David Chaston was in China recently and offers ten perspectives on a rising power that will increasingly dominate how we see our place in the world

I have visited and spent a bit of time in many of the world’s top cities; ones that claim or used to claim that they were the centre of the world. (San Francisco, Sydney, Chicago, New York, Washington, London, Paris – you know, the usual places on a Kiwi’s itinerary).

But with Donald Trump’s serial habit of bad deal-making and foot-shooting, Washington (a truly wonderful city that is always worth visiting) is giving up its mantle. Its status is leaking away by the month.

It is not that others are making a new special effort to claim its position, but somewhere else is going to be anointed.

And that may well be Beijing.

I have spent the past week in this capital city, and I have been truly impressed. Like many other very large cities, it has its problems, some of them significant. But it also has assets, equally significant advantages that just seem to reinforce its position.

Much to my surprise, I came away thinking: "I could live here."

So here are 10 thoughts on what may soon become the world’s power centre.

1. Population

According to official city statistics, Beijing’s official urban population is 22 million in 2017. It was just 1.7 million in 1950 and that is the same amount it grew between 2015 and 2017, an +8.2% spurt. The same source indicates it will grow to 28 million by 2030 with the growth ‘slowing’ to +1% per year in the five years to 2030.

To a large extent, this is as expected. China is currently less than 50% urbanised, so as that level grows to Western benchmarks (+90% urban), it is only natural to expect their mega cities to expand, and Beijing as the capital will be no exception.

But all may not be quite as standard as the official estimates suggest. The location of this city imposes limits. It is here for an ancient reason about how it can be defended, but those attributes are no longer relevant. Modern constraints are kicking in.

Pollution control is changing official thought. What was achieved for the Olympic Games showed what is possible. Beijing is ridding itself of heavy industry, transforming itself into a service powerhouse based on IT. That requires far less people in basic industries that are being either closed outright as productivity standards render them past their use-by date, or shifted to other centres. Those workers are going with them, away.

The strong suggestion is that Beijing may already be near its peak population. I heard it suggested that growth may already have vanished. Having said that, some sectors are still very strong, especially those around education. This is China’s education centre – reinforced recently by the rising TLS rankings of the city’s top universities going up (as Auckland University goes down).

Big recent changes like this are transformational. Beijing is not the city it was just five years ago. It will be even more different – and stronger – in another five years. Official policies are changing the population mix in powerful ways.

2. Demographics / age

If demographics are destiny, Beijing has real destiny. The overwhelming takeaway from my week+ here is how young the people in the streets and on the subway, are.

That is true for China as a whole, too.

It may be an ancient society, but in 2017 it is young, very young.

The relaxing of the one-child policy is having only a minor impact. The young are all from one child families and that is what they know. An urbanised society doesn’t need extra family labour for farming. Besides Chinese farming is adopting productivity aids fast. The other traditional reason for a large family is for social security. But that is changing too.

China as a country is like an adolescent. It thinks it knows more than it does. But just like all adolescents, it is growing up, maturing. And with that comes an expectation of services and a growing social safety net. It is not yet all in place in a way we might recognise, but it is happening.

So young couples are staying with one child. And a key reason is that they are well educated and career focussed. These families are very aware that their new and improved lifestyles need good incomes. And children cost a lot of money, especially for the princeling standards they were brought up in and it is these, and better, standards they want for their children. Parents here are just like those the world over, they want the best for their kids. Most couples will still just have one.

There is an official fear that China may grow old before it grows rich. But that is hard to see in Beijing. Besides, a simple look at Japan shows that you can grow old and stay rich. Technology is changing the way wealth is shared and how ageing populations can still access better-standard care.

China will be no exception to the West’s (and Japan / Korea’s) experience. Yes, people will live longer but the will work longer too because work is not so physically draining. And new ways to deliver services will respond to the demands of an ageing population. The people will keep the system honest.

It is too easy to use the standards of the 1980s to foresee problems in the 2030s. But those linkage are no longer relevant.

