Investment Biker Page 10

  On my 1988 visit the huge square had been a lazy place to fly one of those fancy Chinese kites or to sprawl around on a summer evening, a combination of Moscow’s Red Square and New York’s City Hall Park. History was on all sides of us here—Tiananmen Gate to the Forbidden City, the history museum and the Museum of the Revolution, the Great Hall of the People, Qianmen Gate, the Mao mausoleum, and the Monument to the People’s Heroes. If you got out early in the morning you could watch a troop of PLA soldiers raise the flag in a precisely drilled ceremony of 108 paces to the minute.

  But now, almost a year since Tiananmen Square, scores of police were everywhere, afraid of another demonstration on the anniversary of the first, not letting Westerners tarry. Under their suspicious eyes we took a few pictures and moved on.

  With our plan to take the ferry from Shanghai thwarted by the army, I was in a sweat to make the jump to Japan. We had to stay inside the bubble of summer as we moved around the globe.

  After checking into our hotel, we did a bit of sight-seeing, taking in the Forbidden City. While it would have been nice to see more of Beijing, the next day we rushed out to Beijing International Airport to see about getting ourselves and the bikes to Tokyo.

  Although the passenger terminal was bustling, the freight terminal might have been in a sleepy Southern town, for all its inactivity. There was no traffic and not a lot of international trade, which I guessed went through the ports. Nothing was so urgent that it had to be rushed to China: That country hadn’t had it for centuries, so why hurry now?

  There is no guidebook that tells motorcyclists how to get from Istanbul to Beijing, much less from Beijing to Tokyo. I was dreading this, knowing what we had gone through to ship the bikes from New York to Shannon. Not only would we have to crate the bikes, but we would have to disconnect the batteries, drain the gas, and fill out God knew how many forms and deal with countless functionaries, each one impressed with the importance of his office or fearful of losing his job by allowing us to do what we wanted.

  On May 29 we took the bikes to the airport, and we spent the whole day there, although we were the only people shipping out freight. We always allowed ourselves a full day to cross a border, and this time, in fact, it did take ten full hours to make the arrangements. The insurance office, the authorization office, the airline office, and naturally several cashiers’ offices. We had to have the bikes weighed. To my astonishment nobody asked for a bribe or made any noises about draining the gas and disconnecting the batteries.

  Actually, being the first motorcyclists to leave the Beijing airport for Japan worked in our favor. Had we been the tenth or the hundredth, they would have worked out a procedure that would have taken days instead of hours, but we took them by surprise.

  I knew, too, from years of travel that once you start the process of crossing a border, you have to carry it through with all the speed you can muster. Don’t ever stop, don’t ever say I’ll come back tomorrow or even in an hour. Keep it moving or it will never get done. While it might seem nice to lollygag your way around the world, it takes a kind of intensity to make a trip like this. Giving in to the desire to take it easy or to go off to sight-see, or allowing yourself to become discouraged by some bureaucrat’s red tape during a border crossing—of which we would have more than a hundred—would probably mean not completing a trip as long as this, or that it would be extended by years.

  Luckily, working your way across a border takes on a life of its own, and the last thing you want to do is to cripple that movement. One guy says, “Okay, now go see Joe.” Or he shouts over, “Joe, take care of these guys, they’re okay.” If you stop the process it always runs into a snag. Any pause gives the clerks a chance to think, and what bureaucrats do when they stop to think is figure out a reason why you can’t do what you want to do.

  Pausing is dangerous even after you have crossed a border. For God’s sake don’t linger a few paces on the other side while the border guard mulls over what he’s just done, what his boss is going to say when he gets back from lunch. You want to get the hell out of there, move on while the moving on is good. So, once we had made inquiries and the bureaucrats had committed themselves, the last thing we wanted to do was slow down the process of exiting by suspending it for a week to sight-see in town. I promise you, the next week that process would have been different, longer, more cumbersome—and maybe impossible. So we announced we were ready to leave on the weekly plane the next day, which helped push along the endless paperwork.

