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“As China Goes, So Goes the World offers a vivid portrait of contemporary China.” —Richard McGregor, The Nation
“A worthy introduction to key facets of Chinese consumer culture. It should prove beneficial to readers from executives looking to break into the China market to sociologists keen to understand how consumerism is changing China.” —Andrew Peaple, The Wall Street Journal Asia
“As China Goes, So Goes the World is an exhilarating read, deeply researched and thoroughly entertaining.” —Christina Larson, Washington Monthly
“Nuanced, balanced and accessible—essential reading for anyone trying to make sense of China today.” —Kirkus Reviews (starred review)
“A groundbreaking—and hair-raising—account of what it means for life on the planet as China reshapes itself as a consumer society.” —Isabel Hilton, Editor, chinadialogue
“The global economy of the last several decades has been underpinned by two simple principles: the frugal Chinese make everything, and the spendthrift Americans will buy anything. But what happens when Chinese consumers begin to lead the world and to define global tastes? We’re not there yet, but Karl Gerth’s new book guides us through China’s consumer revolution to a future modeled in part on America—a future of cars and conspicuous consumption; of the selling of land, labor, and sex; of growing inequality and interlocking elites of business and politics; of wanton environmental degradation. This engaging and provocative book captures with skill and wit the changes that define Chinese markets today and that may, in time, transform the world. Read it before your next trip to China.” —William Kirby, Spangler Family Professor of Business Administration, Harvard Business School
“A highly entertaining and incisive description and analysis of the rise of China’s consumerism, and the enormous forces it is driving around the world today.” —Graham Earnshaw, author of The Life and Death of a Dotcom in China
“China not only makes most of the world’s stuff but increasingly its billion citizens are consuming it with Western-style appetites for everything from bottled water to BMWs. As China Goes, So Goes the World holds lessons for everyone concerned about managing the increasing footprint of human consumption on our fragile planet.” —Thomas F. Thornton, Director, MSc Environmental Change & Management & Senior Research Fellow, University of Oxford
“An entertaining read with real—but often alarming—substance packed quietly in every line.” —Mark Elvin, author, The Retreat of the Elephants: An Environmental History of China
“Many books have appeared about China’s social, economic and political systems but little is reported about the everyday lives of hundreds of millions of Chinese consumers. Karl Gerth provides valuable information and insights about consumer choices in China and their implications for Chinese and Western businesses operating in China.” —Philip Kotler, S.C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University
Sharply observed account of what happens, both good and bad, when a group of more than a billion people start seriously shopping.
While China is often thought of as a major producer of goods, it is as a consumer, writes Gerth (Modern Chinese History/Oxford Univ.; China Made: Consumer Culture and the Creation of the Nation, 2003), that the Chinese population is transforming itself and the world. Deliberate government policies aimed at reducing the country's overreliance on exports have transformed China from a country of scarcity and frugality to one in which the consumer ethos rules. "Chinese have already become the world's largest consumers of everything from mobile phones to beer," writes the author, and it is the largest market in the world for automobiles and is becoming one of the world's largest manufacturers of cars. As at least part of the population reaches middle-class status, they are afforded easy access to a variety of quality goods that rival anything available in Japan or the United States. The Chinese have also learned that their status and identity are often tied to their possessions. Gerth makes clear there are many downsides to the new Chinese consumer culture, from the massive manufacture of counterfeit goods to the creation of extreme markets in such things as babies, sex slaves, human organs and endangered species. Perhaps most serious is pollution. Each year in China, millions of trees are cut down in order to produce tens of billions of disposable chopsticks, thus creating millions of tons of waste and also adding greatly to the problem of desertification through deforestation. The author emphasizes, however, that many consumer-driven environmental problems in China are ones of scale rather than kind. These problems are not unique to China, but exacerbated by the sheer size of the population. The rest of the world can learn much as China attempts to solve the problem of "how to enjoy modern consumer lifestyles without exacerbating their many downsides."
Nuanced, balanced and accessible—essential reading for anyone trying to make sense of China today.
Today’s China sounds different. Back when I arrived in Nanjing for my junior year in college in 1986, one of the first things that struck me was the absence of car noise, signaling, of course, the absence of cars. As I rode the Communist-era bus from the airport, aside from the growl of its engine and the tooting horns of a handful of trucks and cars, the air was instead full of the ringing of bicycle bells and the whirring of their wheels.
Determined to hit the ground running, the next morning, as the other students slept, I got up early to change money, finding my way to the brand-new luxury hotel towering over the heart of the city. Built to comfortably house foreign businesspeople, the hotel did not admit Chinese. That morning a dozen stood at its entrance simply gawking at their city’s first high-rise. I marched right in, along with a group of Chinese teenagers sporting Nikes; only much later did I learn that the hotel guards identified overseas Chinese and allowed them entry by looking at their shoes—most local Chinese were still wearing either cloth or inexpensive leather. After changing money, I set off by bus across town to the Friendship Store, where foreigners, and Chinese with a special currency, could buy Chinese trinkets and hard-to-find imported items. The bus chugged along as an ocean of bicycles as far as the eye could see floated past, carrying an army of Chinese pedaling their way to work and weaving back and forth in front of the bus as if to assert the self-evident fact that the road was theirs.