3. Traffic

The adolescent nature of Beijing is most obvious on the streets and the way people respond to population and traffic density.

You can’t own a car in Beijing unless you have an official number plate. And there is a tough, tough lottery in place to get one. I know people here who have been in the plate lottery for five years and still haven’t ‘won’ a chance to apply.

Despite that, the roads are full, mostly with cars with Beijing plates. (it is not legal to drive in this city without Beijing plates and that is mostly respected.)

There are even issues working in the city without residency papers (less respect for these, but if you get in trouble, this lack can hurt).

The streets are full-on by New Zealand standards. You need to be brave to cross the street even at crossing lights. People on scooters and bikes dart everywhere, even against the traffic flow. And cars, bikes and pedestrians press ahead no matter. You can’t be on the road without paying full attention all the time.

And even among all this, on the streets, on the subway, in the airports, people respected each other and their personal space.

As part of the official way to limit the crush, Beijing City has a carless day policy, respected because the penalties are tough. One fifth of most private cars are off the road each weekday (based on number plate digits).  But these rules don’t apply on weekends, so everyone is out those two days. The consequences are that there is no respite on Saturday or Sunday.

4. Subway

Because Beijing is flat, it has been laid out in a grid pattern since it was formed in the early dynasties. That has helped how roads and the subway system have been developed. For this rail sceptic, it (like most other major city subway systems) is a pleasure to use.

All signs are subtitled in English, all train announcements are also repeated in English. The system is vast and new, Olympic Games inspired.

And it is cheap. I used five separate lines, and no one-way ride (even ones that took 40 minutes) cost more than 5 yuan (about $1). Trains came every two minutes. They are fast, clean (very clean) and airconditioned. Station signage is easy to use.

I have no idea the level of subsidising, but the intense use must generate a strong revenue stream. It needs to; I used Line 10 a lot, the longest underground subway in the world. Overall the whole subway system handles 10 million passengers per day, using paperless fare systems. These systems cost about Y1 billion per km (NZ$200 million) and Line 10 alone is 57 km. Overall, there is over 570 kms of service. It has all been financed by debt from state-owned banks.

It is hard to see how a city of 22 million could function without this system. It is a very high standard system by international norms, with no obvious crime.

But a back-of-the-envelope calculation suggests that a system that cost NZ$100 billion to build (570 kms x Y1 billion/km), can hardly have its core construction debt being paid back after operating costs from revenues of Y50 million/day or Y18 billion per year (NZ$4.5 billion).

They are hooked into debt and subsidies forever now. Writeoffs are inevitable. Not that you would notice by riding. It is a marvel. Someone else is paying. It helps that this is a command economy that can push those costs on to others in the future. Perhaps inflation will help.

Beijing is the Capital. It has privileges.

But you have to wonder: does an efficient, less-than-cost-to-ride transit system just enable growth and density, or is it rather a normal city management response to growth, justified by density? I suspect the former; it’s a growth enabler in Beijing, allowing it to be much, much bigger that it would be without it. It causes other infrastructure demands, like for the water supply.

5. Weather and air quality

I was here in early September. It was very balmy, bearably hot during the day without being too humid, stunning in the evenings and night. That is, high 20s, low 30s during the day, low 20s after sundown.

It is not always like this; apparently September is the City’s best time of year. It comes after much higher temperatures and the rainy season, and before winter sets in when it is positively arctic. If you like seasons and wide variability between them, this is your place. Skiing is a local favourite in winter; air-conditioning essential in summer.

That summer can be very smoggy, but wind and the rains can shift it. But the winters are when the smog really sets in. (Huge sandstorms out of the Inner Mongolian desert are apparently disturbingly frequent in summer pre- the rains. A bit like Adelaide and Melbourne can get.)

The smog I witnessed was light by the standards of some other cities I know (although heavy by Auckland standards). But only two of eight days had any noticeable haze – even though I did not really see a cloud in the sky. Most days were great. Must have been the time of the year.

