In Beijing

Hating the Free Trade Player While Loving the Game

Sat, 14 Jul 2012 07:12:16 -0400

When I was participating in Harvard’s Model Congress as a high school freshman, I remember noticing that the American flags which decorated the conference rooms had “Made in China” written on them. While I forget what I wrote in my journal about it, I’m sure it was a suitably poignant meditation on the contradictions inherent in producing things that claim to be symbols of freedom in a place that, itself, is not free. And that’s the perfect place for those kinds of observations to remain – in the journal of a politically precocious 14 year old.

So I was disappointed to hear Rachel Maddow railing against the fact that the uniforms of the US Olympic team were made in China. Joining Maddow were a number of Congresscritters: Harry Reid, Nancy Pelosi, and John Boehner. It is, apparently, horrible, just horrible, that Ralph Lauren would make the clothes for the US Olympic Team where he makes much of the rest of his clothes, in the Perl River Delta of China. But, do they have any problem with the fact that the fashion industry generally produce their goods outside of the US? If not, what’s the big deal? And if so, what are they doing about it?

While as a child I noticed that my He Man toys had the names of places I’d never heard of before, such as Taiwan, stamped on them, I didn’t really know why somewhere half way around the world would be making my stuff. In that particular instance, the answer would include technological developments, such as plastic injection molds, and containerized shipping; Taiwanese ethnic politics; and US cold war political alliances. More recently, the creation of long distance supply chains has been promoted by policies, such as the WTO, which seek to elevate the removal of barriers to trade as a central goal in international relations.

Cheerleaders for globalization, such as Tom Friedman, tend to take it to be a process with only one possible trajectory. This allows them to label protesters at WTO meetings as “Anti-globalization”, which is an odd way to describe an international network of NGOs and activists organizing on a global scale. The question is not, as Friedman would pose it, for or against globalization. The world has always been global. The question is the kind of globe that we work towards creating – one which privileges the ability of corporations to make a profit, one that promotes some vision of social justice, or some other goal?

I’m cynical enough not to be surprised that promoting the ability of Apple, Walmart et al to construct global supply chains, and the ability of financial elites to transfer money frictionlessly across regulatory regimes is the form of globalization that has been ascending for the past several decades. But in constructing our trade policy, politicians make choices and those choices have consequences. The decline in America’s industrial sector and the rise in reliance on imports is hardly a surprising result of NAFTA, GATT, WTO and similar acronyms which privilege the ability of goods to move across national borders. Remember Ross Perot’s “Giant sucking sound?”

Even so eminent a cheerleader for free trade as Paul Krugman points out that the process will have winners and losers within a nation:

After all, economists are familiar with a number of reasons why the gains from free trade may not work out quite as easily as in the simplest Ricardian model. External economies may mean underinvestment in import-competing sectors; imperfect competition may lead to a strategic competition over industry rents; because of distortions in domestic labor markets, imports may reduce wages or cause unemployment; and so on. And even if national income rises as a result of trade, the distribution of income within a country may shift in a way that hurts large groups. In short, there are a number of sophisticated extensions to and qualifications of the model introduced in the first few chapters of the undergraduate textbook (typically covered later in the book — for example, in Chapters 10-12 of Krugman and Obstfeld (1994)).

At the same time that the US state has promoted the integration of the US into global trade networks under the banner of “Globalization”, it has done precious little to provide for the continued employment and wellbeing of those working in industries displaced by globalization. Has there been any broad based effort at retraining workers, making US industry more competitive, or to otherwise compensate for the effects of globalization?

I don’t pretend to know how to advance the US’s industrial sector. When talking to someone working on the issue in a US policy think tank, he pointed out that the problem with developing an industrial policy is the fact that the phrase “industrial policy” is somewhat taboo in policy circles. But looking at Germany, it is possible for a country to be integrated into global trade networks to have a thriving industrial sector, and a strong union movement. So, what is the US state doing to bring us in that direction?

This is similarly true for President Obama’s criticism of Mitt Romney’s profiting from offshoring American workers. Is the President actively working to promote policies which will end such outsourcing? If not, what is his specific problem with Romney’s choices, beyond scoring cheap political points?

Which is just to say, don’t hate the player, hate the game. And if you do hate the game, and find yourself to be the Senate Majority Leader, Speaker of the House or otherwise in a position of power, rather than score cheap political points over something trivial, why not find a solution? And if, like Rachel Maddow, you’ve got a popular news program focused on policy issues, why not, you know, discuss the policies underlying these things?

My Email to This American Life About Their Apple Shows.

Sat, 17 Mar 2012 05:26:17 -0400

Hello,

While listening to Mr. Daisy’s story I noticed the inconsistencies that you point out in the retraction. I’ve never seen private security guards with guns in China and even most Chinese police are unarmed; and a Starbucks is an unlikely meeting place for migrant workers. Two things that you didn’t point out are Mr. Daisy’s assertion that its hard to get business cards made at the last minute in Shenzhen - most copy shops would be able to bang out a rush order pretty quickly - and his description of Shenzhen as looking like “Blade Runner vomited on itself”, its actually a fairly nice town - its much greener than any other Chinese city that I’ve been to, and you can wander 10 minutes from downtown Shenzhen and find yourself in nice wooded areas. Indeed, what I find so disturbing about Shenzhen is that, for a cesspool of capitalist exploitation, it has some of the loveliest neighborhoods that I’ve come across in China.

