Small Things Which Say A Lot

For a long time, I have been telling my friends that China is not going to use its foreign exchange reserves to bail out the US and the rest of the world. Aside from the fact that China does not feel like a superpower, it is becoming apparent with each passing day that China has very real problems of its own, and is going to have use its own reserves to help itself.

Another popular argument is that the newly rich Chinese consumers will go out and spend their yuan, helping the newly poor west out of its self-made predicament.

I have a few stories to tell you which make me doubt this.

Recently, at an apartment in Beijing, I went out to take the garbage, which is in the common area of the building near the elevators. Shortly after going into this area, I noticed that the only lights in the area, which has no windows, were two low-energy consumption bulbs on the other side of the area. Nothing else was on except for those two bulbs, including the stairwell, which was completely black and did not have any lights on. Obviously, the building management company, in an effort to save electricity, had turned off the lights to less than what I would consider safe.

So these are the same guys who are going to bail out western consumers from their problems? Hmmm….

Anyone who has stayed in China for any length of time will find small cards which have a photo of an attractive young woman smiling prettily, with a rate card and mobile phone number on the back. On these cards, the young woman will offer “massage services” with services called 西班牙骑士 and 综合保健 offered. Sometimes the cards mention that the young woman is a university student.

Now, what caught my attention recently was that their rates had gone down! The most expensive package 综合保健 or Total Healthcare Package had gone down from 398 yuan to 298 yuan. My guess is that the market was pulling back, and these young women were asking for less, at least according to my completely informal China Masseuse Index.

Then yesterday I flew from Beijing to Shenzhen. On arrival at Shenzhen airport, I took a small 20+ person bus to downtown Shenzhen. During the ride, as we were going downhill, I noticed that the bus mysteriously went silent. Then, it occurred to me that the bus driver had turned off the engine to save gasoline/petrol costs and was coasting downhill until we reached the toll booth. After we reached the toll booth, he restarted the engine, and we were on our way.

Taken in isolation, I would have said that each would at most, have been an interesting and amusing anomaly. Taken together, they paint a picture of a society which is indeed worried about the future, and is doing its best to cut expenses.

So that, from the street, is my reasoning for thinking why China will not help the west. It has too many problems of its own.

UPDATE: Caijing, the leading economics and business magazine in China, has a short report which supports my observations about falling energy demand from Chinese consumers. (h/t to Bill Bishop)

9 Responses to “Small Things Which Say A Lot”

  1. Uln says:

    Yes, Chinese like to save money. It is a trait of character, and it will not change now just because World economy needs more consumers.

    The Chinese were already saving money when their economy was booming, how does it make sense to expect them to spend more now that they are worried about the crisis? China will not help the World, at least not in this way. It will have enough trouble already to take care of itself in 09.

  2. Gen Kanai says:

    Fascinating to hear these stories directly. That said, while the small signs point in one direction, the large signs point in the same direction, so clearly China will have a hard time managing through this global economic meltdown if no one can buy the products that China Inc. is capable of producing.

  3. Falen says:

    I have no idea where this “China bail out the world” meme came from… it’s freaking silly and retarded… I mean even if China were not having any problem it was never going to bail anybody out except using the money for itself.

    So some pundit start saying that “Wow China have so much money around, they can bail out the world” and then later turns around “no they can’t” and that makes it news? I don’t recall Chinese government ever saying anything about “bailing out the world”.

  4. PBX says:

    You’ve hit the nail on that one Falen. Although I think it served just as much for political purposes. Start the meme, if China delivers then good, if China doesn’t commit use that non-commitment to mitigate responsibility and shore up political points back home for the trouble ahead.

  5. Renaud says:

    I live in Shenzhen… I also noticed for the busses: they often push the engine and then let it go forward with its own momentum for a minute. But usually the cards slipped below the door show one girl on each side, so there is no space for rates… How do you know the prices, did you call? ;-)
    MORE TO THE POINT, the Chinese are now understanding that they have a stake in Western economies’ well-being (they have so much in US Treasury bonds and they sell so much to the West). Just like the OPEC countries after they had purchased so much in Western stock and real estate.

    • admin says:

      No. Forgot to mention that the gals print their rates along with the “service” on their cards.

      I doubt that the Chinese thought through the dependency on western economies. In my opinion, the party and government were just bent on the fastest development and amassing of foreign currency reserves. Now they know what that means, and the picture is not going to be pretty.

  6. […] hurt China much more the United States.  Paul Denlinger, at China Vortex, wrote about some of the small but telling signs of economic hardship that he’s seen.  Peking Duck wrote about the shattered dreams of […]

  7. I believe I have always seen bus drivers do this trick ever since I came to China. Just like they pack busses as full as possible to earn more money. I’m glad I can take the company shuttle bus in the morning and don’t have to join the crowds.

  8. I’ve noticed that with buses too. Not just going downhill but when they are stopped at red lights. Before I thought it was engine problems. :P