6. Water and geography

Beijing is based in a dry northern plain. The northern mountains are steep and rugged and these helped this site to grow, defended by an elaborate wall system. Even today, it is impressive and easy to imagine how that defence worked for more than two millennia and many dynasties.

But the dry plain has always struggled with its water supply. That is true today and it was centuries ago. In the 5th century BC (not a typo) Beijing authorities decided they had a water problem and started a huge canal building project to bring it from the south. The Grand Canal is a marvel, mostly gravity-fed, bringing water from both the giant Yellow and Yangtze Rivers on a south to north route, itself crossing many other rivers. It’s a UNESCO world heritage installation, all 1,775 kms. One lock was added in the 10th century.

So, yes, Beijing’s infrastructure demands are large. But over thousands of years it has been able to cope. It is hard to conclude it is unsustainable.

It is a feature of most places I went to see, the liberal use of water.

That is not to say there aren’t issues; you don’t drink the tap water. It looks just like ours, but it is not. Then again, nobody here has ever drunk it straight (without boiling), probably for thousands of years.

And that centuries-old canal system is big. Find a picture; you will see that it is also used for shipping, especially in the southern section. And of course, it is now just one of three separate canal systems supplying Beijing.

7. Roaming and the Great Firewall

The great modern piece of infrastructure is the internet. Because the population is so young, everyone is connected on mobile. The American internet infrastructure is big and powerful, but the Chinese one is on an even bigger scale.

More than half of everyone I saw on the street, in shopping centres, on the subway, at tourist attractions, was actively using a mobile phone. The other half clearly had them. That is an enormous amount of bandwidth in permanent use.

The Chinese are fascinated with QR codes.

And the Government is very active trying to stay on top of what they see as security risks. It is a heroic effort on their part. They have banned VPNs recently. But realistically, you can just see they can’t win. Of the few locals I talked to about the issue, they laughed off the long-term effectiveness of The Great Firewall.

Apparently, there are already new techniques being widely circulated on how to stay connected to the internet outside the country, sans VPNs.

In my hotel, Google was blocked. Not great for me because I am 100% Android, so no Gmail, no Google Maps. But Microsoft’s Messenger worked flawlessly, as did Spark’s email.

But I wasn’t hampered that much. Google worked faultlessly via China Mobile and their roaming deal with Vodafone, all for $5/day (although watch the data download limits).

And my Teamviewer connection to the office never missed a beat on the hotel wifi, Google and all.

It was all just too easy to avoid The Great Firewall.

And Google itself is ignoring it. It may be officially blocked, but is has a large office here and in the last week announced it is hiring in Beijing aggressively. Google Maps was so up-to-date it was recording live traffic conditions. Impressive for a ‘blocked’ service.

8. GST / tipping / service charges

This is a place where services are abundant and service is highly competitive and very good. Maybe it is a holdover, or maybe some official rule, but no-one tips – which is internationally unusual.

But large institutions (and maybe some smaller ones) do add a ‘service fee’. Maybe that is because foreigners expect it? Or needed because posted prices aren’t always sustainable. I had a meal with a friend that cost just Y88 for two (less than NZ$20), and it was in an upmarket location, and a very fine meal too. No ‘service fee’ there, but given the quality of what we had, the time it took, and the attentive service, I wouldn’t have objected to another 10%. Apparently it was a Groupon-type special.

And that included Chinese GST/VAT, which is generally 6%.

9. Police and security

Police, the PLA, and other security are everywhere. I was ‘warned’ to expect it. Police are on most major street corners, security is at every subway station, there seem to be monitors at the top and bottom of most busy escalators.

In Tiananmen Square, PLA soldiers in uniform are ubiquitous. As are plain-clothed police, recognisable by their official belt buckles, but nothing else. The soldiers are in pairs, standing at their station, with a riot shield and two canisters. The canisters are clearly fire extinguishers because there is a history of immolation protests in the Square.

Having said all that, the numbers of people visiting is enormous; many 100,000s per day. It is a space that can take relentless crowds like that. And given that enormity, it just seemed reasonable that there would be proper security.

In or out of uniform they keep a situation that just seemed safe.