I’m curious as to why both of your shows on the subject had an absence of Chinese voices. The first show had Debby Chan Sze Wang speaking for a few minutes in the podcast version, but for the rest of the shows you relied primarily on Americans to speak for Chinese workers. I took the point of Mr. Daisy’s show to be the absence of the Chinese people involved in the production of Apple products in our experience of the Apple brand. Supply chain capitalism relies on the circulation of commodities, and of images about those commodities. In producing commodities firms such as Apple shop for the least expensive producers possible, which inevitably leads to horrible working conditions as labor is the area where it is easiest to drive prices down. In producing images about those commodities - branding - firms attempt to create an experience of a product that has nothing to do with the physical conditions in which it was produced - so my Macbook embodies creativity, innovation and passion, not a bunch of 18 year olds from the Chinese countryside working long shifts in unhealthy conditions and not being paid their full wages. What made Mr. Daisy’s show so jarring is that he breaks down the barrier between those two kinds of circulation, suggesting that rather than experiencing a brand we should experience a connection to the humanity of Apple workers.

But the way that you reported on it reproduces that absence of Chinese voices. There are, of course, Chinese activists and scholars who have spent a lot more time studying labor in China that Nick Kristof. Is it really so hard to interview someone like Pun Ngai or Yan Hairong, anthropologists who study labor in China? And, more importantly, how might Chinese factory workers want to represent themselves to Apple consumers? How would they explain the choices that they make, and their place in China’s economic and social order? Are they simply driven from the grimness of the rice paddies to the grimness of Foxconn, or are they actively composing lives for themselves outside of any plot-line that Kristof, or Daisy would impose on them? Isn’t that at least as important as the views of a crusading columnist and a tall telling Apple fanboy?

I’ve visited factories in Shenzhen, and am aware of the logistical difficulties involved in interviewing migrant workers, and am sure that you have limited resources for your reporting. But based solely on your shows, that question doesn’t seem to have entered into your consideration. And from my perspective that is an ethical lapse far more serious than any of Mr. Daisy’s exaggerations.

Industrial Chemicals Sold as Table Salt

Wed, 01 Feb 2012 04:19:20 -0500

Industrial Chemicals Sold as Table Salt:

Selling poisonous industrial chemicals as table salt is, apparently, only illegal in China if done in amounts greater than 20 tons. Which is reassuring. Fortunately, the fact that everything I eat is potentially poisonous makes loosing weight that much easier.

Chinese Nationalist Gets Head Stuck in DC Airport Escalator.

Wed, 01 Feb 2012 00:13:33 -0500

Chinese Nationalist Gets Head Stuck in DC Airport Escalator.:

No, seriously. I only know of Sima Nan for his anti-qigong activities (which also involved, bizarrely, him performing qigong healing). Had no idea he had gone on to denouncing America as a global force for evil, or getting his head stuck in the machinery of everyday life.

A Battle for the Soul of my iPod

Tue, 31 Jan 2012 04:12:00 -0500

Anthropologists have been interested in stuff since the beginning of the discipline. This interest with things can be seen in Marcel Mauss’ seminal Essay on The Gift, where he examines societies with economies that are based on the giving of gifts. There are three obligations in the giving of a gift – the obligation to give the gift, the obligation to accept it and the obligation to reciprocate. Mauss focuses on the third of these, asking why is it that people, upon receiving a gift, feel the need to reciprocate. What is it in the physical object one gives to another which compels the receiver to return the favor?

The short version of Mauss’ answer was that the exchanges of objects in a gift based economy wasn’t based on the objects at all, but on the individual relationships who’s creation and maintenance those objects facilitated. Thus, the objects became imbued with the essence of those relationships, serving as a marker for them and compelling the maintenance of the relationship with a return gift. The object itself comes to have a soul, giving the gift entails placing part of your self into that object, and receiving it means accepting responsibility for that part of the giver.

We live in very different societies than the one that Mauss described, but a lot of his description of gift giving applies to behavior we’re fairly familiar with. This goes from buying someone a drink and being annoyed if they dont reciprocate, to a wedding ring - an object whose giving creates the relationship it symbolizes.

What does this have to do with iPhones and the recent todo about Foxconn?

Look at how the repression of the Chinese state is discussed in this apologetic for Foxconn’s workplace standards by Tom Kraitz on Paidcontent.org:

U.S. tech companies have a very complicated relationship with China. It’s the world’s largest potential consumer electronics market and is home to the world’s best tech manufacturing companies, but it is run by a government that encourages censorship, tolerates working conditions that other countries made illegal many years ago, and favors domestic companies to an unnerving degree.

Kraitz concludes the post, “How much change Apple can really bring to an irreplaceable partner born of a country without enough respect for the basic human rights of its people?”

Who is it that doesn’t respect human rights in all of this? The Chinese state certainly doesn’t, and cracks down on independent unions, persecutes workers who complain about working conditions, etc. But that’s not a bug, that’s a feature. Its not something that Foxconn has to endure in order to do business in China, its something that allows them to conduct business in the manner that they do. As far as I know, nobody is alleging that the Chinese state is stepping in and forcing Foxconn to use forced uncompensated overtime. Rather, the Chinese state’s repressive policies allow them to profit from mistreating their workers.