Safely delivered to the store, I browsed a little and selected a bike. Its most distinguishing feature was the lack of any—namely, it looked like a shinier version of the thousands of bicycles I had already seen on China’s roads, and so seemed to promise that it would carry me around this new and exciting city. But to my surprise, the store clerk wouldn’t allow me to buy it. I had assumed that all I needed to buy something was enough of the right kind of money. I had had only a year of college Chinese, barely enough to correctly pronounce the tones of my Chinese name (Ge Kai, two characters pronounced with tones that each rise and fall), so it was hard to follow what the problem was, but I eventually figured out that I needed a ration coupon from my employer, or “work unit.” The store workers (they could hardly be called “salespeople,” as they did not seem very interested in selling anything) realized the absurdity of the situation, but it took some lengthy deliberations and a few phone calls, for reasons still unclear to me, before I could buy the bike.
I rode off triumphantly back toward campus, anxious to share my victory with my American classmates (who were later taken en masse to the same store, where they bought bicycles without incident). Along the way home, though, the bicycle began to disintegrate, as parts started to come loose, and finally, as I rounded a corner, the bell fell off and tumbled down the street. I later learned that new Chinese bikes only looked assembled. Every part required additional tightening and, as one Chinese friend told me, a good rainstorm to rust the parts together. Chinese bicycles were notoriously poorly built and required constant maintenance. The following semester, when I was studying at Beijing University, one student taught me a local expression: “Every part of a bike makes noise except the bell.”
What made the joke work, of course, was the fact that in 1986 you could still hear bicycles. Today, they are overwhelmingly drowned out by the rumble of car engines. The change was so abrupt—in less than ten years—that the brains of those familiar with China before its rapid embrace of a car culture still haven’t quite adjusted to the difference in sounds. In fact, a distinguishing feature of China’s embrace of consumerism is its headlong nature—what Western consumers took decades or a century or so to adopt, Chinese are managing in mere years. By any measure, the accomplishment is impressive. It also defies controls and begets consequences that beget yet more consequences. I treasured my bicycle because it gave me mobility without the need to rely on the slow and extremely crowded buses. (To this day, after my experiences pushing my way onto China’s overcrowded buses, I still see an elevator as always having room for one more.) My bicycle allowed me to explore the city and to do so relatively safely, as there were very few private cars, and the noisy, slow-moving buses posed little threat. Getting a taxi was expensive and difficult—you had to order one or find a queue at a hotel for foreigners. That was in 1986. Jump forward two decades. Today cabs are so common I grow impatient if I have to wait more than a few minutes to hail one. Those cities that once hummed with the sound of tiny bicycle bells now roar with the sound of endless cars pushing through ever-heavier traffic to hotels where even the locals can enjoy the luxury of plush lobbies and feather beds.
This change is what makes the story of the car in China so important. In the early 1980s, China had only one car or truck for every 1,200 of its 800 million people; for local transportation, the vast majority of Chinese relied on bicycles. Indeed, the bicycle—the manufactured product most closely associated with Mao’s China—had served as an iconic image of China for over half a century. While the decade that followed my first visit to China saw a steady increase in the number of motor vehicles on those once blissfully quiet roads, at the end of the 1990s China’s car industry went into overdrive, and within a decade China overtook the United States as the world’s largest market for cars and also one of the world’s largest manufacturers of cars. This was no accident, nor a mere “correction” in the market, but the result of deliberate policies.
Why did China’s leaders elect to build a car industry and culture almost overnight, thereby making their economy and society—like ours in the industrialized world—highly dependent on cars? Consider that Chinese grade-school students in the mid-1990s were still being taught the dangers of an American-style car culture; state-approved textbooks told them that America’s car culture was unsafe, polluting, and wasteful of natural resources. At the same time, the country’s top scientists were advising against going down this route. They cited the inevitable accompanying need to import massive amounts of oil and the country’s resulting loss of energy independence and urged the government to develop a massive public transportation network instead. Nobody can argue that China didn’t understand the downside to embracing cars, but the perceived upside was more compelling. To grow and to compete in world markets on terms partially dictated by others, China decided to embrace cars and encourage its population to desire and buy them.
