Shanghai or Lie?
By Dan Denning
Dinner is later tonight at the American Club, just off the Bund. Bund, by the way, is an Indian word for embankment. It’s also a German word. But the Indian word makes sense here because the river makes a big bend, and the embankment restrains it.
Tomorrow, I’m going to make it down to the Shanghai gold exchange to see what the fuss is all about. It too, is right on the Bund. And as a gold investor, I’m curious to see what attitudes the Chinese have towards it.
I asked some contacts here if I could stroll down and see someone there. That’s what I’ll do if I have to. But they seemed to suggest it would be better if I…arranged things. And of course, I’m here as a tourist, not as a reporter. So below I’ll just offer you what’s in the local press…and some travel observations on Shanghai. And by the way, talk about top-down, I’m on the 43rd floor of the Marriott…looking down the city…with buildings and highways as far as the eye can see. Shanghai is a giant construction site.
The business section of the Shanghai daily has some interesting stories. Jack Welch is getting paid $400,000 to give a speech to the Shanghai business community on June 23rd and 24th. For 30,000 yuan, a VIP can get a picture with Welch, admission to two seminars, and a one-night stay at a five-star hotel.
Seemed to me like the Chinese were being taken for a ride here. But a Mr. Gu Qing says, “The majority of the participants only want to spend 4,800 yuan since luxurious hotel charges are considered unnecessary.”
Besides, the Chinese have more urgent needs than paying good money for a snapshot with a retired CEO. Lula da Silva, the political heartthrob of Latin American leftists, was in town to open a “promising new page” in trade relations between Brazil and China.
Brazil has iron ore. China needs iron ore. Lots of it. Brazil has soybeans. China needs soybeans. In fact, another page one article says The Dalian Commodity Exchange hopes to start trading corn and No. 2 soybean soon, pending government approval.
Homegrown beans (No. 1) are already traded on the exchange. But China’s growers need a way to hedge against risk. Foreign beans would so the trick. Sounds pretty capitalist to me. And without getting overtly political, I’ll just note that while the U.S. has taken the lead in fighting a global war on terror, the Chinese appear to be busy building bilateral trade agreements with countries that can provide the valuable resources China needs. I wonder who’s going to be better off economically when the war is over, if it ever is.
The Nasdaq is closing up shop in China. Nasdaq says it needs to focus on the U.S. market. Nasdaq says its departure from China doesn’t have anything to do with the formation of an exchange for high-tech companies and startups in Shenzhen on May 17th. Sure it doesn’t.
From my initial observation, I’d say China needs more soybeans and less Jack Welch. There are 16 million people in Shanghai. There’s also a lot of commercial real estate. What everyone seems to agree on is that country needs more physical infrastructure.
You can’t help but marvel at the pace and scale of construction, and also wonder if it’s too much too fast. The Chinese I’ve spoken with seem eager to get on with the future. It’s a pretty rapid transition. Within the space of one generation, you’ve seen what appears to be a total change in thinking.
Dinner last night was in a trendy Shanghai neighborhood that translates into New Heaven and Earth. (Should we be on the New Economy watch?) I had Australian veal and a New Zealand white picked out by Andy Carpenter. But most of my night was spent talking to Jeff, a Chinese businessman who grew up when things were a little less heavenly in China, and when school kids didn’t pick a career, but had one picked for them by the state.
Incidentally, Jeff said ideology is still taught in Chinese schools. Whether it’s an ideology for a new “New Man” of capitalism or the old “New Man” of socialism, I’m not sure. And in any case, the icons of the city, along with the ideas, seem to be evolving in a perfectly natural way. And by the way Shanghai was the birthplace of the communist party in China. The headquarters is right down on the Bund, next to all the colonial banks set up by Germans, British, American and Dutch traders.
It’s a city Walt Whitman would love; it contains multitudes, and contradicts itself. You can see it visually, iconographically if you like, in the pictures I’ve posted on the blog…on one side the old world, on the other the new world. And there’s a special one I want to post tomorrow.
One thing you’ll notice here is that there’s advertising…everywhere. Jeff said one of the first businesses to open up in China was advertising. The government, for whatever reason, didn’t see advertising as a “threat.” “That’s odd,” I said. “You’d think controlling what people see is nearly the kind of thing you’d want to have a monopoly in.”
I don’t mean “mindshare” or “eyeballs,” the failed metrics of the “New Economy.” I mean using images as promises or indications that there’s a different world with different ideas. I’d trade a really good space ad or direct mail letter for Das Kapital any day.
It doesn’t seem like an accident to me that Hong Kong’s harbor and Shanghai’s skyline are dominated by large neon advertisements and bulletin boards. At the very least, it builds up a commercial consciousness just as powerfully as putting up a 10-story picture of your favorite revolutionary leader.
Off to the Shanghai Gold Exchange…