Monday, September 3, 2001

Congressman Mike Honda Visits China

In August 2001, a bi-partisan group of California legislators were invited to visit China as part of the initiative to promote greater bi-lateral and mutual understanding. At the planning stage of this trip, Mike Honda was a member of the State Assembly. By the time of the actual trip, Honda had won the Congressional election to represent the 15th Congressional District, encompassing much of the fabled Silicon Valley. Thus Mike became the senior member and the leader of the delegation. I was a member of the entourage from the private sector that went on this trip and took the following notes of the trip.

Monday, August 6, 2001

Morning starts with a quick tour through the Forbidden City, the imperial palace of China that has become China’s national (and largest) museum. Thanks to actor Roger Moore, the voice on the audio tour, everyone in the group--which quickly strung out into a loose caravan--learns something of the palace and life in the former days of imperial splendor. Roger spoke of one overindulgent and roving Emperor who chose a different concubine every night until he did himself in.

At the end of the tour, we then board our bus for a short ride to the Great Hall of the People, the huge building on the western edge of the Tiananmen Square, for a reception hosted by Mr. Zeng Jianhui, chairman of the foreign affairs committee of the National People’s Congress. We were received in the Hong Kong Hall, which features a photomural of the spectacular night scene of the Hong Kong harbor. Most notable from this stop is the pro forma group photo with Mr. Zeng and a pro forma delivery, in my opinion, of a genuine official blah blah blah.

For lunch, we were then taken to a nearby new Radisson’s State Guest Hotel hosted by Tian Zengpei, chairman of foreign affairs committee of CPPCC (national committee of the Chinese people’s political consultative conference). The group awaiting us included former Ambassadors to Canada, United Nations, and Egypt, a former vice minister of foreign affairs, a nationally famous dancer and Wang Lin Xue, a painter who specializes in traditional Chinese paintings of bamboo.

There is more substance to this conversation. Tian said China’s GDP reached $1 trillion last year and is expected to continue to grow at 7% per year, which means it will double by next decade. China’s national priority is to develop China’s western region with a 50-year strategy.

Tian reviewed the U.S. China relations as one plagued by misinformation from the media on such issues as human rights, Tibet, Taiwan, religious freedom, etc. He welcomes American friends and legislators to visit and see for themselves. “Last year, U.S. Congress enacted some 70 resolutions relating to China, many were without foundation. Why not talk to us, come visit, so as to avoid future such resolutions based on false premises?” Tian did not wish to delay lunch and thus time did not permit any discussion on Taiwan, except that the U.S. should continue to adhere to principles of the 3 communiqu├ęs.

On behalf Zhenxie (CPPCC), he wished for more visitors to promote understanding and for visitors to come more often. “Go to more places, not just the prosperous places. Visitors should also see backward, poor regions for a more comprehensive understanding of China.”

After lunch instead of going across town to our hotel, we stayed at the Radisson to rest. Otherwise, we would have spent the entire break on the bus, traffic being as congested as it gets in Beijing. Yang Hong Ji, deputy mayor from Nanchang was a surprised presenter on the merits of investing in his city, the Jiangxi provincial capital. (Jiangxi, hardly far west of China, is next to coastal provinces but decidedly less prosperous.) Alas, his presentation, typical of many presentations from Chinese delegations we see in the U.S., could have been for any city in China and did not really spell out the comparative advantages of Nanchang.

The entire group then was driven to the art studio of artist Wang (Lin Xue) accompanied by the artist and his wife, Li Lin. His studio was located nearby inside the grounds of Diaoyutai, the government’s state guesthouse. On the walls of his studio were photos of many heads of state that visited his studio. He didn’t have to say anything to let us know that he is considered a living national treasure. He presented Mike a bamboo painting to commemorate the visit. He and his wife spent a good part of each year in the U.S. and greeted a number of the delegation warmly as old friends. Among their familiar friends were Anita and Gordon Chan.

The next meeting took place at the office of CPPCC hosted by vice chairman Wang Wen Yuan. He said China’s desire for peace could be understood just from the world’s disastrous experience from the past two world wars. He cited premier Zhou En Lai urging that misunderstandings between China and U.S. are natural. The solution is to have more frequent exchanges, look for more common ground, expand common interests and let differences be. Deng Xiaoping, he told us, frequently expressed confidence in future generations counting on them to solve problems that befuddle the present.

