Hangzhou, China:
Keynes Meets Darwin

Question: How do you control the economic activities of 1.3B people?

Answer: You don’t.

John Maynard Keynes would have loved the spirit of enlightened self-interest that drives the Chinese. But in their robust growth-at-all-costs economy (according to the World Bank, air and water pollution kill 750,000 Chinese each year), the free-market here is as much Darwinian as Keyesnian.

You see the intense competition among the Chinese everywhere. They are very polite to each other, but whether competing for a cab or a job, the competition is beyond fierce.

Because of China’s vast labor pool, no city job is secure. Workers seem driven as much by fear as by ambition. For each worker who fails to perform adequately, there are thousands waiting to take their place, and there is no shortage of supervisors to evaluate their work.

The result is that commerce – whether at a micro level involving competition for individual jobs, or at a macro level involving the quest for world market share — occurs at an almost suicidal pace here. Thirty percent of China’s economy is driven by domestic demand while the remaining 70 percent is linked to exports. This is exactly the opposite of the demand ratio in the U.S., and hints at China’s economic vulnerability should first-world countries enter a recessionary cycle. However, domestic consumption increases daily as the economy grows.

Americans Treated Well

But I must say visiting Americans are treated exceptionally well. In Shanghai, my daughter Laura, 23, and her boyfriend, Mike, went clubbing last night. Laura is tall, slender and, well, glamorous. She was granted rock-star status wherever they went. Mike just enjoyed the ride.

Meanwhile, on the street in Shanghai some young girls just thought my wife, Lynn, was the coolest thing they had ever seen. They literally stood in line to just say hello to her – in English — and to giggle. It seemed everyone we met was interested in all things American, but guardedly so.

But while they are unfailingly polite to us, it seems that no commercial transaction, regardless how small, is complete unless accompanied by paperwork. Our registration at the Jin An Hilton in Shanghai involved a staggering level of administration, including the scanning of our passports and the completion of no fewer than four separate forms – for each of the three rooms we rented. Check-out was only slightly more streamlined.

The process repeated itself when we arrived at the Hyatt at Hangzhou yesterday.

Adversity In the Shadows of Great Wealth

Of course, as American tourists we see only a thin – and not always representative — slice of life here, but in Hangzhou, a beautiful 1.6-million-person city south of Shanghai, within its own 6-million-person metropolitan area, waiters and clerks are almost comically abundant and eager to serve.

There is great wealth everywhere. High-end retail establishments featuring every luxury brand imaginable grace districts throughout Shanghai and Hangzhou; yet poverty and near poverty lurk just behind the swank shopping districts, high-rise office buildings, and world-class hotels. Countless un-air-conditioned one-and-two-room flats, or air-conditioned but extraordinarily tiny apartments are routinely shared by extended families.

The Government’s Bizarre Belief

Meanwhile, somehow – and incredibly– the government here still labors under the profound misconception that a nation of 1.3 billion people can enjoy economic freedom without enjoying political freedom. As a result, the government still attempts – and largely succeeds – to strictly control the flow of non-economic information here

For example, I’ve previously described to you how they are withholding details regarding where three quarters of a million Chinese are dying annually due to air and water pollution. Another example: My 13-year-old son, Sam, could not access My Space here – the internationally popular internet teen-meeting-ground. Meanwhile, in addition to controlling the print media, the blindly pro-government bias shown on this nation’s TV channels is positively chilling.

I Lose My Passport

And then the unspeakable happened: I lost my passport.

We looked everywhere today, and when we finally conceded to ourselves it was gone, I contacted the American Embassy in Shanghai and the manager of the hotel. According to the embassy we needed to acquire a document entitled, “Confirmation of Reporting the Loss of Passport.” I would be able to travel domestically with this document; and it would serve as the basis for the issuance of a new passport by the Embassy.

But it was Friday afternoon, and we were to depart early Saturday morning for the Shanghai to catch a flight to Beijing.

A helpful English-speaking front desk assistant at the Hyatt, a young Chinese woman named Wendy, whisked us in a cab to the local police station to file a missing passport report.

The place was like something out of a B movie about a third-world country. Five police officers sat in a closet-size office, around one metal desk on which sat an ashtray full of cigarette butts. Wendy explained our dilemma and timeline. The five officers scurried about finding the correct form, completed the document in no time, and instructed us to take it about a mile down to the road to the Department of Entry and Exit, to be exchanged for the form that would permit me to travel domestically.

When we arrived at the appropriate department, there were a dozen people waiting their turn, and there was one officer dealing painstakingly with the passport issues of one person at a time. It was 4:30 PM. The place would close in thirty minutes, and would not reopen until Monday. This would essentially make me a captive in Hangzhou through the weekend. There are worse places to hang out, but my five family members and I were already booked on that flight to Beijing the next morning. We needed that form to travel domestically. Changing our itineraries would be a nightmare.

Wendy, a diminutive 26-year-old, God bless her, asserted herself; and while she upset everyone else in line, she absolutely insisted that her American charge (me) be assisted immediately.

The young officer tried to rebuff her, saying her request could not be honored until Monday, but Wendy was not having any of it. But then the young man surprised us all by suddenly turning to me, apologizing for the delay and digging into a mass of manuals to prepare the appropriate “Confirmation of Reporting the Loss of Passport” form. In no time it was completed, stamped and ready for my signature.

In a final note of irony, the English translation on my form said, “Loser Sign Here”. So this loser did.

We returned to the Hotel where I called the Marine Watch officer at the now-closed-for-the-weekend American Embassy in Shanghai. He assured me I could travel domestically with the form we had obtained, in lieu of my passport; and he suggested I appear at 8 AM Monday morning at the U.S. embassy for a new passport. He said the process would take less than an hour there.

But that would not end the paperwork there. Only China can issue visas, so I will then be required to find the “Department of Entry and Exit” in Beijing, to present my new passport, and to have them issue and attach a China visa to it.

Only then will I be free to leave the People’s Republic of China.

My next dispatch will be from Beijing – I hope!

–Keith

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