None of the soldiers seemed threatening; they seemed like students in uniform. I don’t doubt there are hard men in charge. But from what I saw, you could just imagine a young student-in-uniform driving a tank in 1989 facing a young lone student protestor on the street in front of him, and no matter who barked orders at him, he wouldn’t run the protestor down in cold blood. No doubt both young men ‘disappeared’ back then and both paid for their entirely human reactions. But today you can be sure both soldier and student would be even more familiar with the reasons for any protest. However, given the trouncing the students took that fateful day, I personally doubt we will see that type of street protest again in the same venue. The internet will organise something quite different next time.

10. Debt / foreign assets / currency

It is a favourite Western viewpoint to claim the Chinese currency is built on a house of debt-based cards. Such thinking has led some wealthy investors to short the Chinese yuan. But they are coming unstitched in a big way.

The yuan is strengthening, not weakening. China’s foreign currency reserves did slip toward US$3 trillion, but they are growing again.

That short bet can’t be maintained forever (those investors have been calling the ‘end’ now for more than seven years) and even billionaires are throwing in their hand.

I think that what they missed is the transition from a factory economy to a service economy. They also misinterpreted-interpreted the power and speed of the demographic shift and how far the rural-urban migration has yet to go. They may have also missed the impact rising education is having.

They most certainly forgot about the other side of the CNY/USD valuation. The Trump effect corroding the value of the greenback.

China is here to stay. Its financial situation will be a consequence of the drive of its people. The international repercussions will be felt for generations, not just years.

That is not to say I am happy about their politics. Or comfortable about their new role as a superpower, especially as it presses on New Zealand and our choices. But we will need to figure out a way to live with this new adolescent gorilla. And remember, it will grow up, probably in our lifetimes.

We will need to be savvy about how we handle ourselves with them. I don’t think we should compromise much at all, but we will need to make some difficult choices at some stage. The best way to think about this is to realise we are tiny, practically unnoticed in Beijing. Our positions are inconsequential to them (unless we are stupid about how we respond).

We have the advantage of size and nimbleness. And we must use it.

But for Kiwis to be cool about our relationship, we need to put more effort in Understanding China. Euro-centric white-man-knows-best and incipient casual racism attitudes from middle New Zealand will undermine any smart positioning our Government does.

China is growing up; part of New Zealand will need to as well.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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24 Comments

David, thanks for perspective. The Chinese have been interwoven into New Zealand society for over a century, having arrived in multiple waves, how they will influence or dictate New Zealand in the coming century will be truly fascinating..My first recollection , whilst at primary school in Auckland, forty years ago was being given a set of proper chopsticks by my best friends grandfather, Chinese and not a word of English. The friend in question remains today a very good friend. Perhaps Interest.co.Beijing or Interest.co.China

just don't write these for narrow mined kiwis here in NZ. we don't care, we don't wanna know how china goes.

Welcome to Beijing.

Although a solitary observation, yours is a good one.

I give you some names and ppl in this forum may like to invite them as keynote speakers when organizing certain international conferences. They will provide you with the most comprehensive and authoritative knowledge on China's future econ development, foreign policy and much more. Be warned that they will be pretty hard to invite though.

Family name Given name:
Wen Tie Jun on econ history and development (http://our-global-u.org/oguorg/en/wen-tiejun-2/)
Jin Can Rong on foreign policies (https://en.wikipedia.org/wiki/Jin_Canrong)

Did you visit the spy school? Haha.

Does anyone in New Zealand actually believe that China is going anywhere? Or that their impact on New Zealand might diminish in the future?!?

David on one hand you say the subway is going to be subsidised forever, then on the other you say the city couldn't exist without it. I think this is the point that Auckland has reached.
You also ignore that road users are heavily subsidised in that they are given valuable land without paying for it. It is impossible to keep giving more and more of that subsidy in a growing city.