As with its decision to embrace consumerism itself, Chinese leaders didn’t think they had a choice. China decided to join the World Trade Organization in the mid-1990s to gain expanded access to global markets for its exports, a decision that required the country to play by WTO rules and relinquish some control over its own markets. The race was on. Before imports stormed into the previously protected market once full membership took effect in 2001, the country’s leaders recognized that they had less than a decade either to quickly develop a domestic car industry or to surrender the domestic market to foreign companies, perhaps permanently. China wanted to introduce cars on its own terms—namely, it wanted to have a domestic car industry rather than ceding a key industry to foreigners. To develop its domestic car industry in time, it would have to ease barriers on imports just enough to create an internationally competitive car market and entice foreign investment and technology from global car manufacturers. Efforts to create domestic demand worked. The resulting price cuts, access to world-class car models, and easier credit from state-owned banks quickly led to soaring demand on the part of Chinese consumers, most of whom just a few years earlier had never dreamed of riding in any car, let alone one of their own. That soaring demand soon made China the world’s largest car market, surpassing the United States in 2009. In one of countless estimates regarding China that proved to be under rather than over expectations, the rise of the Chinese car market to world supremacy occurred six years ahead of earlier projections. The strategy also created a massive domestic car industry, with the country manufacturing some ten million cars a year, contributing to a global car glut that threatens to bankrupt its American competitors. As in the United States, the Chinese government and, of course, car manufacturers now practically beg citizens who two decades earlier could only aspire to own their own bikes to desire and buy cars, regardless of the environmental and geopolitical consequences.
No aspect of China’s consumer revolution occurs in isolation. The emergence of a vast market for cars is simply a part of many simultaneous and reinforcing changes, each change having its own far-reaching effects. The Chinese state itself is behind many of the changes promoting car use. Until the late 1990s, most urban residents worked in state-owned factories and lived in company-owned housing nearby, meaning they could easily walk, ride a bike, or take public transportation from home to work and back. But as increasing numbers of state-owned enterprises were closed and others relocated to the suburbs, workplaces became less accessible and a new commuter culture emerged. In place of mixed-use development, where people live and work in the same neighborhood, city centers across China are being razed and rebuilt into central business districts of gleaming office skyscrapers, pushing affordable housing out to distant suburbs. None of this is occurring without the implicit and explicit support of the state; all of it carries as a consequence the demand for more cars.
Like their counterparts around the world, Chinese consumers now not only want to own cars but also “need” private transport. The country adds an estimated 12,000 to 14,000 cars to its streets every day, for a total of more than 35 million—a number expected to grow to more than 150 million within ten years. In 2006 alone, Chinese consumers purchased 6.8 million vehicles, overtaking Japan as the world’s second largest car market, and at the start of 2009, China became the world’s largest such market, selling more than 12 million cars annually. In a 2002 survey of families in Beijing, Guangzhou, and Shanghai, 70 percent reported that they planned to buy cars for personal use within five to ten years; in 2005, two fifths of Chinese respondents reported that owning an automobile was their grandest dream.
The successful drive to get the Chinese to buy cars has paved the way for the arrival of such other icons of American-style consumerism as shopping malls on city outskirts, suburban gated communities, leisure homes in the countryside, and weekend holidays. For a country set on stoking domestic consumer demand, all of these are positive developments. Yet the car craze has also led to a number of more troubling and largely unanticipated consequences. These problems are most visible in China’s major cities, where the majority of car ownership is concentrated. In 2009, Beijing alone had four million cars traveling its heavily congested roads, triple the number a decade earlier, and even with the continual addition of new and wider roads, the city cannot confiscate land, demolish residential buildings, and build roads fast enough to accommodate them all. These cars spew thirty-six hundred tons of pollutants into Beijing’s air every day, making it one of the most polluted cities on the planet, with air pollution five to six times higher than World Health Organization safety standards. Leading up to the Olympics in 2008, Beijing took extraordinary measures to curb this pollution; in a bid to reduce the number of cars by one million, only cars whose license plates ended in an even number were allowed on the road one day, odd-numbered-license-plated cars the next. In 2008 Beijing ranked thirteenth in the table of most polluted cities—behind six other Chinese cities. In Shanghai, where earlier efforts to control its notorious traffic jams and pollution have failed, authorities recently tried to limit car consumption by raising registration fees to nearly $5,000, a sum twice the per capita annual income in the city. There has also been a belated rush to expand the public transportation system with new subways.
But the genie is out of the bottle.
China Builds a Car Culture
The Chinese now desire cars. Just as significantly, China needs its citizens to want cars and has consciously created policies to promote private car ownership. This is a dramatic change. Since its victory in 1949, the Communist Chinese government has pursued a flourishing domestic vehicle industry as a symbol of economic power and self-sufficiency. But until the mid-1990s, “vehicles” were seen as the means to transport necessary goods and troops, not for city dwellers to travel to suburban malls. Mao’s government gave no thought to manufacturing cars for private consumers or building roads for the recreation of its citizens. Chinese manufacturers had the technical capacity to make cars for private consumers, but weren’t allowed to by the state.
This bias against consumers continued even after the Mao era. At the start of the Reform Era, state-owned Shanghai Automotive decided to seek a joint venture with a foreign partner to manufacture 150,000 cars a year, but it was looking to export the majority of them. During the cold war, China feared attack by the Americans, Russians, or both, so to protect critical industries, it created a highly dispersed motor vehicle industry. No single enemy nuclear strike, it was reasoned, could destroy all the country’s modern industry. This policy left 1,950 factories sprinkled across the country and collectively producing some 160,000 vehicles each year. But only a few thousand of these were cars. As late as 1990, passenger vehicles still represented just 8 percent of the 520,000 vehicles produced annually in China, hardly an ideal starting point for creating consumer demand, national brands, or economies of scale.
