Older Chinese who lived through the ‘pre-opening’ era in China will tell you that productivity and customer service were infamously low at the time. Finding the product you wanted to buy was challenge enough; getting someone to wait on you was the hard part.
Virtually all engines of economic activity were owned by the state, of course, and the battle was over budgets, not profits. As the manager of a state-owned enterprise you inevitably asked for more workers each year. And if you were awarded the budget, you hired them, whether you needed them or not.
One current colleague of mine tells of being hired out of university as an accountant by a large state-owned enterprise that has long since been privatized. The problem was that they didn’t need any more accountants. He had virtually nothing to do. So he came in each day and sat at a desk and did nothing. Nothing.
Then Deng Xiaoping made his famous speaking tour through the south of China and the world changed overnight. In just one generation the Chinese lifted 300 million people out of poverty, a feat never before achieved in the history of the planet.
Deng warned, however, “some must get rich first.” People would have to be patient. And they were. But it was the patience of hope fueled by the fact that all around them fancy new commercial buildings and apartments were rising like mushrooms after a heavy rain. Expensive luxury cars flooded the streets seemingly overnight.
And some did get rich. Very rich. They zoomed through middle class in the blink of an eye and soon enjoyed wealth seldom seen outside of Manhattan or Beverly Hills.
Young factory workers, meanwhile, continued to toil away for $250 – $300 per month and now face the kind of productivity demands common in advanced economies. The biggest change of all, however, is that they are now surrounded by the trappings of a middle class life. In 2011 Beijing alone added 750,000 new automobiles to the highways, creating an unsustainable traffic and environmental challenge, forcing the government to limit the number of license plates issued each year to a very long-shot lottery system.
Housing prices continued to rise in a market controlled by the government and wealthy developers in a land in which no one but the collective people of China can own property.
The young Chinese, by my observation, are growing increasingly impatient as a result. They can see the middle class. They can touch it. But they can’t quite afford it.
The problem is exacerbated by the 7 million students who graduate from China’s universities each year. (Up from 1 million 10 years ago.) After preparing their entire childhood to get into the best universities by acing the universal college entrance exam known as the gaokao, they can’t find jobs, or certainly not the jobs they were expecting.
In some cases mommy and daddy got super rich during the opening up so it doesn’t really matter in terms of how they feed and clothe themselves. How fulfilling can such a life be, however? Enough to crash your Ferrari after a night of club hopping?
There have been a spate of cases where workers have walked off the job in recent years. Japanese automotive suppliers were particularly hard hit but problems also surfaced at the Taiwanese giant commonly known as Foxconn which manufacturers much of the electronics Westerners buy in such abundance.
An Indian reporter not so many years ago came to China to better understand the difference for the disparity in China’s and India’s economic development. She finally concluded that the difference was largely one of hope. She marveled, for example, that a Chinese man she spoke with who cleaned public toilets was sure that he would someday own his own business and lead a good life. The men who clean public toilets in India, she noted, held no such delusion.
I don’t want to overstate the issue. There’s still plenty of hope in the air in China. But it’s fading. Citizens are rushing foolhardily into the stock market in a desperate hope to make their fortune while there is still time. Or buying up every apartment they can get credit to buy on the false assumption that there is only so much land in the world and the value of real estate can only go up. (Americans of my generation were suckled on that myth until we learned the reality of financial gravity the hard way.)
Where does it lead? It’s hard to say. China still has a lot going for it. But hope is the real currency of economic advancement. Without it there can be no productivity advancement and without that economic activity stagnates at best.
There are still pockets of great hope, for sure. But in a country of 1.4 billion people those pockets need to be pretty big and deep. If merely half of the population give up that’s still the equivalent of the U.S. population twice over. That’s a lot of people to carry on the bus of economic malaise.
There is no index of hope that I am aware of. It is, however, the metric I will watch most closely in the months and years ahead. I watch it in the eyes of my employees, my customers, and the people cleaning the public toilets.
View the author’s literary work written under the pen name of Avam Hale. Both books are available at Amazon and most major online retailers in both electronic and print formats.
Copyright © 2015 Glassmaker in China
Notice: The views expressed in this post are strictly those of the writer acting in a personal capacity. They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.