  Worried that the job wouldn’t be done right, we went with the bikes to see them strapped to pallets. Because that day no other freight was going to Tokyo, every freight handler at the airport showed up to attack this problem. Twelve husky Chinese handlers strapped this way and that, but nothing ever worked. Once they tied Tabitha’s bike so tight that the metal pallet came up, buckled.

  So finally Tabitha climbed on the pallet and said, “All right, guys, let me show you how to do this.”

  All these freight handlers stood back and watched this tall, longhaired blond woman strap the bikes down, which they had tried to do for two hours and failed. When she finished a little cheer went up, led as much by me as by anyone.

  Tabitha wanted to see as much of the sights as we could squeeze in, so we taxied into town for the night.

  In many ways Beijing is the stuffiest place in China and not at all characteristic of the country. While it has the best of everything—the best hotels, the best food, the best roads and streets—it’s a city of straight-laced museums and pompous functionaries. Everywhere you turn there’s a gray wall with a closed gate or door. The city’s influence, however, is felt throughout China. Across all of China’s three thousand miles, even as far away as Ürümqi, unbelievable as it may seem, the clocks are set on Beijing time. Thus we’d wake up at seven-thirty in the morning in the west and it was still dark, because in this geographic time zone it was really four-thirty. The capital’s bureaucrats push their directives on to the far-flung countryside; but where for years they were obeyed, more and more they are not only resisted but ignored, especially in the south around Hong Kong, Guangzhou, and Shanghai, where the capitalist spirit is raging like a wildfire.

  Tabitha wanted to go to the Summer Palace, but we were told it was closed for repairs. We found out later there had been a big incident there. The authorities had beaten someone to death.

  For my part I was disappointed that we didn’t have time to revisit either of the two main southern provinces, Fujian, right across from Taiwan, and Guangdong, which surrounds Hong Kong.

  Both interest me enormously, because both have been strongly influenced by Taiwan’s and Hong Kong’s capitalistic prosperity, by their free-market, entrepreneurial fervor. Guangdong and Fujian are themselves major centers of capitalism, of entrepreneurship, of foreign investment. Most of the people who had fled to Taiwan came from Fujian province, for an obvious reason: It was right across the sea. Many of our own Chinese immigrants of the nineteenth and twentieth centuries came from those two provinces because they were near the ports, the easy way out. Plus, down there they get Hong Kong TV. Dallas is a powerful motivator throughout the world. People everywhere want to be rich.

  These southern provinces have listened less and less to Beijing. The capital thinks it still controls the army, but it’s beginning to have its doubts. When the Tiananmen Square troubles were at their height, Beijing considered bringing in the crackerjack army from Guangzhou to deal with the problem. Then it realized these guys probably wouldn’t come. The southern army was intertwined with the capitalists and entrepreneurs down there, getting their share of the new profits, and they weren’t going to waste their time putting down a bunch of kids in a square.

  The Communist Party hasn’t fallen in the eyes of the Chinese—yet. The Chinese down in the south and in the countryside still call themselves Communists even though they are as capitalist as they can be. The bureaucrats, the military, the generals—they are all in there trying to grab their piece o
f the action.

  It’s clear that over the most recent centuries China has been pretty corrupt, although we might not always agree on what that means. Once China was the richest, most powerful country in the world, but it’s been in decline for a long, long time. Even in the eighteenth century China was still wealthy. The last sovereign, the empress dowager, wasn’t corrupt so much as without dynamic, without the vision and enterprise needed to keep up with the world and the place of the Chinese in it. The ruling classes still sat around doing the mandarin things they’d been doing for the past five hundred years, totally isolated from the rest of the world.