Eventually the demand for taxis to serve foreign tourists, whom the government began to court as a desirable source of hard currency, drove the introduction of more cars. At first, imports filled this demand, and their numbers grew from just 52 sedans in 1977 to nearly 20,000 by 1980. But by 1984, the anxiety of Chinese officials about squandering precious hard currency on imported consumer goods finally led them to approve a joint venture between Beijing Automotive and American Motors Corporation and to allow, if not yet encourage, private ownership of cars. But the path was not smooth and never quite as advantageous to the U.S. firms as they had imagined; the joint venture to produce the Beijing Jeep is a case study in how China emerged having acquired the new technology it needed at virtually no expense. No matter. The siren song of the size of the Chinese market proved, repeatedly, too hard to resist. Soon joint ventures with other foreign automakers such as GM and Ford followed, and a Chinese automobile industry was finally under way. Yet to stem the outflow of foreign currency, Beijing still tried to limit the availability of consumer goods, particularly imports, by imposing licenses, quotas, and high tariffs on foreign-made vehicles. During the 1990s, for instance, consumers paid a 220 percent tariff on full-size passenger cars, among the highest in the world. At the same time, China’s leaders attempted to boost domestic production by forcing multinational car companies to use more domestic parts (“local content”) and domestic labor (“value added”). This was the start of the government’s drive to promote domestic desire for increasingly domestically produced cars and, eventually, Chinese-owned car brands.
Since then, car production has become an employer of some two million in China and an important engine of economic growth. Although in 1993, China still had only 37,000 private cars, a visual revolution in Chinese cities was under way. A population that was accustomed to seeing very few of the same-looking drab cars on its streets was suddenly exposed to a variety of colorful new models. By the early 1990s, China was producing one million vehicles, including trucks, buses, and passenger vehicles. Cities vied to become China’s Detroit, and local politicians actively promoted locally produced cars.
In the Eighth Five-Year Plan published in 1990, the national government designated the automotive industry as a pillar of the economy. To compete with international companies, Beijing consolidated domestic automobile makers into a half-dozen giant conglomerates (called jituan gongsi or jituan qiye, modeled after Japanese keiretsu business groupings and Korean chaebol). Each conglomerate had a foreign partner who controlled no more than 50 percent of the new company. The goal was not simply to have the Chinese manufacture cars for GM and other international companies but to create Chinese-owned brands competitive at home and in export markets. And to boost Chinese demand for “Chinese cars,” Beijing also pushed banks to lend to private consumers and pressured provincial and local governments to divert public transport funds into building roads.
In addition, the government finally recognized that domestic production required domestic demand. Its most significant change in policy was the decision to encourage domestic private ownership. The promise of a huge Chinese market for cars lured some $60 billion in Chinese and foreign capital into automotive production—sixty times what the partnering U.S. companies had invested over the previous four decades. In 2000, the decision to promote private ownership was, for the first time, explicitly included in the proposals for the Tenth Five-Year Plan.
The desire to own a car now permeates Chinese life. As a leading academic authority on cars in China, Li Anding, put it, “The desire for cars here is as strong as in America, but here the desire was repressed for half a century.” Until the late 1990s, government ministries purchased some 80 percent of all passenger cars sold in China, and nearly all the rest were bought by private enterprises and foreign companies; individuals accounted for only 1 percent of sales. But by 2000, 30 percent of the 600,000 passenger cars sold in China were bought by individual consumers, a percentage that doubled by the end of the decade. The rise of this new consumer market pushed manufacturers to start catering to consumers’ tastes for a broader range of models, colors, and features. Like car owners elsewhere, the Chinese see their vehicles as symbols of personal success and view driving as a right. When pressed to explain their desire for cars, Chinese consumers offer up the same reasons as consumers around the globe: status, independence, and privacy. And, increasingly, they consider Chinese cars a source of collective national pride and patriotism. Models such as the poetically named Chang’an Zhi Xiang Hatch (“the Will to Soar”) reflect a new energy and aspiration among Chinese consumers. Companies such as Chery Automobile are producing their own models, though often through reverse-engineered carbon copies of their foreign competitors. Its QQ model is similar to the Daewoo Matiz/Chevrolet Spark mini car, for instance, and the Oriental Son, a mid size sedan, is a reworking of the Daewoo Magnus.
How Car Culture Is Changing China
As China’s citizens have come to equate car ownership with personal freedom, prestige, and success, the social pressure to possess a car has become increasingly difficult to resist. A prominent Shanghai historian recently told me that although he can afford a car, for environmental reasons he has made the principled decision to instead take public transportation. All well and good, except that his apartment complex comes with an allotted parking space, which of course stands empty, prompting his friends and neighbors to begin asking uncomfortable questions about his financial well-being.