Wang expected China to enter the WTO by year-end and become even further integrated into the world economy. China will be developing the western region and China wishes to invite and encourage more outside participation in this endeavor.

Wang suggested that the U.S. try looking from the other side’s perspective and see the big gap that still exists between China and the U.S. The U.S. does not understand China’s policies. For example, had China not imposed a population control policy over the recent 20 some years, there would have been 300 million more people in today’s population—more than the 260 million for all of the U.S.

China is slightly bigger than the U.S. in landmass, by about 300,000 sq km. China’s population is larger by about 1 billion. In terms of population density, the U.S. has 30 persons per sq km while China has 130. However, if this is normalized to the amount of arable land, the density becomes 35/ sq km in the U.S. vs. 700 for China. (Imagine 20 persons in the U.S. for every one that exists today.)

One of the consequences of China entering the WTO is the need to help China’s agriculture sector. The farmers can’t compete in the world market because they lack the economy of scale. China’s auto industry is also not competitive (because it is highly fragmented). “China needs to work out ways to help them in reasonable and equitable manner,” he said.

China treats other countries all the same regardless of the size of the other country but based on actual reality. (By implication, China’s policy is not based on ideology or demagoguery.) “For the U.S. to “look at China as a threat makes no sense,” he said. Instead, look at how hard the Chinese people are working to develop their economy. No other country more than China needs a secure and stable peaceful environment.

The last activity of this long day was to drive north towards Beijing’s academic district and Zhong Guan Cun (ZGC), China’s hope for answer to Silicon Valley. The host was the Legend Group, a spin-off from the Academy of Computer Sciences and the hands down success story of ZGC with annual revenue in excess of $3 billion. After a tour of the Legend modern but empty offices since we arrived after working hours, we then retired to the Legend’s own dining room on the premises for a multi-course banquet.

Tuesday, August 7, 2001

Most of the party went to the Great Wall and lunch enroute to the Summer Palace where Ellen Corbett made her first of many to come purchases. The vendor at Summer Palace took advantage of the crush of tourists to give Ellen a brand new 50 ruble Russian note as change. It is safe to assume that this note is worth nowhere near the 50-renminbi change owed her. But Ellen got her value talking about it and planning to give it to her son as a unique souvenir.

Mike did not go sightseeing but elected to meet American companies in Beijing including Hewlett Packard and other companies organized by the U.S. Information Technology Office. (I did not go with Mike.)

All the different groups reconvened at Kempinski Hotel in late afternoon and left for the Ministry of Foreign Affairs. MFA, the equivalent of the U.S. State Department, is now housed in a spectacular modern building with a multi-ethnic and mythic mural on the lobby facing the entry. Zhou Wenzhong, assistant minister, hosted this reception. Zhou had previously served a stint in the San Francisco Consulate (and returned to Washington in 2005 as the Ambassador from China).

First Zhou reported that Secretary Colin Powell’s visit to China has been very successful. Zhou believes the bilateral relations are on normal track again. The two countries have agreed to talk about human rights and to resume the joint military meetings. This is a winning relationship, beneficial to both sides.

That China will become a threat to the U.S. is a false notion. China is still a developing country, has a long ways to go and does not wish to be a threat to anyone. China’s goal is to continue to double its GDP every ten years so that by 2040-50, China will become mid-level developed and modern country. China wishes to be a force for peace and has no desire to be a super power.

Mike: "Relations building and confidence building is important and not just for economic reasons."

Zhou then said it is natural to disagree in certain matters. The key is how we handle the disagreements when they arise. Should be through dialogue and discussion based on mutual respect, look to benefit from the other’s experience and nobody’s perfect. Human rights have improved in China. Most people now enjoyed the right to subsistence and education, not always the case in China’s past. There is no one model to human rights but there should be many different models.

As one example of differences in points of view is the trade imbalance between China and the U.S. According to U.S. customs, the trade deficit was $80 billion but according to Chinese customs, only $30 billion. But it really doesn’t matter because bilateral trade will only grow and California will continue to play a major role in this.

Zhou would really like to meet members of the “blue team” to discuss how anyone can gain through conflict. The U.S. has already fought two wars in Asia and what did they gain aside from loss of lives? (First reported by Washington Post, the Blue Team is Washington-based and consisted mostly of extreme right wing Congressional staffers and other low profile individuals with China bashing as common interest. Their dangerous and provocative influence on U.S. foreign policy is too easily overlooked.)