  Over a nearly forty-year period, from before the First World War until after the Second, China’s empire was in turmoil and decline, just as the Soviet Union has been. What happened during that large empire’s collapse is a model for what’s likely to happen in the former Soviet Union: thirty to forty years of civil wars waged by warlords, i.e., military leaders exercising power over civilians by force. The collapse in the Soviet Union will be far more complicated, however, as China was more compact, with a billion people of a single ethnic group (the Han are 94 percent of the population and live mainly in the east) crowded into a space the size of the United States east of the Mississippi. The USSR not only sprawls across two continents, but is composed of more than a hundred different religious, language, ethnic, and national groups.

  The nationalists, Chiang Kai-shek and his lads, got rid of all that mandarin decay, but they were replaced by Communists, who were even more corrosive to the native Chinese soul. Mao Tse-tung and his Communist cadres won the Chinese revolution and kept the Americans out of North Korea, but they lived as privileged elites and did not cleanse China’s spiritual rot. Mao, who himself had begun his career as a warlord, was an extraordinary revolutionary and strategist who mobilized his guerrillas to wage an effective civil war. However, like other successful revolutionaries such as Castro, Lenin, Stalin, Cromwell, Bolivar, and Ghana’s Nkrumah, after the revolution succeeded Mao didn’t have the sharply different set of skills and understanding needed to run a country and an economy. His post-revolutionary Great Leap Forward, agricultural and industrial policies, and Cultural Revolution were all disasters.

  Even thirty years later, the mainland Communists haven’t undone the damage of Mao’s Cultural Revolution. In addition to the devastating economic and social disruptions of that period, throughout China many monuments and historic sites were destroyed. They haven’t been and probably never will be rebuilt.

  Mao and his gang were lucky the Chinese infrastructure takes so little to operate; otherwise the country would have collapsed like some of the African countries after they’d used up what wealth the colonialists left. All the roads the Chinese seem to need are those for bicycles and pedestrians. The phones and railroads seem to work better than those in the Soviet Union and Africa, maybe because, relatively speaking, China is a more compact country.

  What could happen is that China will split into three countries—the north, the south, and the west. The people from the south in Guangdong speak a different language from the people in Beijing, Cantonese versus Mandarin, as well as being in their hearts entrepreneurial and not Communist. Then there’s the west, the desert, filled with Muslims, an area which no Chinese back east particularly wants but which might be valuable as a buffer against the forces from the west and might contain fabulous minerals, oil, gold, copper, or diamonds. As a buffer it struck me as an expensive anachronism. Sure, Genghis Khan or Tamerlane would have had to march across the desert to reach Beijing, but a modern army would fly over.

  The western region may split off from China, not because of any ideological independence movement but because the region is still culturally, geographically, and spiritually part of the old Turkistan. As recently as the 1960s, there was armed resistance to Beijing in the west, although considering to whose tender mercies such independence would have laid them vulnerable—the Russians—I can’t say the region’s leaders had thought through their rebellion.

  The mentality throughout the south and in the countryside in the north is different from that of the capital, and on my three prior trips—two of them close-to-the-ground motorcycle visits in 1986 and 1988—I had found its spirit being fed more and more.

  To give you a sense of the economic entity coming into being, by the end of this decade China’s economy will be the third largest in the world, although obviously this won’t be on a per-capita basis. Sometime in the first half of the twenty-first century China will come to have the world’s largest economy.

  What will be the effect of China’s one-child-per-couple policy on its future? After all, people in agricultural countries like China always have wanted lots of kids to help on the farm and as an insurance policy for their old age. In all of history such an unnatural policy has never been tried.

  I ask myself if these only children will be so spoiled and self-centered as to shift the Chinese personality. Then, too, many studies document the success orientation of only and first-born children. Will an entire nation of them strive even harder than today’s hardworking Chinese? China could wind up as a nation of spoiled, driven achievers. Then I ask myself if parents and grandparents in such a country will send their only darlings to die in a war.