As the Chinese have become more automobile savvy, not just the fact of owning a car but one’s car’s price and appearance have become new ways to determine an owner’s social status. As one popular saying has it, “if you want to know a man’s tastes, you just need to look at his watch and car.” According to a GM spokesperson in Shanghai, the car’s actual performance is often less important to Chinese consumers than features such as video displays on seatbacks, wooden fittings, and leather upholstery that their friends and family can readily see. And German car manufacturers add length to their models to appeal to Chinese consumers. At one end of the status scale, owners of inexpensive cars tell stories of being ridiculed and denied valet parking; at the other, luxury models have become a handy way for kidnappers to identify potential upper-class victims. (In Guangdong province, for instance, one gang used state vehicle registration rolls to target BMW owners.)
Along with desiring and driving cars, traffic jams are another new experience for Chinese consumers, as increasing numbers of them trade the slow, plodding, but dependable bicycle or public transport for the uncertain, traffic-dependent progress of the car. It is not unusual to sit in a queue for an hour to make a left turn just so you can zip across the city on an elevated highway. But no one is getting anywhere as fast as they once did. A decade ago, for instance, the average speed on Beijing’s Third Ring Road was forty-five kilometers per hour. It’s presently twenty, and often as slow as seven at busy intersections. Private automobiles, in other words, bring mobility in principle but uncertainty in practice.
At the same time, it may be difficult for most Westerners to appreciate the extent to which private automobiles represent a new era of mobility for Chinese consumers. Until the 1990s, travel within China was highly restricted. A Chinese traveler needed a letter from his or her work unit to buy a plane ticket, a comfortable seat on a train, or a room in one of the few decent hotels. For those with enough money, the personal car, of course, pushes against all such strictures and consequently has become a powerful symbol of individual freedom and status, despite the difficulties of urban traffic jams.
Cars have also transformed the experience of walking in China’s cities. Western pedestrians are by now well familiar with the kinds of signals, barriers, and conventions necessary to coexist with speeding urban traffic. In China, however, the requirement that one cross streets within set times and at specific locations as determined by traffic lights is new, and pedestrians and drivers alike routinely ignore the rules. The Chinese media, evoking speed and efficiency as measures of modernity, have begun accusing pedestrians of bad manners by crossing streets too slowly. Raising the complaint to a question of national character, they observe that the Chinese take longer to cross a street than their counterparts abroad. (This is not unique to China. Korean media have carried similar stories, contrasting the relative chaos of Korean queues and traffic with those of the highly disciplined Japanese.) Chinese pedestrians, the accusation runs, tend to watch cars rather than signals and, when they grow impatient with lights timed to facilitate vehicle flow, attempt to cross the street anyway. One local TV station ran videotapes of pedestrians who ignored signals and even stopped to chat with friends in the middle of the road.
Concern over breaking in pedestrians to the new rules of the road underscores the obvious: cars bring danger as well as mobility. Collisions between pedestrians and bicycles or even donkey carts were rarely fatal, but not so with cars. The death rate on China’s roads is one of the highest in the world, even though it has started trending downward. In 2007, it dropped to 90,000 fatalities for the year, and dropped again in 2008 to 73,000; before that, however, somewhere between 100,000 and 200,000 people died each year in fatal car crashes. On average, 680 Chinese died and 45,000 were injured due to car accidents every day during the first five years of the twenty-first century. By comparison, the United States, which is much more heavily motorized, saw 115 deaths a day; Britain, fewer than 10. Most of China’s automobile accidents occur outside cities, where rural pedestrians and cyclists must battle with cars, buses, and trucks for space on older, narrower roads. The effects are also unequally distributed by class: in collisions between bicycles and cars, the cyclist is much more likely to die or be injured than the driver, and the wealthy can afford safer and more dependable cars. Paradoxically, perhaps, the increased risk of death has likewise increased the demand for automobiles. Just as many Americans switched to more expensive and fuel-hungry SUVs because they perceived them as safer, many Chinese (even the reluctant historian alluded to earlier) see cars as dangerous but safer than walking or riding a bicycle.
Cars are also becoming the focus of middle-class leisure activities. Shanghai, in addition to pouring billions of dollars into creating a car industry in the new “International Automobile City” in its Jiading District, has also built a car culture center replete with the country’s first Formula One racetrack. In 2004, when the $320 million state-of-the-art facility opened its 5.4-kilometer track, 150,000 people attended the first race, paying at least 1,800 yuan each. The Chinese state and private investors have funded not only Jiading’s research, development, and production facilities but the racetrack and an adjacent $50 million car museum to encourage consumer celebration of the car as an accoutrement to leisure. Their aim, according to one official, is to build in three years what “took Detroit a hundred.”