And what about Apple’s respect for human rights? Do they pay someone to mistreat workers, or do they buy a product from someone who happens to mistreat workers? Do the social relationships across which an iPhone is made attach to the object so that all whose hands it passes through receive part of the souls of the workers who produced it? Or is it severed once they pass through customs and make their way abroad. (If this is the case, Chinese consumers are protected, because Apple products are exported from China before being reimported for sale – for some ridiculous reason that nobody’s been able to explain to me).

And how about me as a consumer? I’m typing this on a Macbook, and I’ve got an iPod in my pocket. What’s my relationship to the Foxconn factory floor?

Robert Foster describes the two meanings of value that drive modern supply chain capitalism. There is the economic value that is created, which is gained from sourcing products the the cheapest possible production point. This is, inevitably, achieved by finding places with very bad labor conditions. The second meaning of value are the cultural values that are grafted on to commodities to differentiate them from competitors, so that we choose between Motorola and iPhone based on their differing meanings. Brand value.

This system is created so that instead of identifying with the circulation of goods from production to use, we identify with the circulation of images within advertising, stores, the media and other sources. As one marketing website describes:

Apple has a branding strategy that focuses on the emotions. The Apple brand personality is about lifestyle; imagination; liberty regained; innovation; passion; hopes, dreams and aspirations; and power-to-the-people through technology. The Apple brand personality is also about simplicity and the removal of complexity from people’s lives; people-driven product design; and about being a really humanistic company with a heartfelt connection with its customers.

We have a relationship with the idea of Apple, rather than with a hunk of metal and plastic in our pockets. That isn’t to say that functionality isn’t part of that relationship - user interface, design and function are an inherent part of the Apple experience that we participate in when we take our Macbook out and start banging away. This is the soul of the commodity object which we’re supposed to be entering into a relationship with, not those of the workers on Foxconn’s floors.

Successful brand management depends on keeping these two kinds of circulations, of physical objects in a China based supply chain, and of images about those objects, as separate as possible. This is especially true in a premium brand like Apple, where the contrast between the factory in which they are made, and slick aesthetics of the stores in which they are bought is so jarring. And that’s what is disturbs people when these two conflicting souls mingle, as they read about Foxconn factories on the screen of their MacBook.

When Does Economics Become Ideology?

Mon, 30 Jan 2012 19:51:00 -0500

There has been a lot of discussion online and elsewhere about the conditions under which Apple products are produced in the wake of the New York Times articles about the Foxconn’s factories. I find it an interesting moment to look at the ways in which the poltiics and economics of supply chain capitalism is are discussed. One thing that strikes me is how economic theories and concepts are deployed in rationalizing poor working conditions.

This can be seen in the invocation of Krugman by Tim Worstall in this Forbes Posting:The Apple Boycott: People Are Spouting Nonsense about Chinese Manufacturing

Paul Krugman has been pulled in to rationalize low wages. A long quote gives the differences between the naïve expectations of a non-economist, with the way an economist understands wage levels. A non-economist expects wages to be based on the productivity of a specific factory, enterprise or industry, but economists understand that wages are based on the overall productivity of the economy as a whole. Wages are based on the national labor market, and not the comparable wages paid to workers at comparative levels of productivity at comparative industries/enterprises in other labor markets.

I’m sure that’s an accurate description of how economists model labor markets – Krugman got a Nobel prize for his work on trade economics, so I’ll assume he represents the mainstream economics model of how labor markets work in countries at different levels of development. But notice how Krugman’s economics explanation is being used here. There’s a subtle shift between analytical and normative. Krugman’s “This is how wages ARE calculated” then shifts to Worstall’s “This is how wages SHOULD BE calculated”.

I quote at such length because it is an extremely important point. Wages paid to manufacturing workers in China are not determined by the productivity of those specific workers. They are not determined by US wages, by the profits that Apple makes nor even by the good intentions of the creative types that purchase Apple products. They are determined by the wages paid by other jobs in China and that is itself determined by the average level of productivity across the Chinese economy.

Which is, of course, entirely besides the point. It is pretty widely understood that China has lower wages than America, and that’s why American firms source production there. The description of WHY wages are lower is then used as an argument that Apple CANT pay higher wages. But can’t they? Is there anything in economic theory preventing Apple from deliberately raising the wages of workers on their production line. If there is, there is nothing in the Krugman quote to suggest as much (Krugman writes that if factories raised wages than companies looking for low wages would go elsewhere, which is doubtlessly true, but doesn’t address why Apple can’t raise the wages its willing to pay its workers.).

And that’s how The Market becomes a force that takes the politics out of social interactions. When used in this register, economics is used to take our attention away from the fact that individuals are making choices about how they treat their workers, about factory conditions, wage levels, etc.. These decisions are then displaced onto impersonal economic trends and forces, that the individuals involved are then imagined to be beholden to, thus absolving them for any responsibility for those decisions.

People who are upset about working conditions in Foxconn factories aren’t disputing economic models of how wages are being calculated. They’re suggesting that economic calculation shouldn’t be the sole means by which we interact with factory workers, that there should be some idea of human dignity that mandates a better work environment and higher wages. When economic models are used as a response to these calls for the human dignity of workers, they cease to be analytical tools, and start to become rationalizations for the dehumanization of workers. To say that isn’t to take away from the analytical use of economics, but to question its political uses in a world where the proclamations of economists like Krugman hold great political weight.

