Monday, April 14, 2014

Review of Country Driving: A Chinese Road Trip by Peter Hessler

Peter Hessler, author of Country Driving: A Chinese Road Trip, is a John McPhee student who learned Mandarin in the Peace Corps and wrote three books about his experiences in the country. This one is about his many trips in the early 2000s in a rental car along the "great wall" through rural northern Chinese areas and also through the factory towns of southern China.

His book is a shockingly honest and mostly unflattering depiction of China and the Chinese, although the rural Chinese are pretty decent people who are either neglected or oppressed by the rulers of China.

Rural Chinese agriculture is very primitive and labor intensive, even in the 21st century. Driving through rural agrarian areas, he was confused to find piles of raw grain in the roads. The farmers wanted passing motorists to crush the grain by driving over it - threshing grain in the street! Threshing was historically very labor intensive, but other civilizations solved this problem much earlier with capital equipment.

China has the lame propaganda slogans printed everywhere. I can't tell whether nuance is lost in the translation but the propaganda messages are clumsily simplistic: "protect water, solidify earth," or "use the World Bank's opportunity wisely".

Useful information in China - at least at that time - is spread by word of mouth only. There's nothing like the American internet that can be used for unabashed, honest, anonymous discussions. Government communications are unconvincing dissembling and lies. Small villages have propaganda speakers mounted on poles that blare "news" about grandiose government plans, and more propaganda slogans.

As we have observed many times on this blog, the Chinese governments have always been the biggest enemy of economic progress in China by overcentralizing and thereby blocking the spread of useful information and stealing surpluses needed to allow innovation. More than 200 years after a Scotsman invented the threshing machine, they are still threshing grain by hand!

Hessler's experience in China reveals the incredible Chinese paranoia. Can you imagine if the U.S. made Chinese travelers register with the police in San Luis Obispo if they drove from San Francisco to Los Angeles? Hessler was repeatedly shooed out of towns by police who said that their areas were closed to foreigners, even though there is no such (written) law in China. He made an arrangement to rent a house in a small village a few hours' drive from Beijing, but was told by the local police that he wouldn't be allowed to stay overnight. He eventually wore them down by ignoring this arbitrary order and continuing to come back.

Navigation was difficult because there are apparently no topographic maps and no detailed road maps of the country. This is again because of government paranoia but also apparently because Chinese are very uninterested in geography and mapping.

The "planned birth" (abortion/infanticide) policy is not the eugenic master plan that we have been led to believe. Rural Chinese, Mongolians, and other minorities are allowed to have 2+ children and the urban Han Chinese are limited to one. If you're not too proud to do business with people who execute babies, shouldn't you at least worry about how they'll steward your investments?

The government continues to sabotage economic progress by failing to create a system of private land ownership. Anyone who predicts that China is going to become an economic rival to the west is showing their Marxist colors by believing that economic progress can be imposed from the top down without a system of price signals between private owners.

The country is incredibly corrupt. From the horse's mouth: "You know how China is: toushui loushui - stolen taxes and leaked taxes." Something naive western investors don't realize about these corrupt countries is that you have two choices: you either comply with the laws and pay the taxes that your competitors don't, making you the highest cost producer, or you pay the bribes and cheat, in which case you are corrupt and can be blackmailed.

In the southern factory towns, Hessler deduces that people are acting according to the following code: "if a lie works, fine; otherwise just burn the bridges." I understand that this is a "developing country" and I'm not "judging" how people who make $3,000 a year behave. I'm just saying - I don't think people who buy U.S.-listed Chinese companies know that business in China needs to be cash & carry.

Hessler made friends at factories in southern China and says that during 2008 workforces were being cut in half. Something I've never understood is how Chinese GDP growth was never negative during this time period.

China is a joke. There will be no "Chinese century". If they are lucky, they can back down from their insane construction binge without having a civil war.



Luke The Debtor said...

So I clicked on the wiki link to "threshers" and eventually migrated to "enclosure". It is striking that this is almost exactly what China is doing: forcing people off their land through eminent domain or taxation.

So, in order to prevent their residence from being confiscated, or to pay rent for their new residence, they must migrate to the coastal cities for work. However, because of the hukou system, these migrants do not have the ability to send their children to school, seek health care or social security.

I wonder if the system also prevents legal recourse against inhumane work conditions. Overall, I wonder if China isn't just some kind of ponzi scheme.

James said...

Thanks for the review; the book sounds really interesting.

It's amazing that they've gone on a runaway building boom while letting their agriculture stay pre-modern. In a way, I think the Chinese RE bubble is even worse than it looks-- not only are they building mm's of apartment buildings that will never be lived in, in many cases they're building them on fertile land that could have been used for farming. So the RE bubble destroys wealth multiple ways.

James said...

The "planned birth" (abortion/infanticide) policy is not the eugenic master plan that we have been led to believe. Rural Chinese, Mongolians, and other minorities are allowed to have 2+ children and the urban Han Chinese are limited to one.

It's weird that China and Russia have the same problems- pervasive corruption, an aging population, higher birthrates among sepratist minority groups, etc- yet China is considered a rising superpower and Russia is considered a corrupt has-been. I'm not a big fan of investing in Russia because it's a beneficiary of the China bubble, but there's an obvious disconnect.

CP said...

"Housing Trouble Grows in China:
Overbuilding by Real-Estate Developers Leaves Smaller Cities With Glut of Apartments"

CP said...

"a runaway building boom while letting their agriculture stay pre-modern"

That's what it sounded like - or at least it was 10 years ago when Hessler was exploring.

CP said...

"China is considered a rising superpower and Russia is considered a corrupt has-been"

Good observation.

The "BRIC"s are all alike in that they are all a joke from a foreign investor or minority shareholder perspective.

I'd be most bearish on Brazil and India, China and Russia probably vying for least worst. Russia may even be the better of the two?

CP said...

CP said...

CP said...

BRICs update

Anonymous said...

One of Beijing’s busiest public toilets is fighting the scourge of toilet paper theft through the use technology – giving out loo roll only to patrons who use a face scanner.

The automated facial recognition dispenser comes as a response to elderly residents removing large amounts of toilet paper for use at home.

Now, those in need of paper must stand in front of a high-definition camera for three seconds, after removing hats and glasses, before a 60cm ration is released.