Newsstands across China are stocked with dozens of glossy car magazines. A 500-car, six-screen, American-style drive-in movie theater opened on the outskirts of Beijing in 1998. The archetypical car-related leisure business, drive-through dining, has also appeared in China. The first McDonald’s drive-through restaurant, in the central business district of Dongguan, Guangdong, features an enormous, fifty-space parking lot. Seeing the drive-through as “the next generation of McDonald’s restaurants in China,” the chain has opened ninety in Shanghai, Beijing, Tianjin, Guangzhou, Shenzhen, and dozens of other cities and is considering an alliance with Sinopec, which runs 30,000 gas stations throughout China. Chinese consumer culture is quickly catching up with international “best practices.”
Another odd import, the vanity license plate, has melded with Chinese superstitions, proving that Chinese markets are more finely tuned for many things than in other countries, especially when it comes to numbers. When Chinese buy a new phone, for instance, they aren’t randomly assigned a number as they are in the U.K. and the United States, but rather buy a specific number, which can range in price from a few to thousands of dollars. The luckier the number (such as eight, which sounds like the word for “become wealthy”), the higher the price; unlucky numbers (especially four, which sounds like the word for “death”) command lower prices. A Chinese regional airline, for instance, paid $300,000 for the phone number 8888-8888. When a southern Chinese city auctioned off license plates with lucky numbers, the highest, AC6688, sold for $10,000; the auction raked in $366,500. A secondary market for desirable plate numbers has also emerged; one enterprising man in the southern city of Hangzhou, for instance, offered to sell his plate number, A88888, for $140,000. (This culture of license plate numbers has led some consumers to go to extremes. Parents, for instance, have reportedly refused to allow their children to take taxis with unlucky license plates to their college entrance exams.) This market for automobile plates reflects not only superstition but conspicuous consumption; those with several eights inform onlookers that the owner is wealthy.
Car clubs have sprung up throughout China. Beijing alone has over a hundred, primarily organized around travel, such as touring, but also around maintenance and dating. These clubs are run by car dealers, owners of specific models, or even travel agencies. The largest touring club in China is affiliated with the Beijing traffic radio station FM 103.9 and offers the usual assortment of services, such as group insurance rates and, within the city, emergency roadside service. Their primary mission is to organize the popular “self-driving tours” in which groups of car owners drive in convoys, with places to eat and sleep arranged in advance. Clubs will even take their own mechanic along. Other car clubs create their own subcultures around brands, such as the Beijing VW Polo Club; the wedding of one member even included a procession of thirty-two of these super-mini cars through the streets of Beijing.
The ripple effects of the advent of China’s car culture have ironically recast that onetime icon of Chinese basic transportation, the bicycle. As car traffic, and in some cities outright bans on bicycle riding, have led many Chinese to abandon bikes, the new middle class is starting to embrace cycling as a leisure exercise. Once, bikes were prized, difficult-to-obtain family possessions; now China produces seventy million bicycles a year and more than a thousand brands. Although traditional brands such as the Tianjin-based Flying Pigeon (Feige) and the Shanghai-based Phoenix (Fenghuang) and Forever (Yongjiu) remain popular, particularly with older consumers, younger cyclists prefer the fashionable, lighter Taiwan-based Giant, the number-one brand in the country. The types of bikes now for sale in China reflect all the major transnational bicycling trends: mountain bikes, road cycling, and bicycle motocross, known as BMX. Bicycles now convey status among teenagers in a way that mirrors that which cars impart to their parents. As one thirteen-year-old boy admitted, “I was heartsick and envious at the sight of my classmates on their stylish bicycles, but my parents wouldn’t buy me a new one until I promised to get better grades.” The competition at one middle school in Shanxi province got bad enough that the school prohibited students from riding bikes costing more than 300 yuan to campus.
How Chinese Car Culture Is Transforming the World
China’s production of cars for its domestic consumption is also fueling a boom in car use around the planet. Chinese automobile manufacturers excel at producing cheap “gateway cars,” cars for first-time buyers. In 2007, Chinese automakers built 8.8 million cars, and by the end of 2010, Chinese automakers expect to sell 10 percent of their production to the international market. If this persists, China may do for the car industry what it did for other consumer goods such as plastic lawn chairs and electronics: greatly reduce their entry-level price and make them ubiquitous across the globe. Certainly, the Chinese state is actively promoting the exportation and international consumption of Chinese cars. Even as the government backed away from extending easy credit for domestic car purchases starting in 2004—spurred on by fears that state-owned banks were overexposed to bad loans—China’s Ministry of Commerce adopted measures such as financial and export credits to encourage Chinese automakers to export vehicles with Chinese brand names to the international market, where automobile sales make up a tenth of the world’s total trade volume. Chinese companies such as Geely, Chery, and Lifan not only compete with foreign brands domestically but sell their cars in Africa and other developing markets, and recently made international news with their decision to aim for the European and American markets. And if Americans prove hesitant to embrace Chinese brands, there is always the expediency of buying a brand Americans already buy, as they tried to for the first time with the purchase of GM’s Hummer truck unit by Sichuan Tengzhou, a previously unknown Chinese heavy industrial company.
