Beijing entrepreneur Yu “Anna” Yuanyuan passed this week’s 60th anniversary of the founding of the People’s Republic of the China in the most patriotic way possible — trying to make money off Americans.
She said she’d ignore the goose-stepping People’s Liberation Army soldiers parading next to Tiananmen Square and ignore speeches extolling the glory of capitalism, known as “socialism with Chinese characteristics.”
Instead she said would be busy making sure all the dwindling number of American expats and businessmen still crowded around the bar she owns had full mugs of beer.
During the late ’90s, when I was a struggling writer in Beijing and Yu was a street-side souvenir hawker, we lived blocks from each other but never met.
Now, a decade later, I returned to my old Beijing neighborhood on a journalism fellowship to see firsthand China’s staggering economic expansion.
I took a break from endless meetings with bureaucrats and party functionaries to stroll through my old neighborhood in the northeast part of Beijing when I happened upon Yu’s place. Five years ago, the 37-year-old opened Café del Mar — a multistory complex of restaurants and stores that replaced a block of shabby eateries with names like Dog Meat King, where plates of braised canine ribs sold for a buck.
As Yu made small talk with me and other patrons, I realized she represents the unofficial bargain the ruling Chinese Communist Party has made with its people — leave the politics to us and we’ll give you a chance to get rich.
Yu migrated from Chinese Inner Mongolia in her 20s in search of a better life in Beijing. The Chinese government was encouraging its citizens to go into business for themselves and earn dollars.
Ten years ago she hawked cheap tourist tchokes outside the Lido Holiday Inn, once one of Beijing’s finest hotels. For years she lived frugally. She banked every yuan she extracted from the ceaseless haggling with foreigners.
Like Yu, China as a whole over the past decade evolved from being desperate for foreign cash to be stuck in a situation where it is all too entirely reliant on it. Yu’s entire economic life revolves around foreigners — a strategy once encouraged by the government but now deeply problematic.
China survived the Asian Financial Crisis of 1997 and 1998 relatively unscathed compared to its Southeast Asian neighbors. The key to their survival, it’s now recognized, was Beijing deliberately ignoring world economists’ advice to let the renminbi, also known as yuan or People’s Money, float. It remained pegged at the dollar.
Just as importantly, Beijing learned that huge foreign currency reserves, specifically US dollars, is an excellent defense against future economic troubles. Currently Beijing is sitting on a staggering $776.4 billion in US Treasuries. That’s up from $180 billion in 2004 and a seemingly paltry $50 billion in 2001.
Not only did this move hedge against the future but funded the massive American buying spree of Chinese products.
In 1999 US imports of Chinese goods was $81.8 billion. Last year it was $337.8 billion — a fifth of the country’s total experts.
But this has created it’s own headache for the relationship because China is just as dependent on US purchases of its exports as the US is on Chinese loans.
Indeed, an estimated 50 to 60 million Chinese jobs are directly dependent on exports to the US, according to James Bianco, president of Bianco Research in Chicago. This is an economy that needs to create 25 million new jobs a year to keep its increasingly restive population employed.
Beijing is clearly worried about keeping everyone employed. China’s Public Security Ministry reports tens of thousands of “mass incidents” or riots each year — mostly laid off workers furious that the government has broken their promise to keep them employed in exchange for obedience.
Now one of the biggest challenges for China is convincing its citizens to start consuming to make its economy less vulnerable to fluctuations in the US and the rest of the world.
Today Chinese private consumption, that is spending by the average Chinese citizen, accounts for just 36% of the country’s gross domestic product, according to a report by the McKinsey Global Institute. All the production is shipped overseas. By contrast, private consumption in the US is 71%.
Beijing’s priority is tapping its own market with a $586 billion stimulus plan, including $2.25 billion in subsidies for the average citizen to buy big-ticket items like refrigerators, washing machines, and televisions — all, of course, made in China.
As for Yu, these days she wants to talk about sports or fashion or the changes she’s making to her bar — any talk of politics bores Yu. Corruption in the government? She’ll shrug her shoulders and answer with the Chinese phrase “Zenme ban” meaning “What can one do?” She’s more interested in getting a better TV satellite hook-up, not for unfiltered news, but for more sports.
But that may change if things don’t turn around soon. An empty bar leaves a lot of time to question government policies.
That’s what worries the masters in Beijing — angry, empty-pocketed citizens with nothing to lose. After all, many revolutions have been born in taverns.
Post reporter Chuck Bennett is a 2009 East-West Center Hong Kong Journalism Fellow.