More on carless days - Muldoon was prescient

The burghers of Auckland bet their shirts on road systems and prevented the future by blocking "rapid rail" - now as you face the future you find that is in fact a massive failure - they got it wrong and the cost of fixing it is massive - maybe they will have to adopt Muldoon's carless days as a temporary measure

Simply late arrivals to the great surplus energy, fossil fueled, environmental rampage that the western world has been on for decades.

Yes, very nice for the mo, yet entirely unsustainable.

Finally someone gets it.

Did you see any baiji?

I finally understood how the traffic in China worked when I crossed a 6 lane street in Beijing. Very different from the slot car mentality of roads here.

David, thanks for sharing what you saw in China. You may be impressed too if you have a chance to visit some major cities in southern China such as Shenzhen and Guangzhou.

Been to both. Interesting places.

I once saw the sun too, although that was only on the last day after it had rained. Before that it was a dark gray haze every day.

The high speed train between the two was great. So was the food.

@RickStrauss You might not so lucky to experience many haze days in Guangzhou but generally speaking the weather and air qualities in Shenzhen and Guangzhou are much better than in Beijing, David is lucky as I can see from the photos that the sky is blue (not as blue as NZ though) in Beijing. If you live in Shenzhen or GZ for a while you will love it. Also I don't know when you visited there last time as these cities change very fast, every year is different. Welcome to be there again. I'm flying there after Election Day. :)

Wow - Muldoon's carless days reprised - 40 years later

A very interesting read but it may have been better timing to issue it after 23/9.

Nice write up, thanks for giving the latest views on Beijing and China.
For Nixon and Kissinger, Mission Accomplished in bringing China to the World.
For the Chinese, it is a permanent mission, getting integrated and getting their influence to prevail.
One would think that NZ has a head start in this side of the world in dealing with the Chinese. But are we getting the benefits yet ? Will we give more than we get ?

Population ..."China is currently less than 50% urbanised, so as that level grows to Western benchmarks (+90% urban), it is only natural to expect their mega cities to expand, and Beijing as the capital will be no exception."

You make it sound like if you "urbanise", somehow energy is created....

You need to get your head round two graphs
https://earthhabitat.files.wordpress.com/2010/02/worldpopulationgrowth1.jpg
https://ourworldindata.org/wp-content/uploads/2017/05/global-primary-ene...

Population needs energy.

Thanks David, for this very thoughtful article. As a Chinese living in NZ, I often want to say similar things to what you have written in your article to my friends/colleagues. But I found most people would only pay attention if they hear things they want to hear. I am totally OK if people dislike China after they have been there. After all there are many things that need to be improved. On the other hand there are also many things China did right. Just don't judge before you see it. That's a mistake Chinese people made 200 years ago. I totally agree with you, NZ is in a position to benefit from China's rise. I wish more Kiwis can pay a visit to the Chinese cities and we can understand each other more!

China is developing 4000km per hour super fast train.
https://www.google.co.nz/amp/bigthink.com/paul-ratner/china-is-making-a-...

Yes. I took the 325 km/hr fast train from Beijing to Shanghai. 5 hours. Yes, it is fast, but still quite a long time although it is 1300+ kms (NZ is 1600 kms long.). Too fast for good photos. What was an eyeopener for me was how many trees there are in the intensively farmed rural areas. Wasn't expecting that. Or even the density of the urban forest in both Beijing anbd Shanghai. (The farming areas all looked very prosperous.)

Thanks David ............ all it now needs is a real democratic process and a free-floating currency .

While NZ and Australia can maintain and defend their open, free democratic societies, then they can enjoy trade and partnerships etc with China. However, if they lose their democratic freedoms and social freedoms then they may not view their loss of individual freedoms as being worth allowing such a large political, military, economic power to dominate their societies. Without the USA and Australia, NZ would be very vulnerable.

I had a Beijing couchsurfer stay around 3 years ago and introduced her to binocular astronomy. She was astounded even without the binoculars as she had never really seen stars before.

Second observation about this young lady was that she was smart. I have a 4 page explanation of my Rework of the Quantity Theory of Money - (M.V)+i=P.Q - at the end is a question. So with English as a second language she is the only one I have ever had answer the question.