The state-supported development of the Chinese auto industry has led to massive overcapacity (a capacity that may reach 10 million units per year by 2010) and a consequent intensifying pressure to promote exports. In 2005, China for the first time exported more automobiles (170,000) than it imported. If this trend continues, Chinese cars may transform consumer consciousness around the world, including in established auto markets such as the United States and Europe. China’s brands may enter American consciousness in the same way that Japan’s Toyota, Honda, Lexus, and Mazda and Korea’s Hyundai and Daewoo did. Chinese-branded cars and trucks have already entered more than 170 countries, up from only a few dozen in 2000.
There are many Chinese contenders. The next Asian car brand to enter popular Western consciousness may be Qirui (Chery), which has ambitious export plans and a bold track record. Chery initially succeeded with its QQ, which apes the Daewoo-GM car the Chevrolet Spark. Chery’s QQ, which went on sale in 2003, beat GM to the market and undersold the Spark by a fourth. At just $7,000, it gained a place in the low-end market, making cars affordable to many more consumers. By 2005, Chery was exporting nearly twenty thousand cars and has ambitious plans for expansion into Middle Eastern and Russian markets. While its initial flirtation with the American market hasn’t been reciprocated, it won’t be the only such overture.
Chery is a state-owned company with self-proclaimed plans that reflect China’s national mission to own and export world-class brands. A sign at the entrance of the QQ assembly plant reads: “We Need Not Only to Work Hard, We Must Also Be Diligent, and More Important We Must Have a Sense of a National Mission.” That mission, shared by other Chinese automakers such as Great Wall and Geely, includes exporting cars in large numbers. Although the auto industry is not a zero-sum game, it’s close. The ascendancy of Chinese brands means the decline of someone else’s, first in China and then around the world, including in the United States.
The spread of car culture to China, and from there outward to the rest of the world, confirms a key argument of this book: Chinese consumers are becoming the new vanguards of global consumerism. Because of the size and growth rate of the Chinese automobile market, all the leading international manufacturers are designing cars specifically for the China market. In just a few decades, Chinese consumers have gone from settling for older technologies and weaker brands to becoming a proving ground for the latest brands and technologies. For instance, in honor of the sixtieth anniversary of the founding of the People’s Republic of China, which fell on October 1, 2009, BMW rolled out a special edition of its ultra-luxurious, twelve-cylinder turbo sedan. And when Volkswagen decided to export its first gasoline-electric hybrid vehicle, it decided to do so in China, not the United States. Chinese consumer choices may soon determine the car options available around the world.
Even as the car culture creates new industries and jobs in China, it is also consuming massive quantities of oil, in the process transforming China’s foreign relationships. Private cars now consume a third of all oil imports in China, and surging car use is pushing up that demand. Already China accounts for roughly 12 percent of the world’s demand for energy, and its consumption is growing at more than four times the global rate. By the early 1990s, China had lost its energy independence and needed to import a majority of its crude oil, a whopping $130 billion in oil in 2008. This demand has huge international implications as China competes around the globe with other advanced economies, most notably the United States, to buy and control nonrenewable resources. Consequently, Americans, Europeans, Japanese, and everyone else who relies on oil imports to meet their energy needs are paying more.
As with many other countries before them, China’s reliance on oil has forced its government into unsavory international relationships. On the eve of the Beijing Olympics, for instance, China was importing 6 percent of its oil from Sudan, accounting for 60 percent of that country’s exports. These purchases were highly controversial. International human rights campaigners argued that Chinese oil purchases were directly underwriting genocide in the Darfur region, and rebranded the games the “Genocide Olympics.” The point isn’t that the West has been able to avoid the same compromised relationships, but instead that Chinese consumer demand for cars, and energy more broadly, directly strengthens the hands of anyone sitting atop oil reserves.
This car culture is also gobbling up China’s valuable agricultural land. Perhaps the most economically unfair impact of China’s embrace of cars is its effect on food prices. Poor people around the world are paying more for food because of cars. Cars are driving this increase not only by competing for crops to produce biofuels but also by swallowing up millions of acres of cropland for roads and parking lots. As Lester Brown, founder of the Earth Policy Institute, observes, “There’s no such thing as free parking.” Countries such as China and India that have only begun to embrace the car have likewise only begun to pave over their lands. As asphalt becomes China’s number one crop, the world’s poor—and everyone else—will pay more for food.
But they are paving, nonetheless. Twenty years ago, my classmates at Nanjing University and I headed out for a field trip to the historic city of Yangzhou. As the bus made its bumpy way out of the city while dodging chickens, bicycles, tractors, and donkey carts, I remember wondering how long we would have to endure the ill-kept local roads before reaching the highway. But we never got on a highway—there were virtually none then. Now China is devoting billions of private and state dollars to building roadways. China’s first modern expressway, a tollway linking Guangzhou and Shenzhen, was built by Hong Kong tycoon Gordon Y. S. Wu in the 1990s. Between 2000 and 2004, the country doubled the length of its motorways to 34,000 kilometers (21,000 miles) and has the third most roads in the world—44 percent of them built since 1990. Nor will it stop there: China plans to double again the length of its motorways by 2020.