What’s China’s education program, Elaine Alquist asked. Answer: In urban areas, education is compulsory for 9 years and 6 in rural areas. Unfortunately, dropout is a problem in poor rural areas. Project Hope was set up to help children of the poor stay in school. Contrary to the past, the government now encourages formation of private schools to supplement the public schools. Right now 30% of high school graduates go on to college and the goal is to get to 60%. Beijing has already reached 70%.

The Beijing office of Deloitte & Touche hosted dinner this evening. After dinner one bus went back to the hotel. Another group led by D.K. Lu went to nearby Wangfujing for a quick shopping foray and then rode the peddicab to Tiananmen Square. A third group walked through the Peking Hotel, Beijing’s first deluxe hotel that dates back to the early 20’s, enroute to Tiananmen Square. The latter two groups managed to converge at the square and came back together on the second bus.

Wednesday, August 8, 2001

This was a relatively easy day. We left the hotel bright and early in the morning for the airport and flew to Nanjing. By the time we checked into the Jinling Hotel it was almost time for lunch. In the afternoon, we went to visit Dr. Sun Yatsen’s Mausoleum and then the Nanjing Museum. At the Mausoleum we were to see as we have seen elsewhere throughout this trip the attention Jim Brulte and Walter Hammon attracted. Giggling children and sometimes adults would ask to have their pictures taken with either one. Jim because he towered over them and the full bearded Walter reminded them of a Karl Marx reincarnate.

Chen Huanyou, Chairman of the Jiangsu Provincial People’s Congress at another hotel a short distance away, hosted dinner.

Thursday, August 09, 2001

This morning began with a reception and meeting with Ji Yunshi, governor of Jiangsu province held at the Jinling Hotel. He mostly talked about the economic development of Jiangsu. Jiangsu is one of the most developed regions of China, number 2 in terms of enacting reform and its GDP has reached over $100 billion, contributing about 10% of the country’s GDP. In fact, Jiangsu more or less accounts for roughly 10% of China’s major economic indicators.

Jiangsu was one of the first to accept the principles of reform and benefit there from. For the most recent five years, the GDP has averaged an annual growth of 11.7% and the aim is to continue to grow at 10% per year for the next 5 years. Jiangsu was one of the first to open to foreign trade and export last year reached $46 billion. Jiangsu attracted about 20% of China’s foreign direct investments (FDI) and 30% of province’s tax revenue came from foreign investments.

As for Jiangsu’s sister relationship with the U.S., there are 4565 enterprises and joint ventures in Jiangsu, U.S. investments representing $ 8 billion investment out of a total of $36 FDI invested in Jiangsu.* Of the 63 projects over $10 million, 50 are from the U.S. and of those, 5 are over $100 million. Average size of the U.S. investment is around $23 million--higher than any other country. Japanese investments are also quite successful as also are investments from Taiwan.

Trade with the U.S. reached $6.5 billion; export at $5 billion made U.S. second largest market while import at $1.5 billion ranked U.S. at 4th largest.

We were the 4th official delegation from California to visit Jiangsu since 1999, the governor noted.

After the meeting, we were herded into the adjoining room for a surprised signing ceremony between Justin Tin and Kenneth Yee and city of Xuzhou on a memorandum of understanding over a dental clinic for Xuzhou. Customary banner, floral displays and a healthy contingent from Xuzhou were awaiting us. While they signed, Mike and Jim hovered to provide photogenic backdrop to the affair. The group then filed out of the conference room for the bus to get back to the next scheduled event.

Zhu Chengshan, curator of Nanjing Massacre Museum, was on hand to greet us. This museum was dedicated in 1987, a memorial dedicated to the memories of 300,000 victims massacred by the invading Japanese troops in the winter of 1937. This was a sobering experience.

The museum in a park like setting, consisted of concrete pillars, stone pebble covered grounds and sprinkling of black and white granite blocks, each describing one of the Japanese atrocities committed in and around the Nanjing area. There was a wall of names a la the U.S. Vietnam War Memorial, except in this case there was only a paltry list of known victims, most being unnamed and unknown.

The walk leads to an enclosure where excavation exposes random stacks of human remains to the visitors’ view, the museum being located on one of the execution grounds used by the imperial Japanese troops. At the entry and exit of this enclosure are leis of multi-colored, paper-folded cranes hanging on the walls. These are offerings left by visiting school children of Japan as a sign of regret and respect. From the record of leis, some schools seem to make this sojourn an annual event.

