David Chaston was in China recently and offers ten perspectives on a rising power that will increasingly dominate how we see our place in the world

I have visited and spent a bit of time in many of the world’s top cities; ones that claim or used to claim that they were the centre of the world. (San Francisco, Sydney, Chicago, New York, Washington, London, Paris – you know, the usual places on a Kiwi’s itinerary).

But with Donald Trump’s serial habit of bad deal-making and foot-shooting, Washington (a truly wonderful city that is always worth visiting) is giving up its mantle. Its status is leaking away by the month.

It is not that others are making a new special effort to claim its position, but somewhere else is going to be anointed.

And that may well be Beijing.

I have spent the past week in this capital city, and I have been truly impressed. Like many other very large cities, it has its problems, some of them significant. But it also has assets, equally significant advantages that just seem to reinforce its position.

Much to my surprise, I came away thinking: "I could live here."

So here are 10 thoughts on what may soon become the world’s power centre.

1. Population

According to official city statistics, Beijing’s official urban population is 22 million in 2017. It was just 1.7 million in 1950 and that is the same amount it grew between 2015 and 2017, an +8.2% spurt. The same source indicates it will grow to 28 million by 2030 with the growth ‘slowing’ to +1% per year in the five years to 2030.

To a large extent, this is as expected. China is currently less than 50% urbanised, so as that level grows to Western benchmarks (+90% urban), it is only natural to expect their mega cities to expand, and Beijing as the capital will be no exception.

But all may not be quite as standard as the official estimates suggest. The location of this city imposes limits. It is here for an ancient reason about how it can be defended, but those attributes are no longer relevant. Modern constraints are kicking in.

Pollution control is changing official thought. What was achieved for the Olympic Games showed what is possible. Beijing is ridding itself of heavy industry, transforming itself into a service powerhouse based on IT. That requires far less people in basic industries that are being either closed outright as productivity standards render them past their use-by date, or shifted to other centres. Those workers are going with them, away.

The strong suggestion is that Beijing may already be near its peak population. I heard it suggested that growth may already have vanished. Having said that, some sectors are still very strong, especially those around education. This is China’s education centre – reinforced recently by the rising TLS rankings of the city’s top universities going up (as Auckland University goes down).

Big recent changes like this are transformational. Beijing is not the city it was just five years ago. It will be even more different – and stronger – in another five years. Official policies are changing the population mix in powerful ways.

2. Demographics / age

If demographics are destiny, Beijing has real destiny. The overwhelming takeaway from my week+ here is how young the people in the streets and on the subway, are.

That is true for China as a whole, too.

It may be an ancient society, but in 2017 it is young, very young.

The relaxing of the one-child policy is having only a minor impact. The young are all from one child families and that is what they know. An urbanised society doesn’t need extra family labour for farming. Besides Chinese farming is adopting productivity aids fast. The other traditional reason for a large family is for social security. But that is changing too.

China as a country is like an adolescent. It thinks it knows more than it does. But just like all adolescents, it is growing up, maturing. And with that comes an expectation of services and a growing social safety net. It is not yet all in place in a way we might recognise, but it is happening.

So young couples are staying with one child. And a key reason is that they are well educated and career focussed. These families are very aware that their new and improved lifestyles need good incomes. And children cost a lot of money, especially for the princeling standards they were brought up in and it is these, and better, standards they want for their children. Parents here are just like those the world over, they want the best for their kids. Most couples will still just have one.

There is an official fear that China may grow old before it grows rich. But that is hard to see in Beijing. Besides, a simple look at Japan shows that you can grow old and stay rich. Technology is changing the way wealth is shared and how ageing populations can still access better-standard care.

China will be no exception to the West’s (and Japan / Korea’s) experience. Yes, people will live longer but the will work longer too because work is not so physically draining. And new ways to deliver services will respond to the demands of an ageing population. The people will keep the system honest.

It is too easy to use the standards of the 1980s to foresee problems in the 2030s. But those linkage are no longer relevant.

3. Traffic

The adolescent nature of Beijing is most obvious on the streets and the way people respond to population and traffic density.

You can’t own a car in Beijing unless you have an official number plate. And there is a tough, tough lottery in place to get one. I know people here who have been in the plate lottery for five years and still haven’t ‘won’ a chance to apply.

Despite that, the roads are full, mostly with cars with Beijing plates. (it is not legal to drive in this city without Beijing plates and that is mostly respected.)

There are even issues working in the city without residency papers (less respect for these, but if you get in trouble, this lack can hurt).

The streets are full-on by New Zealand standards. You need to be brave to cross the street even at crossing lights. People on scooters and bikes dart everywhere, even against the traffic flow. And cars, bikes and pedestrians press ahead no matter. You can’t be on the road without paying full attention all the time.