Reason Why I Love the China Daily #235

Fri, 08 Jul 2011 07:21:00 -0400

Reason Why I Love the China Daily #235:

An announcement that 31 brands of water have been recalled for bacterial contamination without a corresponding list of those 31 brands. It just underscores the extent to which eating anything in China is a game of Russian Roulette. People take for granted that any number of things might be tainted, chemically infused, poisonous or even explosive. Some folks will share their hints of how to choose what to consumer - never trust fruit, I’ve been advised, that’s conspicuously large, brightly and/or evenly colored and out of season. I was at a banquette where people were raving about how brilliantly red the watermelon was, and I discretely threw my piece under the table. It was only the week before that a batch of hormonally enhanced watermelons had spontaneously combusted in a market.

Stigma and the Market

Tue, 28 Jun 2011 00:30:52 -0400

When I was living in New York City there was an announced illegal immigrant strike, which never came to fruition. And it was a good thing, too, because if it wasn’t for illegal labor NYC would starve to death. Every part of the food chain, from people picking crops in the fields, to warehouse workers, stock boys at the local bodega and kitchen staff at restaurants are undocumented migrants. How is it that something that is formally illegal is so central to the United States economy?

Undocumented migrants are allowed to exist in a liminal area somewhat allowed, but not legal– as the Chinese say of the police, opening one eye, while closing the other – to create a structurally exploitable workforce. They’re people who can work long hours doing difficult labor which exposes them to hazardous pesticides for little money, because that’s the only niche open to them. Race and nationality are used to create a social class.

Which makes what’s been happening in Georgia so interesting. When the state passed legislation cracking down harshly undocumented labor, migrants left the state. This left a shortage of 11,000 workers, and the threat of millions of dollars of food rotting in the fields.

What does this tell us about the labor market? In a state with an unemployment rate approaching 10% it should not, presumably, be difficult to find people to work the fields. If workers don’t want to do it for the wages offered, one would expect the invisible hand of the market to step in and raise wages to a level where people would be willing to sell their labor. This might, of course, raise the price of produce to the point where it isn’t competitive with other states where undocumented labor is (unofficially) allowed, or other countries. But in a free market economy, that would, of course, be allowed.

That doesn’t seem to have happened. And, as this article suggests, farmers have moved on to another stigmatized population – ex-felons – who are structurally discriminated against in employment and are thus easy to exploit. Even then, the prospect of crops rotting in the field looms in the near future – unless the state does something to intervene.

And this perfectly illustrates the social embeddedness of markets – the intersection of race, social stigma, labor and the state that is necessary for getting produce at a price lower than “pure economic” phenomena of supply and demand meeting at an equilibrium could.

Learning Has its Uses

Tue, 21 Jun 2011 00:53:14 -0400

After last night’s kung fu class I went to my usual hole in the wall restaurant around the corner from the school for dinner. 9 times out of 10 there’s a group of loud drunk people dwelling over the end of a long dinner – which is to say that its a normal neighborhood restaurant in Beijing. Loud drunken dinner conversation is something that, once you’re in Beijing for over a week, fades into the general background din of the city, with the second hand smoke, smog and car horns. I’ve gotten to the point where I find it quite relaxing, and use recordings of people drunkenly shouting for the waitress to bring them more beer when I have trouble sleeping － the same way some people use recordings of waterfalls and crashing waves.

This night, rather than a group of loud drunken men, there was a group of loud drunken women. Really drunk - two of them had already passed out on the table, and the others were sloppily chomping on post-meal cucumbers while finishing their beers. The general consensus at the table was that I was handsome. Apparently. And that one of them should talk to me. (I say that not to stroke my ego, but to illustrate just how drunk they were – after a couple of hours of flailing around in the 90 degree heat, I was a disheveled sweaty mess.)

I stared at my book, trying to ignore their conversation about me, and hoping that nobody too each other up on the dares to go over and strike up a conversation. But, alas, one of them finally did.

“What’s that, an iPad?”

“No, its an ebook”

“What are you reading?”

“US Congressional reports about US China trade policy. Its actually really interesting, lots of economists disagreeing about the long term effects of US China trade on America’s economic growth…”

I’m pretty sure that my attempt to explain Ricardo to her was pretty horrible – considering that my economics is even worse than my Mandarin – but it got the job done. She excused herself, walked back to her friends and said, “He speaks really good Chinese, but I didn’t understand a word he said.”

And so it begins - the next round of virulent anti-China...

Mon, 20 Jun 2011 23:33:18 -0400

And so it begins - the next round of virulent anti-China campaign ads of the season. I’m impressed that this one manages to combine Orientalist stereotypes of sneaky Chinese with suggestions that Obama is anti-American. I’m just waiting for the John Huntsman as Manchurian Candidate ads start coming out.

(Via TPM)

Reconsidering Free Trade?

Mon, 20 Jun 2011 05:39:09 -0400

Grad school is full of moments of clarity when you realize just how far from being a normal human being you’ve become. One recent one for me was when I reacted to finding congressional testimony on China’s 12^th Five Year Plan by shouting out “Dude!” and then spent my saturday night devouring it. There are a fair number of congressional inquiries on China, that are really useful – they get experts on various fields, like legal reform, who write brief reports geared towards the intelligence of your average congressman.