Next to the massacre grounds is a pond where many bodies were thrown. This pond has long since disappeared and skeletons that have been excavated are numbered and labeled and the mounds are protected by a glass enclosure. Next came photo exhibits before entering the museum itself. The museum displayed photos, weapons, documents and other physical evidence of the “Rape of Nanjing.” Mike and members of the group signed the museum register at the exit. The delegation’s visit to this museum occurred just about a week before the Japanese prime minister was to make his controversial visit to the Yasukuni Shrine in Tokyo.

Lunch back at the hotel featured steak or grilled salmon in case anyone missed an old fashioned western meal. Trouble was that the entrees arrived at snails pace thus delayed our timely departure for Suzhou. There was a Caucasian matre’d hovering around us and became the recipients of our disgruntled complaints. We found out that he was a student in hotel management from Purdue University working in Jinling for 5 months on an exchange program.

On our way to Suzhou, we made a brief stop at the northern part of the Nanjing city walls, very well preserved from the Ming dynasty and opposite to the direction of the Japanese invasion, hence still intact. Ms. Wang, our guide in Nanjing, told us more than once that the wall was so durable because the bricks bore the names of the brick maker. Failure of the bricks to perform was punishable by death. The short climb to the top of the wall was rewarded with a view of the nearby lake and a spectacular Buddhist nunnery with golden yellow walls and slate tile roofs. We arrived in Suzhou by bus just in time for shower, change of clothes and dinner.

At dinner hosted by Huang Jundu, chairman of Standing Committee of Suzhou People’s Congress, I sat next to Zhang Xue a deputy of Foreign affairs department. His formal training is Japanese and he personally sees 30 to 40 delegations from Japan every year. Suzhou is very much in Japan’s culture and lore.

Zhang said Suzhou is no. 7 in China in contributor to GDP and no. 1 in Jiangsu. Now a population of more than 1.5 million inside city proper, all the narrow streets of yore have been widened and thus losing some of the charm of this ancient city.

Some surprised guests joined this dinner--Larry and Celia Lee, the parent-in-laws of Washington governor Gary Locke. They recently bought a place in Shanghai and happened to be visiting Suzhou. Another unexpected guest was a Ms. Wang who then invited the party to a karaoke where we were her guests while many of the women folks bought and were fitted for various apparel. The karaoke party for some ran into the wee hours of the morning.

Friday, August 10, 2001

We left early in the morning for China Singapore Suzhou Industrial Park (SIP), which is east of the old Suzhou. Deputy Barry Yang, deputy CEO of the park, greeted us and provided the briefing.

Suzhou, a 2500-year-old city, is known as a “village of fish and rice and a paradise on earth.” Suzhou is one of top ten contributing cities to China’s economy. Contracted FDI in Suzhou by end of 2000 reached $42.2 billion and $20.3 has actually been invested. Of the global 500, 76 have invested in Suzhou. In terms of GDP, the six ahead of Suzhou are Shanghai, Beijing, Guangzhou, Shenzhen, Tianjin, and Chongqing, all much larger than Suzhou. Per cap GDP reached $9,300 in 2000.

SIP is one of thousands of development parks located inside China but is the only one that is a JV with the Singapore government, begun in 1994. The JV went from 65/35 Singapore to 35/65 where Suzhou now holds the controlling interest. Wang Jun Hua, deputy mayor of Suzhou is now the CEO of SIP. As of July 2001, FDI contracted reached $9.8 billion with $4.3 utilized. Approximately 25% is from the U.S., 47.9% is in electronics and electrical related, > 90% is in high tech and > 90% is wholly foreign owned. SIP made $7.5 million in profit in the first year since the change in ownership structure, making up for the losses of the last 3 years. They have plans to go public.

SIP is also the only part in China with nine different underground piping so that there is no above ground wires and pipes. Unlike Shanghai’s experience in recent monsoon downpour, Suzhou has no flooding problem. With Lake Taihu nearby, Suzhou also has no lack of water. The sewage treatment set-up is advanced with ability to handle all manner of wastewater. The park offers dual redundant power supply to guard against interruption. The park has ready built factories in various configurations for instant occupation. Customs is located inside the park and can handle everything within the park.

The park has built 6010 residential units, 3360 more are under construction and 7750 have been sold. Average sales price is $250 per sq. meter. There is a lake, Jinji Hu, inside the park. Seven different recreational sites along the lake are built, under construction or in the plans.