And even among all this, on the streets, on the subway, in the airports, people respected each other and their personal space.

As part of the official way to limit the crush, Beijing City has a carless day policy, respected because the penalties are tough. One fifth of most private cars are off the road each weekday (based on number plate digits).  But these rules don’t apply on weekends, so everyone is out those two days. The consequences are that there is no respite on Saturday or Sunday.

4. Subway

Because Beijing is flat, it has been laid out in a grid pattern since it was formed in the early dynasties. That has helped how roads and the subway system have been developed. For this rail sceptic, it (like most other major city subway systems) is a pleasure to use.

All signs are subtitled in English, all train announcements are also repeated in English. The system is vast and new, Olympic Games inspired.

And it is cheap. I used five separate lines, and no one-way ride (even ones that took 40 minutes) cost more than 5 yuan (about $1). Trains came every two minutes. They are fast, clean (very clean) and airconditioned. Station signage is easy to use.

I have no idea the level of subsidising, but the intense use must generate a strong revenue stream. It needs to; I used Line 10 a lot, the longest underground subway in the world. Overall the whole subway system handles 10 million passengers per day, using paperless fare systems. These systems cost about Y1 billion per km (NZ$200 million) and Line 10 alone is 57 km. Overall, there is over 570 kms of service. It has all been financed by debt from state-owned banks.

It is hard to see how a city of 22 million could function without this system. It is a very high standard system by international norms, with no obvious crime.

But a back-of-the-envelope calculation suggests that a system that cost NZ$100 billion to build (570 kms x Y1 billion/km), can hardly have its core construction debt being paid back after operating costs from revenues of Y50 million/day or Y18 billion per year (NZ$4.5 billion).

They are hooked into debt and subsidies forever now. Writeoffs are inevitable. Not that you would notice by riding. It is a marvel. Someone else is paying. It helps that this is a command economy that can push those costs on to others in the future. Perhaps inflation will help.

Beijing is the Capital. It has privileges.

But you have to wonder: does an efficient, less-than-cost-to-ride transit system just enable growth and density, or is it rather a normal city management response to growth, justified by density? I suspect the former; it’s a growth enabler in Beijing, allowing it to be much, much bigger that it would be without it. It causes other infrastructure demands, like for the water supply.

5. Weather and air quality

I was here in early September. It was very balmy, bearably hot during the day without being too humid, stunning in the evenings and night. That is, high 20s, low 30s during the day, low 20s after sundown.

It is not always like this; apparently September is the City’s best time of year. It comes after much higher temperatures and the rainy season, and before winter sets in when it is positively arctic. If you like seasons and wide variability between them, this is your place. Skiing is a local favourite in winter; air-conditioning essential in summer.

That summer can be very smoggy, but wind and the rains can shift it. But the winters are when the smog really sets in. (Huge sandstorms out of the Inner Mongolian desert are apparently disturbingly frequent in summer pre- the rains. A bit like Adelaide and Melbourne can get.)

The smog I witnessed was light by the standards of some other cities I know (although heavy by Auckland standards). But only two of eight days had any noticeable haze – even though I did not really see a cloud in the sky. Most days were great. Must have been the time of the year.

6. Water and geography

Beijing is based in a dry northern plain. The northern mountains are steep and rugged and these helped this site to grow, defended by an elaborate wall system. Even today, it is impressive and easy to imagine how that defence worked for more than two millennia and many dynasties.

But the dry plain has always struggled with its water supply. That is true today and it was centuries ago. In the 5^th century BC (not a typo) Beijing authorities decided they had a water problem and started a huge canal building project to bring it from the south. The Grand Canal is a marvel, mostly gravity-fed, bringing water from both the giant Yellow and Yangtze Rivers on a south to north route, itself crossing many other rivers. It’s a UNESCO world heritage installation, all 1,775 kms. One lock was added in the 10^th century.

So, yes, Beijing’s infrastructure demands are large. But over thousands of years it has been able to cope. It is hard to conclude it is unsustainable.

It is a feature of most places I went to see, the liberal use of water.

That is not to say there aren’t issues; you don’t drink the tap water. It looks just like ours, but it is not. Then again, nobody here has ever drunk it straight (without boiling), probably for thousands of years.

And that centuries-old canal system is big. Find a picture; you will see that it is also used for shipping, especially in the southern section. And of course, it is now just one of three separate canal systems supplying Beijing.

7. Roaming and the Great Firewall

The great modern piece of infrastructure is the internet. Because the population is so young, everyone is connected on mobile. The American internet infrastructure is big and powerful, but the Chinese one is on an even bigger scale.

More than half of everyone I saw on the street, in shopping centres, on the subway, at tourist attractions, was actively using a mobile phone. The other half clearly had them. That is an enormous amount of bandwidth in permanent use.

The Chinese are fascinated with QR codes.