Ralph E. Gomory’s testimony is fairly interesting – it jibes with his paper with economist William J Baumol on US China trade, which argues that the development of China’s productive capacity will, in the long run, be harmful to the United States. What’s interesting is that it does so on the basis of Ricardo’s theory of comparative advantage, which is usually used to argue for the benefits of free trade. The general gist of it is that while Ricardo’s theory holds that nations pursuing industries which they have comparative advantage in (things they do better than other nations) and trading for those things that other nations do better, the process of trade helps nations develop their comparative advantages in other areas. So China’s development of low value added manufacturing will, in the long run, help it develop a comparative advantage in high value added manufacturing, research and development, and other areas where the US has a comparative advantage today.

I’m not familiar enough with economics to know if this is anything revolutionary, but its good to see economists come to realizations that Marxists have taken as common sense for a half century or so – that the ways in which individual nations are integrated into a global economic system makes free trade benefit some at the expense of others. World Systems Theory and Dependency Theory hold that the relative productive levels of trading partners relegate some to benefit less (or be actively harmed) by trade. These theories focus on the methods through which dominant nations ensure that they maintain their dominance. Gomory, on the other hand, argues the transfer of information (e.g. technical know how) in sourcing production in non-dominant states can lead them to rise to dominance.

Some points that Gomory makes are:

Free trade will ultimately be harmful to the US economy for the above reasons as Chinese state politices lead Chinese industries to increase their productive capacities through interactions with multi-national firms.
US corporations pursue strategies that are harmful to the US’ long term interests because they’re focused on the short term gains they get from sourcing manufacturing in low cost countries.
Congress pursues policies harmful to the US’ long term economic interests because of the lobbying and campaign contributions of corporations, and because they rely on corporate and financial elites for advice.
In the long term this will lead to a situation in the US with a small upper class and large lower class.

That this is coming from someone with a background in corporations and busines schools is intriguing. I wouldn’t expect it to be the last word, though. There are significant social and environmental pressures that could easily restrict Chinese industries’ abilities to effect such a transformation. At the same time, raises in wages and manufacturing costs in China are causing it to loose some of its comparative advantage in low value added manufacturing before it has developed a significant basis of high value added manufacturing or service economy to compensate. But again, I’m not an economist, so take that with a grain of salt.

It was all an (en)lai

Sat, 18 Jun 2011 11:40:40 -0400

So, the famous Zhou Enlai quote about his opinion of the French Revolution, “It is too soon to say,” has been debunked as a mistranslation - he thought he was being asked about the 1968 student uprisings in Paris, and not the 1789 Revolution. I’m disappointed. Some have taken the popularity of the quote to reflect an orientalist view of the long term perspective “Chinese wisdom.” I always assumed that he was suggesting that, in spite of their - at that point still recent - colonial misadventures in Vietnam and Algeria, the French might eventually get their act together and attain some level of civilization.

Well, in spite of that, he’s still got some of the better one-liners in the Chinese Communist Party. His come back to Kruschiev’s pointing out that, while Zhou was born wealthy, Kruschiev came from the peasant class - “Each of us is a traitor to his class.” is, while no Dorothy Parker, still pretty slick. And, lets face it, he is the hunk of the Chinese Revolutionary vanguard.

I Love the Foreign Corrupt Practices Act

Fri, 17 Jun 2011 01:43:00 -0400

I love the Foreign Corrupt Practices Act – even more so now that I’m about to violate it. I think that I’m alone on this one – it seems like its the bane of many a US Corporation doing business in China (and if not, it should be). The act makes it illegal for a representative of a US firm (or a firm with significant standing in the US, which presumably includes Chinese firms listed on US stock exchanges) to bribe a public official abroad - that is, to offer “anything of value” in exchange for a business advantage. (For a discussion of this by actual lawyers, see the always excellent China Law Blog and this WSJ blog post). There are two problems that US firms encounter in trying to follow the FCPA in China. The first surrounds what bribery consists of, the the second consists of who can be considered a public official.

At first glance, what a bribe is seems fairly straightforward. You had a government official an envelope full of $100 bills and they do what you ask of them. But what about buying someone dinner? A lot of business in China gets conducted over banquets (Although the one’s I’ve attended generally don’t actually consist of talking business, but are the socializing after we’ve been locked in a meeting room for 10 hours. They are, however, considered essential to sealing a deal.). Who pays for the dinner depends on the dynamics of the relationship that you have or are trying to create. So, does a Western firm trying to court a Chinese SOE as a potential client take executives out to dinner? Present them with a gift or two? Things that are regarded as “customary and non-extravagant” expenses are considered Kosher by some lawyers, whereas others advise avoiding anything even appearing like a gift. There is no lower limit to the “anything of value” standard, and you won’t know if you’re going to be prosecuted for violating the law until you do (Although, up until now, most prosecutions have been for blatant, cash in an envelope bribery.)

My sense from talking to folks is that there is a gradient of corruption in China, from calling in a favor to a friend with connections (people’s opinions of which tend to vary with the extent to which they have friends with connections) to straight up handing around bundles of cash. In all of this, buying dinner and giving gifts doesn’t, as far as I can tell, get counted in the same category – its just “How to Win Friends and Influence People.” It is similar to the difference between paying for dinner on a date and paying for sex with a prostitute – both are exchanges through which you attempt to curry the favor of someone else, but most people (or at least those with healthy attitudes towards relationships) would consider them as being two entirely different kinds of interactions. But it could easily be considered illegal under the FCPA.

