Smells Like Communist Spirit*

I spent last week at a national education retreat (国情教育) in the central city of Linzhou, Henan province. Popularly called “red tourism”, these retreats take Communist Party of China (CPC) members to locations around the country with historical significance to the development of the CPC. The idea is to bring the Party’s history alive for the rank-and-file, to rekindle their revolutionary and proletarian spirit (even if Chinese people tend, nowadays, to aspire to Mercedes-Benz cars and Hermes bags rather than class struggle).

Since the CPC began promoting red tourism in 2005, it has become big business. China Daily said in March that over 800 million red tourism trips were made in 2018. According to the Ministry of Culture and Tourism, the average amount spent on a single domestic trip is around CNY930 (about $135). So the red tourism market may be worth nearly CNY750 billion per year (about $110 billion). But before you get too excited by the potential investment opportunities, keep in mind that it’s a market essentially closed to the private sector. As far as I can tell, these study tours are almost entirely subsidised by public funds and mostly spent at state-owned enterprises or government-owned destinations. Locals in those generally poor inland locations where red tourism takes place do benefit from some trickle-down, but it’s a small drip to be sure.

Group photos at the canal. Pic by Joseph Lo

The usual agenda of these retreats include sightseeing visits to important revolutionary locales, followed by classroom sessions and group study. Linzhou wasn’t my first taste of red tourism. Last year I attended a retreat at Yan’an in Shaanxi province, the endpoint of the Long March and important for being where the CPC based itself for most of the Second World War (or the Chinese War of Resistance Against Japan). The theme of that earlier retreat was highlighting the CPC’s resistance credentials. It also included a visit to nearby Liangjiahe, a small farming village where CPC General Secretary Xi Jinping spent the Cultural Revolution.

So what’s at Linzhou? Situated at the crossroads of Hebei, Henan and Shanxi provinces, it’s a rugged mountainous region where the Zhang River cuts through the Taihang mountains. The closest city is Anyang, about two-hours away by car, the first capital city of China, during the Shang Dynasty (between 1,600 BC to 1,000 BC), and where archeologists discovered examples of the earliest known forms of the Chinese writing system in oracle bones. But for the CPC, the area’s importance stems from much more recent history.

Linzhou is the location of the Red Flag Canal (红旗渠, or hongqiqu), a massive waterworks project from the 1960’s that is held up by the CPC as a shining example of what the communist spirit can achieve even in the face of scarcity and immense challenge. Connect the dots to the present day economic challenges being brought about by Trump’s trade war, and you’ll have a sense of the message the CPC is pushing to its rank-and-file. Self-reliance! As Rob Schneider says, You can do it!

The masses celebrating the canal’s completion. Photo by Joseph Lo

The central plains of China have always had a problem with drought and accompanying starvation. Guangdong province is populated by ethnic Han-Chinese from the central plains largely because, over the centuries, hunger pushed us south in search of more fertile farmland. So when the CPC took control of China in 1949, for the cadres in charge of Henan, and in particular, Linzhou, water relief works were a priority, even if they lacked the requisite technical know-how, money, and materiel.

It took nearly a decade of back-breaking work to complete the Red Flag Canal in 1969. The project consists of a 71-km long main canal feeding an extensive 1,500-km irrigation network. There are 134 tunnels cut through 24-km of mountain, and 150 aqueducts running across 6.5-km of ravines and crevices. It’s not especially pretty if you compare it with any old Roman waterworks in Europe, but it’s impressive nonetheless considering the lack of technical knowledge of the young cadres in charge of the project. And knowing that the work was almost entirely done by volunteer-farmers using no more than hand tools and whatever they brought with them from their farms. They didn’t even have dynamite, resorting to home-made blackpowder to blast away the cliff faces.

China’s central plains gave rise to Han-Chinese civilisation but also to drought and hunger. Photo by Joseph Lo

While the CPC now upholds Red Flag Canal as the embodiment of collectivism, mass mobilisation, honest labour and national pride (and evidence that the Great Leap Forward wasn’t all bad), the truth is that there wasn’t much support for it in Beijing at the time. The central government agreed to contribute just 15% of the canal’s construction costs, half-expecting that the local authorities would be unable to come up with the remaining CNY58 million-plus (about $200 million in present-day dollars) as that was more than the total CNY52.7 million GDP of Henan province in 1960. What the central government didn’t know, however, and which led to conflicts and serious problems later on, was that the Henan provincial leadership had massively underreported their grain yields for the previous number of years, giving them a secret surplus that would help cover their share of the canal’s costs.

And remember also that, at the beginning of the Great Leap Forward, Chairman Mao was more interested in leading China to overtake Great Britain as a steel-producing nation. In 1958, he had disastrously ordered the creation of millions of backyard furnaces and the melting of all household iron objects, unaware that wasn’t the recipe to make steel. The result was a critical shortage of household tools and farming implements across the country. Even doorknobs and nails were melted down in the heedless enthusiasm.