And the Government is very active trying to stay on top of what they see as security risks. It is a heroic effort on their part. They have banned VPNs recently. But realistically, you can just see they can’t win. Of the few locals I talked to about the issue, they laughed off the long-term effectiveness of The Great Firewall.

Apparently, there are already new techniques being widely circulated on how to stay connected to the internet outside the country, sans VPNs.

In my hotel, Google was blocked. Not great for me because I am 100% Android, so no Gmail, no Google Maps. But Microsoft’s Messenger worked flawlessly, as did Spark’s email.

But I wasn’t hampered that much. Google worked faultlessly via China Mobile and their roaming deal with Vodafone, all for $5/day (although watch the data download limits).

And my Teamviewer connection to the office never missed a beat on the hotel wifi, Google and all.

It was all just too easy to avoid The Great Firewall.

And Google itself is ignoring it. It may be officially blocked, but is has a large office here and in the last week announced it is hiring in Beijing aggressively. Google Maps was so up-to-date it was recording live traffic conditions. Impressive for a ‘blocked’ service.

8. GST / tipping / service charges

This is a place where services are abundant and service is highly competitive and very good. Maybe it is a holdover, or maybe some official rule, but no-one tips – which is internationally unusual.

But large institutions (and maybe some smaller ones) do add a ‘service fee’. Maybe that is because foreigners expect it? Or needed because posted prices aren’t always sustainable. I had a meal with a friend that cost just Y88 for two (less than NZ$20), and it was in an upmarket location, and a very fine meal too. No ‘service fee’ there, but given the quality of what we had, the time it took, and the attentive service, I wouldn’t have objected to another 10%. Apparently it was a Groupon-type special.

And that included Chinese GST/VAT, which is generally 6%.

9. Police and security

Police, the PLA, and other security are everywhere. I was ‘warned’ to expect it. Police are on most major street corners, security is at every subway station, there seem to be monitors at the top and bottom of most busy escalators.

In Tiananmen Square, PLA soldiers in uniform are ubiquitous. As are plain-clothed police, recognisable by their official belt buckles, but nothing else. The soldiers are in pairs, standing at their station, with a riot shield and two canisters. The canisters are clearly fire extinguishers because there is a history of immolation protests in the Square.

Having said all that, the numbers of people visiting is enormous; many 100,000s per day. It is a space that can take relentless crowds like that. And given that enormity, it just seemed reasonable that there would be proper security.

In or out of uniform they keep a situation that just seemed safe.

None of the soldiers seemed threatening; they seemed like students in uniform. I don’t doubt there are hard men in charge. But from what I saw, you could just imagine a young student-in-uniform driving a tank in 1989 facing a young lone student protestor on the street in front of him, and no matter who barked orders at him, he wouldn’t run the protestor down in cold blood. No doubt both young men ‘disappeared’ back then and both paid for their entirely human reactions. But today you can be sure both soldier and student would be even more familiar with the reasons for any protest. However, given the trouncing the students took that fateful day, I personally doubt we will see that type of street protest again in the same venue. The internet will organise something quite different next time.

10. Debt / foreign assets / currency

It is a favourite Western viewpoint to claim the Chinese currency is built on a house of debt-based cards. Such thinking has led some wealthy investors to short the Chinese yuan. But they are coming unstitched in a big way.

The yuan is strengthening, not weakening. China’s foreign currency reserves did slip toward US$3 trillion, but they are growing again.

That short bet can’t be maintained forever (those investors have been calling the ‘end’ now for more than seven years) and even billionaires are throwing in their hand.

I think that what they missed is the transition from a factory economy to a service economy. They also misinterpreted-interpreted the power and speed of the demographic shift and how far the rural-urban migration has yet to go. They may have also missed the impact rising education is having.

They most certainly forgot about the other side of the CNY/USD valuation. The Trump effect corroding the value of the greenback.

China is here to stay. Its financial situation will be a consequence of the drive of its people. The international repercussions will be felt for generations, not just years.

That is not to say I am happy about their politics. Or comfortable about their new role as a superpower, especially as it presses on New Zealand and our choices. But we will need to figure out a way to live with this new adolescent gorilla. And remember, it will grow up, probably in our lifetimes.

We will need to be savvy about how we handle ourselves with them. I don’t think we should compromise much at all, but we will need to make some difficult choices at some stage. The best way to think about this is to realise we are tiny, practically unnoticed in Beijing. Our positions are inconsequential to them (unless we are stupid about how we respond).

We have the advantage of size and nimbleness. And we must use it.

But for Kiwis to be cool about our relationship, we need to put more effort in Understanding China. Euro-centric white-man-knows-best and incipient casual racism attitudes from middle New Zealand will undermine any smart positioning our Government does.

China is growing up; part of New Zealand will need to as well.