What is Capitalism but a way of life for many who want to get rich. Communism gets a bad rap for its ability to stifle innovation and effort. However, when you look at Communist China, growing at 7-9% GDP per year, do you really think its citizens have no desire to improve their living standards beyond what is generally proposed?
We all have an inherent nature of wanting to do better. Not only do we want to continue improving, we also want to one-up our peers! After all, what’s the point of making $100,000 dollars a year if everybody else makes the same?
We learned a good amount about how the happiest people on Earth live after my 2.5 week trip to Scandinavia. So, I decided to take a trip to Chongqing, one of the fastest growing cities in China to learn more.
THE CHONGQING FIREBALL
Chongqing is known as one of the “Three Furnaces” of the Yangtze River because temperatures frequently get into the mid 90s. We’re talking muggy, suffocating, scorching heat during the summer months. The heat is way worse than the “armpit states” of America for sure. Wuhan and Nanjing are the other two “furnaces.”
The first thing I asked the cab driver when I arrived was how his life has improved over the years. I thought he’d be ecstatic, given Chongqing has been growing at a double digit rate for the past decade. Instead, he was bitter.
“Yes, my income has grown by 30% a year, every year for the past five years. But, I am still a cab driver! Everybody around me is making just as much, if not much more,” he explained.
“What about living conditions? Surely, they are better now?” I asked.
“The government has decided to build these massive high rises for all of us. Yes, at least we have air conditioning during our hot summers, but the space is cramped. Furthermore, food prices have risen by 30-40% a year recently, especially pork prices. We’re all richer, but we’re all still the same!”
He went on to say, “During the Cultural Revolution, my parents went off to the countryside. They didn’t believe in helping me further my education, so I didn’t go to college. Here I am, decades later driving a cab. This is all I know how to do, and this is all I will ever do until I die.”
By the time we got to my hotel, the cab driver was flustered beyond belief. I thought he was going to have an aneurysm as he complained on and on about how hard it is to get ahead. I empathized with him through the smog and the eight million city residents who seemed to have no regard for traffic signs. All you notice when driving into Chongqing are the construction cranes everywhere.
My cab driver’s personality matched the climate – fiery!
FOOD TO DIARRHEA FOR
Chongqing is famous for its hot pot cuisine. We’re not just talking temperature hot, but spicy hot chili infused hot that will burn your intestines from the inside out. I love spicy food in the beginning, but I almost never enjoy spicy food in the end!
Living in America for the past two decades has made my body soft. Too many ice cream sandwiches, donuts, and lemon meringue pies I must admit. As a result, there is no more lining as thick as an elephant’s rump to protect me from harm.
After eating what seemed like a buffet of chili oil, I almost died the next day as I pissed out of both ends. The hot cold sweats beaded over my forehead as I dared not stray more than five feet away from the bathroom. Thank goodness China has largely done away with squat toilets, unlike when I first visited in 1997. Holy hell my legs had a workout.
Only after I became sick did my friends tell me to be careful of the Chongqing chili oil. Thanks guys! Duly noted for the next time I visit.
My tour guide said, “Our food is as hot as our souls. We will do everything possible to take advantage of this economic transformation to get ahead!” I believed him.
THE YANGTZE RIVER OF COMMERCE
The Yangtze River, also known as Chang Jiang is the third longest river in the world at 3,988 miles. The water comes from the glaciers on the Qinghai-Tibet Plateau in Qinghai, flows eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai.
At the eastern point of Chongqing, you can stand and watch the Jialing River and the Yangtze River collide. It’s quite peculiar to see water flow in opposite directions, eventually combining to become one great force.
If you can’t tell by now, the Yangtze and Jialing Rivers are nothing like the crystal blue waters of the Bahamas. The rivers churn tremendous amounts of mud and pollution as they pass some of the world’s most industrial cities. I stood at the edge of a cliff looking down in amazement until I finally started to feel sick again due to the 98 degree heat and remnants of chili oil oozing out of my pores.
“The Yangtze River is our pride and joy. It allows Chongqing to be a major manufacturing centre and transportation center for Southwest China,” explained my guide.
THE DESIRE FOR MORE
With a per capita GDP of roughly US$5,500, Chongqing ranks 13th among all Chinese cities. The top three are Tianjin, Shanghai, and Beijing with per capita GDP levels of around US$12,500-$13,500. In other words, in order to catch up with China’s biggest cities, Chongqing has to triple its income.
Imagine a 3X income differential for those who live in the Midwest vs. those who live in San Francisco, Los Angeles, and New York City. Actually, this is not hard to imagine at all as it takes over $150,000 a year in San Francisco to afford similar luxuries as someone earning $50,000 living in Des Moines.
I’ve got several friends who live in Middle America who want to make more money. When I ask them why not just move to parts of the country where the economy is booming, they tell me they can’t leave their families behind. They also tell me they find housing prices to be outrageous in booming cities, not thinking that it’s because incomes are “outrageous” and quality of life is “outrageously better” that leads to higher costs. It’s weird how in a day of buses, trains, and planes, folks aren’t willing to buy a ticket to a better life.
In Chongqing, residents are also hesitant to move to the coastal cities of Shanghai, Beijing, Shenzhen, and Guangzhou as well. But, it’s not because they don’t want to get on a train or a plane. They don’t want to move because Chongqing is growing at a much faster rate than its coastal city sisters. They don’t have to move! Whereas if you are part of a dying textile or auto manufacturing industry in Michigan, it might be best to develop some new skills and reinvent yourself in another part of the country. Easier said than done of course.
“Sam, I love it hear in Chongqing. In the next 10 years, we are going to be a powerhouse and the envy of all of China!” explained my guide. I’m sure the residents of Chongqing will grow wealthier. I’m just not sure foreigners will envy the heat and pollution.
COMMUNISM IS DISAPPEARING
Many will argue that China is more capitalistic than America, especially since China has a massive capital account surplus. America on the other hand, has a current account deficit plus a growing budget deficit thanks to unrestrained government spending. The American government is trying to narrow the gap between the haves and the have-nots by becoming more like China and Europe. However, China is fast becoming more like the US. Funny how everything seems to converge.
China is in its growth stage and will likely be the #1 economy in the world by the year 2035. The Chinese will turn from net exporter to net importer as they buy all of our stuff with their super middle class. Their citizens will grow in size and weight as we Americans have done. Services and health industries will explode in profitability as a result of new wealth. Let’s hope they have a benevolent leader when its time for them to rule the world.
To understand Capitalism, we must first understand Communism. Based on my week long trip to Chongqing, China, Capitalism and Communism are becoming the same. What’s indisputable is a person’s desire to better their own lives with the limited resources they have. If there’s a chance for any of us to get ahead, we’ll rationally do whatever it takes to get there. China and the Western World are more alike than we think!
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Updated for 2017 and beyond. The Chinese economy is finally slowing down! Yet, the pollution is as bad as its ever been. Go to China for a couple weeks to explore. It’s worth it.