The Red Flag Canal is cut through the middle of the Taihang Mountains (note blue line along the cliff face). Photo by Joseph Lo.

The steel-making drive and other poorly-thought out policies of the Great Leap Forward caused the worst famine ever in Chinese history, which the CPC now calls the Great Chinese Famine. Frank Dikotter, the Chair Professor of Humanities at the University of Hong Kong, in his book, “Mao’s Great Famine”, figures that more than 40 million people across the country lost their lives. According to the national census bureau, for Henan province, in 1958 at the start of the Great Leap Forward, there were 493,000 people. By 1960, the population had dropped 20% to just 390,000. A nonagenarian cadre who worked on the canal in his youth told me the Red Flag Canal workers lived on no more than 6 ounces of bread per day during this period; “work” was not actually possible. It’s also possible that the diversion of grain to pay for the Red Flag Canal badly exacerbated the famine in Henan, one of the hardest hit provinces.

It’s also interesting that, as I was on the bus going to the Red Flag Canal museum, I was listening to a podcast about the Apollo 11 moon mission, which also took place in July 1969. I know it’s pointless to make a comparison; rural China during the 1960’s was probably little more advanced than rural China in 1560. But it’s still an interesting contrast, and a starting point to think about how quickly rural China has changed, for better and worse, over the last few decades.

Made with a lot of blood, sweat and tears. Display at Red Flag Canal Museum. Photo by Joseph Lo.

Our retreat was based at the Hongqiqu Leadership Academy (红旗渠干部学院), a sprawling modern 28-acre facility with 55,000-sq meters of classroom and dormitory space for 600 students at a time. A second phase is currently being built that will add space for another 1,000 students. More students are housed at nearby hotels and bused in for classes and events. The three-story academy canteen was chock-a-block at meal-times, which had to be staggered to accommodate everyone.

You’re probably thinking this retreat was a silly way to spend a good chunk of my summer break. You could have been at the beach with Daisy, Benji and Georgia! Plus I’m not even a CPC member. The retreat was organised by the United Front Work Dept of Zhuhai in Guangdong province, a southern city next door to Macau from which my maternal grandmother’s family hails. They were kind enough to invite me along as I am active in their overseas-Chinese groups. I always try to go when asked because these events give me a unique insight into the CPC’s current salient issues and policies.

For instance, I can report that Mr Xi’s anti-corruption drive for cadres and CPC members has become incredibly strict. Normally the first evening is marked by an introductory banquet with mandatory baijiu (distilled spirits) toasts. Not this time. No banqueting, just three meals a day at the academy canteen. No wine and no carousing, either. In fact, they didn’t even want us in town (outside of the academy) after dark. A couple of us did sneak out for a few beers at a local pub, only to be caught and given a severe dressing down (including for our party secretary and group leader to have to write a self-criticism, something I thought had gone out of style with the Cultural Revolution).

*A note about the title before anyone gets offended by it. It’s in tribute to one of my favourite songs from Nirvana, possibly the greatest band in human history. Besides the Apollo 11 podcast, I had Kurt speaking to me in my earbuds as we drove through the plains of Central China.

Hongqiqu Leadership Academy main entrance. Photo by Joseph Lo.
Three meals a day, but nothing to drink. Photo by Joseph Lo.
“Cleave open Taihang Mountain!” – that’s seriously what it says. Photo by Joseph Lo
The entire planning was done by just 26 cadres, all under the age of 30. Display at Red Flag Canal Museum. Photo by Joseph Lo.
Deep inside Taihang Mountain. Photo by Joseph Lo.
One section of the Red Flag Canal accessible to visitors. Photo by Joseph Lo.
Locals catering to visitors. My group didn’t spend much time in local businesses, however. Photo by Joseph Lo.

This post is the sole property of Joseph Lo, Joe Quietly Ruminates Blog. All Rights Reserved.

The Greater Bay Area – Xi’s Plan for the South

A version of this article was originally published in Week in China (www.weekinchina.com – paywall)

Chinese president Xi Jinping has a grand vision, called the Greater Bay Area Plan, to transform the south coast of China into an integrated cradle of innovation that will help lead the country into a new era of prosperity. It’s a fantastic vision of the future. But for people who already live and work in the GBA, it’s also a bit head-scratching. We’ve been living this dream for 40-odd years, even if we did call it the Pearl River Delta.

In 1979, then-paramount leader Deng Xiaoping made the stupendous decision to fence off parts of Guangdong and Fujian province as market-oriented special economic zones (SEZ) that would help lead the country out of poverty. Investors from Hong Kong and Macau, especially those whose family roots originated in Guangdong, which is most of us, quickly took advantage of the opportunities afforded by an abundance of cheap land and labour, greased by light regulation. My family was among those who made an early bet on Shenzhen in the early 1990’s, establishing a plush-toys factory on property leased from Futian district. That our factory was successful had as much to do with cheap rent and the thousands of (mostly) young rural women surging into Shenzhen for jobs and a new life, as it did with our acumen.