And what about “road pay” for journalists? It is standard to give journalists 200-300 RMB “travel expenses” for showing up to a press conference. That guarantees their attendance, but not that they will actually write anything up about it (which, if you’re not a compelling news story, costs more). PR professionals that I’ve talked to do not consider paying journalists travel expenses to be bribery. A Western PR professional that I spoke with went on at length about the high ethical standards he tries to get his clients to adhere to – which included not paying journalists for good coverage, or to axe negative stories. At the end of the rather lengthy discussion he concluded, “But if we’re talking about giving journalists 200RMB so that they’ll show up to a press conference, that’s just common sense.” And journalists I’ve spoken with do not consider it dishonest either – they’re underpaid and have an abundance of press conferences that they could go to – why not pick the ones that will pay them for their time? And since you cannot get news coverage without it, presumably every American company in China does it. (My research institute gave me 200RMB for showing up to a conference, which I thought was great at first, but listening to economics papers for $3 and hour isn’t that good a deal.)

This is a real consideration because China’s media landscape is dominated by State Owned Enterprises (SOEs), the People’s Daily, the Global Times, CCTV - which brings us to the second question. Its who consists of a public official that makes it the FCPA really interesting or frustrating, depending if you’re doing business in China or just watching from the sidelines. The state seems like a straightforward entity with clearly delineated boundaries – if your paycheck comes from the government, you’re in it, and if not you’re, well, not. But there are plenty of moments where this clarity breaks down, and its impossible to tell who is or is not the state. And it is differing definitions of the state within the “Chinese characteristics” of the market that makes the FCPA dangerous for US firms - as the Justice Department has decided that SOE employees are public officials.

Anthropologists who talk about the state frequently use the concept of performance to describe state power. Discussion the state as a performance attempts to draw out that the state is not a thing that does stuff, but is an effect that arises within interactions between people – state power is made real through the use of specific gestures, genres of speech and symbols. When I was crossing the border into China yesterday afternoon a man with a blue uniform and a badge said “Sir come with me please” in a strong and confident voice. I then walked into Luohu market in Shenzhen, where dozens of people said, “Sir, come with me,” and without thinking I instantly know it was safe to ignore the latter but not the former. (Well, I did walk away when the border cop turned his head, but I’m pretty sure he was talking to the person behind me.). That difference – and the extent to which you don’t need to think about it – demonstrates how the state is made real in specific encounters.

The difficulties of following the FCPA point to the extent to which the boundaries between State and non-state can become blurry. In China, the boundaries between the state and the market are convoluted and changing. The most obvious example of this are State Owned Enterprises that remain from the socialist period, when all large scale production and services were integrated into state bureaucracies. While many SOEs have been split up and privatized, there remains a financial system where state run banks funnel money into different semi-private and private entities in the form of loans that frequently become defaulted. One of the most visible sign of “the market” that American visitors to Beijing comment on are all of the high rise luxury apartment buildings – but a significant percentage of them are actually run by SOEs and financed by revenues from the central State (I’ve met people working for a seafood SOE based in Southern China who were in Beijing developing luxury real estate).

And there are state owned venture capital firms, that invest in private entities. Having spent time with employees of state owned venture capital firms, I can say that they do not have the trappings of state power. The ones that I have met were, for lack of a better word, fabulous – they hang out at the right clubs on Saturday night, being witty and interesting over scotch and champagne. (Presumably there are SOE VC employees that aren’t fabulous, but why would I be spending my Saturday nights with them?) When they talk about their work, they do so in language that is undistinguishable from other VCs I’ve met who work for non-state owned firms. When they talk about the Chinese state its from a position on the outside – while I’ve never asked, I’d be surprised if any of them consider themselves to be public officials.

If they invest in a private firm, does that make it a state entity? The clear answer to this question will come when some bureaucrat in the bowels of the US Justice Department decides to prosecute someone for attempting to influence them, or not. Until then all you are going to have is differing experiences of the state in a middle zone where the distinction between the state and the market breaks down. Where the everyday experience of the state contradicts institutional structures involving the flow of money and influence between state, quasi-state and non-state organizations that are largely invisible.

And how am I, a lowly grad student, going to violate the FCPA? I’m based at the Chinese Academy of Social Sciences, which is a state owned think tank. I’m going to take my advisor there out to dinner – and I might ask him to do things over the course of the meal involving his official duties. I’m doing so with revenue that comes from the United States (From a fellowship provided by a California State institution, no less). So, should this be the last post on my blog, you can assume that Eric Holder’s come knocking on my door…

Who am I? Why This Blog?

Thu, 16 Jun 2011 23:28:47 -0400

I am a grad student in Anthropology at UC Santa Cruz, currently doing research into marketing, branding and economic development in China. I’ve lived in China on and off (more off than on) since 1997. Before focusing on Capitalism at UCSC, I got a MA in Anthropology at Hunter College, where I researched the creation of the “Traditional Chinese Martial Arts” in Beijing and Shanghai in the early 20th Century, and in Late 20th Century New York City. I am currently a visiting scholar at the Chinese Academy of Social Sciences.