China’s leaders, however, are aware of the myriad and often unwanted consequences of encouraging a desire for cars. Indeed, they have taken steps to slow China’s growing dependence on imported oil even as they have continued to encourage the development of a car culture. In 2005, China imposed new fuel economy standards for cars and trucks that are far more stringent than those of the United States. The following year, the central government began promoting smaller, lower-carbon-emitting cars, calling on eighty-four cities across the nation to repeal bans on small cars (originally intended to limit noise and air pollution, reduce fatalities, and remove unattractive vehicles from the streets). They also took other regulatory measures such as lowering parking fees for smaller cars and allowing their use as taxis. Cities such as Beijing, where 10 percent of households owned cars by 2005, are going even further by capping the number of license plates issued each month.
And the government, recognizing the unanticipated implications of having supported cars over public transportation, is finally spending billions to improve public transportation in the big cities. By 2008, Beijing had 200 kilometers of underground track for its subways, doubling their length in just three years. Shanghai expanded its underground railway from 80 to more than 420 kilometers in 2010, when the city hosted the World Expo; by 2020, the plan is to have 810 kilometers, twice the length of London’s subway system.
Beijing officials, facing rising pollution along with the increase in car ownership, also periodically make gestures to fight for the ever fewer number of “blue sky days” in the city, which had fallen to only fifty-six in 2006, down sixteen days from 2005. Under pressure to live up to its promise to hold a Green Olympics, Beijing tried instituting “
Car-Free Days,” modeled on a program begun by thirty-four French cities, to alleviate pollution and traffic jams. Beginning in June 2006, more than a quarter million Beijing residents agreed to avoid driving their cars to work once a month; the gesture, however, had no discernible effect on air quality or traffic jams. On the other hand, a new regulation allowing cars into the city only on alternating days, based on odd and even license plate numbers, led to the creation of car-pooling arrangements by drivers with complementary plate numbers. Indeed, the practice has expanded beyond sharing rides to work to sharing rides to school and even vacation travel.
In the spring of 2006, the Chinese government also tried to dampen the demand for passenger cars and imported oil by imposing a luxury tax on cars with larger engines, which included nearly all imported cars. Yet the new tax failed to slow the shift in the market toward American-style larger, less efficient cars, in part because a growing production glut has kept prices low, and in part because people will pay more for status. For instance, the price of Shanghai VW’s most popular model, the Santana, dropped from 124,000 yuan in 2001 to 76,000 yuan in 2005.
More so than their Western counterparts, China’s leaders were deliberate about this transition to the automobile. They also knew they faced a choice, though arguably a poor one. Thirty years ago, in the spring of 1979, the American magazine Mother Jones ran an article about China titled “The First Post-Oil Society?” The article predicted that “the likelihood that Shanghai will become the Detroit of the Far East seems, at this point, remote.” If an industrializing China continued to have a mere 100,000 cars in the entire country, China could create “the world’s first post-petroleum culture.” However laughable now, those expectations also remind us that there once were compelling reasons to think China might travel a different route than its neighbors and the West. But today China is finding itself trapped by the same economics and politics that have made changes in transportation policy difficult in the United States and Europe. Far from saving the world, Chinese car buyers by the millions are committing their country to a problematic developmental path.
China’s centralized state has proven remarkably good at certain things. As planned, the automobile industry has become a major part of the Chinese economy, employing several million people and bringing in large tax revenues in Beijing and Shanghai. The success of the auto industry also offers the possibility of increasing Chinese exports and trade surpluses with leading Western nations. All of these were consequences sought when China set out to create a domestic car market. But whereas a factory can be opened or closed, taxes and tariffs imposed or lifted, the unleashed hopes and dreams of the consumer—without whom the launch of any new market is a nonstarter—are not so readily restrained. Perhaps the most important consequence of China’s embrace of a car culture is that car ownership has now become part of the Chinese middle-class dream. Reining that in has now become all but impossible.
Like the United States and the European Union, China, too, is trying to have it both ways—promoting a car-dependent culture and economy while blunting its inevitable negative consequences. Indeed, China is doing more than the United States to mitigate the consequences of cars. At forty-three miles per gallon, for instance, China’s minimum fuel efficiency standards are now already higher than the U.S. standard of thirty-five miles per gallon, which will not even go into effect until 2020. Likewise, Chinese manufacturers are racing with other world car manufacturers to produce electric, low-carbon-emitting cars. They have already introduced China-made plug-in hybrids into the market in their own country and should have them in the United States shortly; fully electric cars are coming. But in a country where coal-powered plants produce almost 70 percent of the electricity, clearly resolving the fundamental contradiction between cars and the unfolding environmental calamity described in Chapter 8 will take more than simply replacing the tens of millions of new petro-powered cars with electric vehicles. The world now needs to ask of China what it has consistently failed to do itself: embrace cars without producing negative consequences.
AS CHINA GOES, SO GOES THE WORLD Copyright © 2010 by Karl Gerth