Seeded by capital and expertise from Hong Kong and Macau, the GBA now produces more than one-third of China’s exports and contributed 12% of China’s GDP in 2018, over $1.5 trillion. If the GBA were a country, it would be the thirteenth largest economy in the world, just behind South Korea and ahead of Spain and Australia. This success is no mean feat, considering that the GBA spans three separate legal, monetary, passport and customs jurisdictions.

Shenzhen-GBA-GDP
Photo credit: BBC

What’s old is new in the GBA

To paraphrase Benjamin Disraeli, change is inevitable and constant. The last of the barbed wire fencing around the Shenzhen SEZ was finally taken down last year. Those young women that my family’s Shenzhen toy factory relied upon? Gone home to Hunan or Sichuan to raise families, and few have come to replace them. Cheap locations are also a thing of the past. Shenzhen’s landscape has transformed so completely that our old factory address, then on the outskirts of town, is now part of a high-density residential development in a central location where a 1,000-square feet flat costs slightly more than $1 million.

These changes have necessitated that the GBA keep moving up the value-added chain for survival. So far, that’s been happening organically. Shenzhen has morphed into a dynamic centre for prototyping consumer electronics and software, underpinned by companies like drone-maker DJI, mobile phone giant Huawei, and internet linchpin Tencent. And while the original Shenzhen model was all about export, these days catering for China’s own middle-class is equally important. Government forecasters say domestic private consumption will account for 80% of China’s GDP growth this year. So instead of making toys for export, I’ve invested in a startup that makes mobile games for Chinese millennials. Zhongshan and Foshan, the “home counties” of the GBA, have developed flourishing industrial catering and food processing industries, catering largely to the 105 million people in surrounding Guangdong province and the 8 million-plus in Hong Kong and Macau.

How can Xi help?

Formula one racing cars have a boost button the driver presses for a jolt of extra power in overtaking maneuvers. Mr Xi’s plan for the GBA is essentially the same thing; let’s take China’s most dynamic economic region and supercharge its development to help the country navigate around the impending middle income trap.

Mr Xi can make this happen by ensuring that more convenient transport links are built for the GBA, particularly east-west links. It is critical that the construction of the Zhongshan-Shenzhen Corridor be completed as scheduled in 2024. Connecting the east and west sides of the Pearl River Delta will ensure more balanced growth. Currently, the only northern route across the PRD is the heavily-used Humen Bridge running between Nansha and Dongguan. I drive often between Macau and Shenzhen and, even in light traffic, it’s a 4- to 5-hour journey which often takes a lot longer. With the ZSC, that journey time is expected to be halved. It’s a shame the new bridge doesn’t include a high-speed rail line, as well.

 

HZMB
Photo credit: The Telegraph

It’s also critical to ensure that people can move freely about in the GBA, especially between Hong Kong, Macau and the Mainland, while still respecting one country, two systems. It’s especially onerous in Macau, where fears of inappropriate behaviour by Mainland cadres have led to irrationally tightened access. For example, in the last year, a routine invitation extended to Zhuhai officials to attend the annual dinner of a Macau trade association necessitated back-and-forth paperwork months in advance. Further work reducing overall red tape for businesses will also help. My own company employs an administrative assistant whose primary job, it seems, is to queue – at the bank, at the tax bureau, at the labour bureau, and so on.

What’s the GBA’s ceiling?

Silicon Valley, or the San Jose metropolitan area, is most often mentioned as the target the GBA should be aiming for. This comparison is unfair and it sets the GBA up for failure. The GBA inhabits a disparate world that includes very diverse micro-economies, from agriculture to technology. Silicon Valley is tiny, by comparison, and concentrated on software and innovation.

But there is one thing I believe the GBA must emulate, and that is Silicon Valley’s openness. Silicon Valley is world-class because it’s a melting pot of the brightest people and best ideas from all over the world. Taiwanese-Americans are well represented there, as are Indians. About 15% of Silicon Valley startups are founded by Indians, who also lead some of its biggest companies, like Microsoft, Google and Adobe. Since the role each city plays in the GBA is clearly laid out in Mr Xi’s plan, to be world-class region as a whole means each city must be a leader in its field. It’s not enough for Hong Kong and Macau to be international, while the rest of the GBA is cloistered.

The GBA has a long way to catch up to Silicon Valley’s track record of economic dynamism and innovation. Let’s hope that Mr Xi’s vision helps the GBA to create a whole that is, at the very least, greater than the sum of its parts.

 

This blog post is the sole property of Joseph Lo, Joe Quietly Ruminates Blog. All Rights Reserved.