This blog is primarily to collect my thoughts about issues surrounding Capitalism, Economic Development and Contemporary China. I’m sure I’ll go off on tangents related to kung fu, philosophy, politics and all manner of things along the way. Bare with me.

Its called In Beijing for a couple of reasons. As an anthropologist going through grad school I had the idea that all speaking comes from a specific position, geographically, socially and culturally, drilled into my head enough that I can’t call my blog something grandiose like “Understanding China”. I have only one piece of the puzzle, and that’s all I can share with you - one that I hope is valuable, but is only one (small) piece of the puzzle. And that’s how my calligrapher friends sign their calligraphy… with their name, the year, and “In Beijing”.

Dorothy, the girl that I was seeing when I last lived in...

Wed, 10 Nov 2010 01:35:00 -0500

Dorothy, the girl that I was seeing when I last lived in Brooklyn worked in Per Se, one of the better restaurants in New York. To mark our leaving town – me for grad school in California, her for an orchestral festival in Switzerland – we went there for dinner. The price of the food was already pushing the limits of what I could pay, and I was suspicious of my chances of finding a $2 can of PBR on the drink list to wash things down. But when Dorothy explained to the manager that we might not be able to afford wine pairings, he said “You’re like family to us” and gave us drinks on the house. I’m pretty sure that, once you figure in the cost of booze, I made a decent profit on the meal.

Earlier that week the pastry chef had been making something with jackfruits, which Dorothy mistook for durians. When the chef said she hadn’t experienced durians first hand, Dorthy resolved to fix that – asking me to pick one up in Chinatown on my way over. Durians are notorious for their noxious smell – so much so that its illegal to open them up in public in Singapore, and I’m told its not uncommon to see signs in hotels in Malaysia, banning them. And it hit me, as I stepped out of the columbus square subway station, that I was bringing something who’s smell has been compaired to rotting flesh (unfavorably at that) into one of the classiest restaurants in town. When I handed it to the manager I advised him, “Make sure there aren’t any paying customers in the house when she opens that thing up.”

“Why not?”

“It has a very distinctive smell…”

A cafe around the corner from where I just moved had a sign advertising durian cheesecake. It caught my eye as I walked past on my way to the subway, and I resolved to go back and check in out. I’d had deep fried durians before – but that just tasted like deep fried anything (delicious). I figured durian cheesecake would either be amazing or poisonous and that I needed to experience it first hand either way.

But when I returned the sign was down, and I forgot exactly which cafe it was (and does the fact that there are a half dozen cafes that it could have been say something about how gentrified my neighborhood is?). When the sign returned, I went in that night to try a slice.

“So, this durian cheesecake… how is it?”

“Delicious”

“Really?”

“Yes”

“Do you promise?”

“Yes”

“Do you swear? I’ve heard those things smell like dead babies.”

“Yes, I swear. It doesn’t taste like dead babies.”

And it was the best cheesecake experience that I’ve ever had. Better than my mom’s homemade cheesecake I grew up eating, better than anything I’ve had at Juniors or Aunt Butchie’s, unfortunately not my actual aunt, but my favorite Brooklyn cheesecake shop. For the twenty minutes that I lingered over the cheesecake, and a pretty decent shot of espresso, I was in absolute bliss.

“So, how was it?” The waitress asked me when I was finished.

“If, right after I just finished eating that cheesecake, someone walked in here and shot me I wouldn’t mind at all.”

“ummm… thanks…”

I live in a hutong on the North side of the central slice of...

Sun, 07 Nov 2010 11:14:24 -0500

I live in a hutong on the North side of the central slice of Beijing that’s enclosed by the 2^nd Ring Road, which follows the old city walls. Its one of the last neighborhoods to be preserved from the endemic demolition and development that’s moved through Beijing knocking buildings down and leaving poorly built modern apartment blocks in its wake. While the city doesn’t allow development of the neighborhood, if the quality of the cars lining the alleys is any indication, they’re gentrifying pretty fast. Walking around the narrow alleyways, I feel vague sense of nostalgia for some idea of Old Beijing – which people have been waxing nostalgic for since at least the 1920s, and to which I can’t claim to have ever been. Perhaps I need that sense of an authentic past as a yardstick against which I can measure the weight of change that has come through this town since I first came here 13 years ago. Or maybe its just the reflexive romanticizing of both the youth that I spent here, and the strangeness of a foreign land.

Last night I discovered a shortcut through the hutongs that cuts the walk to one of my favorite bars in half. I like to think that I’ve thereby doubled the efficiency of my alcoholism. These are some pictures I took along my walk home, after a long existential conversation with an old friend. It was my second time in 10 years trying to explain Paul Tillich’s existential theology in Mandarin, and it went significantly better than the first.

I took a cab from the Beijing airport and the driver cursed...

Tue, 26 Oct 2010 10:58:14 -0400

I took a cab from the Beijing airport and the driver cursed nonstop for the hour it took for me to get into town. It started when he pulled up to the toll booth. Being midnight, there were only four cars in front of us – but that was clearly too much. “Fah-ke” he yelled.

“Huh, did he just say fuck?” I wonder until he removes all doubt by unleashing a barrage of expletives that I don’t have the time or energy to recreate here. A little bit down the road we passed a giant banner across the highway that said “说文明话做文明市民” “Speak in a Civilized Manner and Be a Civilized Citizen”

Pointing to it, I asked, “Are you being a civilized citizen?”