Key to the SIP turn around: they learned that the park cannot do without the local government support and cannot function solely on commercial basis. Cost of SIP land was fixed while price of competitive land elsewhere was going down. By reversing ownership, local government can give all kinds of support including price concession, tax grants, etc. There is a workforce of 28000 inside the park, about 2-300 expats.

Solectron in SIP

Kent Chen, Vice President & General Manager of Solectron China greeted and made the presentation. He started the SIP facility and it now produces over $50 million worth of products in one month. Solectron now has 76 sites in the world. The first site in Asia was in Malaysia and now has 11 facilities in Asia. Solectron’s business mission is to help MNC’s grow in China.

AMD in SIP

Dickin Cheung, managing director, greeted the group and made the opening presentation. Total investment in this facility, which assembles and tests integrated circuits, is $108 million. At full capacity, this facility will employ 1500, currently it is at 700. Start-up of every line at this facility has been on time and successful. Katherine of his staff talked about AMD employee’s participation in Project Hope, a national charity designed to help educate the poor.

Chen Deming, Party Secretary of Suzhou City, hosted lunch back at the Gloria Plaza Hotel. He was the first and only official that greeted the group with a PowerPoint presentation. The presentation largely covered information already covered by others. (Chen received post graduate training at Harvard and became the Minister of Commerce in 2007.)

After lunch, the group went to Garden of the Master of the Nets, a World Heritage site, and the Suzhou Embroidery Institute. Exiting from the Institute, Mike was recognized by the kids of three generations of a Chinese American family visiting from Los Altos Hills. Mike signed autographs and had his picture taken with this family.

On the way to Shanghai via the Nanjing-Shanghai toll way, traffic came to halt due to an overturned bus on a rain-slicked road. Thanks to police escort, which we had throughout our stay in Jiangsu (but not in Beijing or Shanghai), we created a third lane out of the two-lane road. The skills of our driver were impressive as he weaved our coach around other buses and trucks. We lost about 40 minutes because of the accident. Could have been hours, had the escort not been with us.

Sha Lin, Vice Chairman of Shanghai Municipal People’s Congress, hosted the dinner in Shanghai. Everybody lugged his or her carry-ons into the Old Jinjiang Hotel and bid farewell to our bus from Nanjing. From here on the group is back to two minibuses, one unofficially for Republicans and sympathizers and the other for the Democrats and their followers. This sorting of guests was not an organized effort among a most congenial group, and must have been a matter of natural inclination.


Saturday, August 11, 2001

First stop was to Fang Yuan Digital, a Sino-Korean-American JV making the loader mechanism for the DVD player. The American partner is DVS based in San Jose, who owns a majority interest in the Korean firm and together own the controlling interest of Fang Yuan.

Mike, Meri, Jeffrey and I skipped the plant tour to visit MeetChina.com, a B2B company based in San Francisco and Shanghai. Upon leaving MeetChina for lunch being hosted by Allbright and arranged by Katherine Schiffler, Shanghai based director of California Trade & Commerce Agency, Jeffrey found that the group left at DVS had gone back to the Shangri-la Hotel in Pudong instead of proceeding direct to lunch. Thanks to a few frantic cell phone calls, most of the group was rounded up and re-convene at the Cypress Hotel, site of the former Sasson Park. Allbright has 27 partners and a staff of over 150 and considers itself the largest law firm in China.

After lunch some of the women slipped away for some serious shopping. We got to the Shanghai Art Museum in time for a quick one plus hour tour of this internationally renowned museum. On the way to the venue for dinner hosted by DVS, the two minibuses dropped off the shoppers for some frantic bargain hunting while the buses circle the blocks. After we returned to Shangri-la after dinner, some went on to PuJ’s, located at the Jin Mao, Shanghai’s 88-story skyscraper, for some discoing.

Sunday, August 12, 2001

After checking out of the hotel, the group went to the former Chinese quarters of Shanghai where Yu Garden, city god temple (Chenghuangmiao), and all kinds of shops beckoned. Most of the group did not want to spend the precious time touring Yu Garden nor the temple but devoted the time to last opportunity of shopping. The Shanghai bureau of China Daily, again arranged by Katherine Schiffler, hosted lunch. After lunch, some went for a stroll on the section of Nanjing Road that has become a pedestrian mall, while others went—what else—shopping.
====================================
Most of the notes were written within one week of the visit. Some notes were added after this report was posted on the blog.

No comments: