Tag Archives: Robert Herbold

The Dangers of a Quick Visit

First and foremost, all credit due to Stan Abrams of China Hearsay for finding this article and posting it on Twitter. As he pointed out, the rosy-glasses here are remarkably large, but I wanted to write a post about it because this kind of article is not altogether uncommon. The process, it seems, goes something like this.

  1. American businessman with no special knowledge of China visits China for a week or two.
  2. American businessman is very impressed with China’s authoritarian efficiency, and its high speed rail.
  3. American businessman returns to the US and writes glowing review of China for a respected newspaper and the editors print it even though it’s somewhat ludicrous.

I do also want to say out front that some of the things Robert Herbold says about China in this article are right, and there are some advantages to making comparisons like this. I suppose the real point isn’t to talk about China at all, but to galvanize the United States into doing something for once (you know, aside from invading middle eastern countries), which doesn’t seem like a bad idea. Still, the execution here is, well…off.

Recently I flew from Los Angeles to China to attend a corporate board-of-directors meeting in Shanghai, as well as customer and government visits there and in Beijing. After the trip was over, in thinking about the United States and China, it was not clear to me which is the developed, and which is the developing, country.

So, after briefly visiting Shanghai and Beijing, mainland China’s two most developed cities ((Shut up, who cares about Shenzhen?)), Herbold feels qualified to judge whether or not China is developing? That is utterly ridiculous. It might be fair for him to judge, say, public transportation systems (except that you know someone who flies to China to attend a corporate board of directors meeting isn’t going to be on any public transportation). But to judge whether a country is developed or not, shouldn’t you visit more than the two cities, especially if those two cities are widely known for being China’s most developed? Maybe take a trip out into the countryside or something. Or at least visit a second or third-tier city. You don’t have to do that. But if you want to write in the Wall Street Journal about whether or not China is developed, it seems like you might want to make an effort to actually see some of China. I’d have thought the WSJ editors might insist on that, but apparently not.

Infrastructure: Let’s face it, Los Angeles is decaying. Its airport is cramped and dirty, too small for the volume it tries to handle and in a state of disrepair. In contrast, the airports in Beijing and Shanghai are brand new, clean and incredibly spacious, with friendly, courteous staff galore. They are extremely well-designed to handle the large volume of air traffic needed to carry out global business these days.

In traveling the highways around Los Angeles to get to the airport, you are struck by the state of disrepair there, too. Of course, everyone knows California is bankrupt and that is probably the reason why. In contrast, the infrastructure in the major Chinese cities such as Shanghai and Beijing is absolute state-of-the-art and relatively new.

The congestion in the two cities is similar. In China, consumers are buying 18 million cars per year compared to 11 million in the U.S. China is working hard building roads to keep up with the gigantic demand for the automobile.

The just-completed Beijing to Shanghai high-speed rail link, which takes less than five hours for the 800-mile trip, is the crown jewel of China’s current 5,000 miles of rail, set to grow to 10,000 miles in 2020. Compare that to decaying Amtrak.

Herbold is spot-on here, but of course, he’s only talking about Beijing and Shanghai. Anyone who’s spent hours on a Chinese bus bumping along narrow, pothole roads, squatted over a hole in the ground by the side of the road at a truck stop “bathroom”, or squeezed into a standing-room-only hard-seat slow train knows that the comforts of Beijing and Shanghai are not available nationwide. This is obvious to someone who has lived in China for even a few months, and could also easily have been ascertained by talking to any regular Chinese person who doesn’t have something to gain by impressing you, but Herbold didn’t stay long and I doubt he bothered to converse with many laobaixing while he was here.

In fact, I’d be surprised if he ever experienced the “infrastructure” that China’s regular people use every day; the subways, slow trains, and unairconditioned buses. From his description of the trip, it sounds like he probably spent most of his time in black Audis and on business-class seats in high-speed trains and planes. But that’s just pure speculation on my part.

Government Leadership: Here the differences are staggering. In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China’s new five-year-plan. This is the 12th five-year plan and it was announced in March 2011. Each of these groups reminded us that the new five-year plan is primarily focused on three things: 1) improving innovation in the country; 2) making significant improvements in the environmental footprint of China; and 3) continuing to create jobs to employ large numbers of people moving from rural to urban areas. Can you imagine the U.S. Congress and president emerging with a unified five-year plan that they actually achieve (like China typically does)?

The specificity of China’s goals in each element of the five-year plan is impressive. For example, China plans to cut carbon emissions by 17% by 2016. In the same time frame, China’s high-tech industries are to grow to 15% of the economy from 3% today.

This is where things start to get really disturbing. If you read this carefully, you’ll note the only thing he really mentions being impressed by is the five year plan. Don’t get me wrong, I’m sure it’s a lovely plan. But it hasn’t happened yet. Wouldn’t Herbold have heard an equally rosy view of the future if he had traveled to the US and met only with democratic party officials and strategists, for instance?

Without speaking to the common people, or even the ability to understand what’s being said in newspapers and on TV, of course it seems like everything is perfect and the future will be even better. China aside, did Herbold consider who he was talking to? No government official, from any country, would ever greet foreign investors with a presentation about how things were going badly and the government’s plan was to make everything worse over the next five years. But if Herbold ever bothered to ask anyone who wasn’t a government official about how effective China’s government is, he doesn’t mention it here.

Of course, he’s not entirely wrong. China’s government has engineered massive economic growth, lifted millions out of poverty, etc. My point is mostly that Herbold’s methods are highly questionable, and regardless of past successes, the government isn’t exactly batting 1.000 at the moment, as we’ll see here:

Government Finances: This topic is, frankly, embarrassing. China manages its economy with incredible care and is sitting on trillions of dollars of reserves. In contrast, the U.S. government has managed its financials very poorly over the years and is flirting with a Greece-like catastrophe.

Whoops. Guess Herbold didn’t stay long enough to learn that China’s local governments are trillions of dollars in debt, and that inflation may have climbed above 6%, a three-year-high, last month. Yes, the government is sitting on a mountain of reserves, and they’re certainly in a better position than the US government is (though that’s not saying much…). But there are also serious financial issues that Herbold seems to have completely missed.

Human Rights/Free Speech: In this area, our American view is that China has a ton of work to do. Their view is that we are nuts for not blocking pornography and antigovernment points-of-view from our youth and citizens.

Here, it seems Herbold has bought hook, line, and sinker the same Party line any foreigner hears the first time they mention “human rights” in China: “It’s just a cultural difference! It’s not that China is horrifically oppressive, it’s just that Chinese and Americans see things differently.” Sure, some do. But many Chinese understand human rights and free speech the same way Americans do, they just don’t have any say in what the government does or any way of expressing those opinions. I’ve said plenty about human rights in other posts, so here, let’s leave it at this: it’s an extremely complex issue that Herbold boils down to a single sentence, which essentially parrots the Party line. Even if this were true and every Chinese person felt the same way, did Herbold ever attempt to verify it, even anecdotally, beyond his meetings with government officials?

Anyway, he goes on about research and science before a rousing “Wake up, America!” conclusion — yes, he does actually use that cliche phrase as his closer — but I think it’s already clear what the problem here is.

At the risk, nay, the inevitability of sounding elitist: spending a week or two in China on a business trip doesn’t make you an expert on China. Hell, I can speak decent Chinese, I’ve lived here for years and traveled to many different parts of China, and I wouldn’t feel comfortable writing a piece for the WSJ about whether or not China was a “developed country”. (For the record, I don’t consider myself an “expert” either, although I clearly know a bit more than Robert Herbold).

I don’t blame Herbold for having the impulse to write this; certainly after my first two weeks in China I felt I had observed much of what was different between China and the US, and I spent a lot of time reflecting on what was wrong with the US. Luckily for me, the Wall Street Journal didn’t offer to publish those thoughts. Like Herbold, if I got anything right back then, it was by accident, for I didn’t have the resources yet even to know what I didn’t know, nor had I spent the time required to learn anything of substance.

Frankly, the Wall Street Journal probably shouldn’t have published this. I’m sure he’s a very intelligent and adept businessman, and everyone is entitled to their opinion, but come on. Printing something like this even as an op-ed gives it credence that it just doesn’t deserve. I know the WSJ has a very adept staff of folks who know enough about China to rip this article to shreds, or even to write another one on the same topic with the nuance that it actually deserves.