“I’m not going to stop cursing because I read it on a stupid fucking sign.” Fair enough.

Whether they’re reminding you to speak in a civilized manner, to support the census or not to casually spit all over the place, Beijing is covered with signs asking you to regulate your behavior for the good of China. By far my favorite is this one, which you can find posted over every urinals in public bathrooms across China. “One Small Step Forward is One Giant Step Towards Civilization”. I generally try to avoid peeing on the floor just out of common curtsey, but now that I’m advancing civilization I feel like I’m accomplishing something.

I find establishing that you have nothing to loose is essential...

Sun, 24 Oct 2010 16:25:00 -0400

I find establishing that you have nothing to loose is essential to successfully navigating any retail interaction more complicated than buying a bagel or asking in which aisle you can find the oven cleaner. However, having worked a wide range of retail jobs I feel threatening low level employees with physical violence is both distasteful and counterproductive. (In all the times that I’ve been threatened with death in the course of my work day, my immediate reaction has never been to be more diligent in carrying out my job.) The best way around this is to, instead of threatening to kill the employee in question, suggesting that he kill you if it would be easier and less time consuming than whatever task is at hand. When the guy at the Apple Genius bar tells you, in Chinese, that you need to completely reinstall your operating system, for example, you might start out by, in your jet lag induced stupor, misunderstanding his disclaimer that “I might accidentally erase all of the data in your computer” and hear him telling you “I’m going to erase all of your data, do you agree that that’s a good idea?” “Why would you possibly want to do that?” Then, when he says again, in Mandarin so basic that even the obnoxious Midwestern tourist that’s been trying to nudge his way past you for the past hour can understand, “No I’m not trying to break your computer, I’m trying to fix it. We’re friends right? And as your friend I want to help you. In order to help you I need to…” you chime in with a helpful yet pathetic tone to your voice, “You can always just kill me if it would be more convenient for you.”

The most obvious way to punctuate this statement is to start banging your head repeatedly against the counter. While this is, indeed, dramatic it can knock other people’s computers onto the ground and tends to hurt. Its much easier to slump down onto the counter, slide off your stool and onto the floor, lying flaccidly as a crowd of folks on line to buy the iPhone 4 start to gather around you. The longer you stay motionless on the floor, the stronger the impression you will make, but you should probably stop playing possum before the security guards start performing CPR on you. Even someone highly skilled in CPR will break a rib or sternum, and the security guys lurking around the edges of the Apple store in poorly fitting black suits don’t look like they’ve had EMS training. At that point, if my experience is any guide, the Genius Bar attendant will suggest that you go out, walk around, get some fresh air or maybe have a drink and come back in an hour when it will all be done. As the Apple Store is within spitting distance of dozens of cheap bars you can get in a quick jog and several shots of bourbon before returning to pick up your newly fixed MacBook.

Hurry Up and Wait

Sat, 02 Oct 2010 03:49:46 -0400

I’ve spent the past year running around like a chicken with its head cut off, applying for grants, working on my qualifying exams, teaching, doing classwork, organizing a conference, moving, etc.. This summer was a final mad dash to finish my qualifying exams, while working out the details of my trip, TAing and packing. When I finished my oral exams, drove my advisor home to San Francisco and finally made it back to Santa Cruz I actually collapsed from exhaustion. Yesterday I finished packing, cleaned out my room and rushed up to my aunt and uncle’s house in the East Bay, unpacked my car into their garage and then rushed off to dinner at a friend’s house. (It was vegetarian mush night, which was surprisingly good). I only barely made it back to my aunt and uncle’s before passing out.

Today I had nothing to do. At all. I’m waiting on my Visa which -allegedly- will come on Tuesday. I have some things I could be working on, but nothing urgent. It reminded me of the Saturday after I handed in my MA thesis - it was a beautiful spring day and I spent it sitting on my bed watching TV, wondering what people do when they have nothing to do. In a couple of weeks I’ll be in Beijing, running around like a chicken with its head cut off, trying to balance my research project, practicing kung fu, various side projects that I’m going to get involved in and, perhaps, even a social life. I’m sure at that point 24 hours with nothing to accomplish will sound amazing. But for the next couple of weeks until I get to China, its pretty unbearable.

My camera remains packed away somewhere, so this pic a day thing will have to be put off for a spell.

Wherein I Only Last A Day...

Fri, 01 Oct 2010 02:49:19 -0400

When I started this blog (you know, yesterday) I wanted to get into the discipline of taking a picture and writing something about it every day. And I left my house this morning planning on doing just that - I was going to take a picture of my overflowing bookshelf in my office - complete with pots/pans, weights, martial arts weapons, boxes filled with non of your business, and, of course, plenty of books. And I was going to write a meditation about the tension between Anthropology as a field focused on the study of people, and graduate training in anthropology - which involves sitting on your ass, reading and not talking to anyone.

But the batteries were out on my camera, and I had already packed the other batteries and couldn’t find them. No problem, I figured, I can just snap a picture as I drive up to the East Bay. But I packed my camera and lost track of where I put it.

And now I’m sufficiently disheveled, ungroomed and exhausted from moving that I’d prefer not to take a picture of myself right now with my iCam. So, will this pic a day thing be added to the pile of things I just didn’t show follow through on?

Dunno…