  What I do know for sure is that the Chinese have a long history of trading, as far back as Roman times. It’s a collective memory, a historic set of skills and attitudes. In the twenty-first century China is going to be the most capitalistic, most developed, and richest nation in the world. Forget Japan; our children should be learning Chinese. Here are more than a billion people being infected with the Taiwan miracle. Hong Kong is the site in the larger body where the growth has taken root, and its shoots are rapidly spreading northward. Sooner or later the southern provinces will influence those northward, and this fast-growing bamboo capitalism will spread across all of populous eastern China.

  We forget, too, the overseas Chinese.

  No one knows how many there are, but they are in every country—Taiwan, Thailand, Singapore, San Francisco and New York, Australia—many thriving, many rich. A third of the population of Malaysia is Chinese. They’ve been emigrating from China’s southern provinces for more than a century, but especially since the Communists came, unwilling to be ground under the heels of self-righteous thugs.

  Even if you’re third-generation Chinese, a cheerleader living in Beverly Hills who doesn’t know a chopstick from a baton and who has never heard a word of Cantonese, you’re still Chinese to the Chinese. You’re welcome back anytime, and they’re happy to give you a passport.

  Many of the overseas Chinese have expertise and capital and want to go back and help, or invest in China and make lots of money. The Chinese welcome them with open arms. There may be fifty to a hundred million overseas Chinese—seven to twenty times the population of Hong Kong—vast numbers around the globe with vast wealth. China goes so far as to set up three classes of hotels—one for the locals, one for foreign travelers, and one for the overseas Chinese.

  Compare them with the overseas Russians. The Russians don’t have a vast, successful overseas population to aid their stricken country. Why? First, there are not huge numbers of them overseas. Second, the overseas Russians haven’t been as successful as the overseas Chinese. Third, they don’t have the Chinese’s historical capitalistic experience. The Russians weren’t great capitalists even under the czars, whom the Communists threw out seventy-five years ago. The Communist takeover in China was only in 1949. Lots of Chinese alive today still remember capitalism. Fourth, few overseas Russians want to go back home, whereas the Chinese do. The Russians who left have been absorbed by other cultures. Few Russians in Brooklyn think of returning to Russia. They want to move to a fancy suburb.

  What Russia has in abundance are ethnic groups wanting to govern themselves. All that’s going to lead to is chaos. If China disintegrates, it’s going to be into three countries, the three reasonably coherent, rational parts I mentio
ned previously. Russia will disintegrate into, say, fifty or a hundred belligerent factions. Will this be dangerous to us, or even to Europe? No, because these factions will be too small to be of military importance, but more important, they have fought one another for hundreds of years, and what working weapons, including nuclear bombs, they have they will at worst use on one another.

  Still, I’d be tempted to sell short almost any non-Chinese company with a massive investment in China, because the Chinese frame of reference won’t allow outsiders to make the big money. Why? There is a centuries-old suspicion and contempt for foreigners first bred by the Middle Kingdom’s certainty that it was the center of the universe. The rock-hard belief that persists until today that the Chinese way of doing things is best isn’t going to be shaken anytime soon by the West.

  Thus, because they’re treated differently, the Americans, the Germans, and even the Japanese aren’t going to make nearly as much money in China as the local and overseas Chinese will. Anyone else who invests in China, as the Japanese are doing, needs a strong stomach for risk and the patience to wait maybe twenty years for a proper return. The folks who do that probably will get rich, of course, because the market is so huge.

  How, then, should a prudent Western investor play the Chinese economic explosion?

  If you want to get involved, you should get a Chinese company to do business for you in China. For instance, if XYZ Corporation announced it was going to make a major effort to market directly in China, I’d be tempted to short it, but if instead it hooked up with an overseas Chinese health-and-beauty company already marketing successfully in China, perhaps one listed on the Thai or Singapore stock exchanges, I might be an eager buyer of XYZ Corporation or the overseas Chinese company itself.