rightful about what the United States did post-9/11. And I think a lot of what Bush did under his administration like Guantanamo and what has continued on with the United States in Guantanamo under President Obama has really hurt American prestige.
A lot of Chinese view America as somewhat hypocritical pushing for human rights but at the same time not adhering to the highest values of honor, morality, in Guantanamo and other cases.
I think there are sympathy about 9/11. There was certainly happiness that Osama bin Laden was brought to justice. But I also think there is a wish within the Chinese leadership and within the everyday people here that America would start to look after its own problems a little bit more. Because there are serious issues.
America has really lost its standing as the beacon of light. Which is too bad, because the world is really dark in certain areas. And it was always great to see America do the right thing. And I am not sure it is always doing the right thing anymore.
Gadhafi and Lybia
YinYang:Shaun, can you weigh in on Gadhafi and Libya? It was kind of interesting. China along with the BRICS abstained from U.N. resolution 1973. I should add Germany too. China has a big stake in Libya with so many workers there and had to evacuate right before the bombing. Can you shed some light on what was happening there?
Shaun:I really don’t know. I haven’t been privy to senior discussions in the Chinese government about this. I don’t know enough about Gadhafi and Libya specifically to comment too well on those specific situations.
What I can say, though, is that the United States needs to be very careful about what it is promoting in the Middle East right now. I think the Arab Spring uprising could be good in certain areas. I am also worried about what is going to fill the vacuum of the leadership changes. We need to make sure the new governments are friendly towards the United States. And, are actually better than what they replaced. I am not convinced they are always going to be.
The Middle East is still a major friction area, and what I am concerned about is in the last year or two United States has started to pivot its focus in looking at the Middle East back into Asia Pacific. There is a worry that they are starting to create enemies and look for bogeymen where there really aren’t any.
You know, I don’t think China is definitely going to be an enemy of the United States. But far too many people in the West seems to see it as a major threat. I do think the threat in the Middle East is still very serious. And even though you are toppling some of these regimes, I am not convinced that the new leaderships are necessarily going to be better for American security.
China embracing existing world order
YinYang:In 2011 we saw crisys in the IMF and the World Bank. Looks like China is working hard within these organizations. China is not trying to create alternatives and compete with them head-on. We continue to see China essentially embracing the existing world order that’s been dominated by the West.
Shaun:China is very interested in working within the existing system and world order, as you said. You know, giving money to the IMF and working through the United Nations and WTO and these types of multilateral organizations.
And I think what you also gonna see is China’s leaderships, they are looking to make money. You know, I think everybody here wants to get rich. It makes more sense to focus on peace and stability so your families can put up buildings, or factories, or sell more products to Chinese consumers.
I think everybody here wants to make money right now, and they are not that militant. That might not be the case if America continues to provoke a response from China, like Secretary of State Clinton’s misguided statements in the South China Sea last year.
YinYang:In 2011 we also saw the successful launch of China’s space module, Tiangong-1. That is going to eventually become part of China’s space station. They also demonstrated few days later with the successful space docking. To date, only the United States and Russia have achieved this techonolgy.
We often think of space in the military context. But people should bear in mind, I guess, just like NASA, for example, few years ago in their Chang’e lunar probe, a lot of the data they collected, they made them freely available to scientists around the world. And this is something that NASA has done, and I think it is a cause for celebration.
Sure, anyways, there is a military context. You know, from China, with this advancement I guess, what’s the take from within China? I know from the U.S. media, they look at all these success stories with a lot of suspicion.
Shaun:Ah, that’s a very loaded question, YinYang, in a subject.
I think in general, China is not as warmongering as a lot of the Anglo-saxon nations; missionary based like the United Kingdom and the United States. Historically, China doesn’t like to go beyond its borders. Now with borders, there are some definition issues with that. With India, Taiwan and Tibet. In general, what China considers its sort of area, it really stays to that. I don’t think you are going to see China taking a war-like aggressive stance by sending soldiers and setting up bases throughout the entire world like the United States.
Now, that said, I don’t think it’s a foregone conclusion that China is going to remain weak, timid, and meek. You know, I think as threats from the internal side sort of disappear, and threats from outside rise, I think you are going to see more militarization in China.
I think a lot of people here believe that the United States is trying to contain China’s rise, and that the best thing for China to do is to be friendly with other nations. Promote economic interdependence. Push for more soft power. But at the same time in the background really modernize the military to be able to withstand security risks.
My hope is that you are gonna have cooler minds prevail. You know, I am very concerned about the risk for trade war in 2012. You saw after President Obama announced he was going to rotate 2500 marines in Australia, the Chinese government responded by slapping more tariffs on American-made SUV’s. My hope is that it is not going to spiral out of control, because increased trade tension, and certainly obviously military tension doesn’t really help anybody in China or the United States except for people with vested interests in selling more weapons.
Foreign policy with missionary zeal
YinYang:Kissinger in his book, “On China,” essentially acknowledged this idea that the U.S. pushes her values with missionary zeal.
Shaun:China is clearly a much friendlier nation to the Western world than the Western world is to China. I mean that is very obvious. You know, you have most of the senior leaders in China have sent their kids or grand kids to the United States to study. They are embracing American culture and American ideas, and then tweaking it or taking the best of it to come back to China.
My concern is that no matter how friendly China is, they are always getting bashed by American politicians. You know, a lot of the China bashing has become far to mainstream. And, at some point, my fear is that people within China are gonna take massive umbridge. And, say, you know what, let’s not allow for American hegemony anymore. And, let’s take a much more muscular diplomacy in the coming decade. I could see that happening. I think that calmer mind will certainly prevail in China. I can’t say the same is true in the United States where the political system right now seems far too rancorous to have rational thought and decision making at most of the levels.
YinYang:And that’s all the time we have. You have incredible insights, Shaun. Thank you very much.
Shaun:Thank you so much. Happy New Year! Bye bye.