Thursday 2013-11-14

China Airborne by James Fallows

Fallows uses the aerospace industry in China as a lens with which he views China as a whole.

They explain the aphorism that has stuck with me since I heard it from a government official in Shanghai in 2006. “Outsiders think of everything about China as multiplied by 1.3 billion,” he told me. “We have to think of everything as divided by 1.3 billion.”
That left taxis. When we finally saw one with the bright red “empty car” () sign illuminated, meaning that it would take passengers, I raced past a group of young Chinese women also looking for a taxi—forget chivalry, it was either that or stand around waiting all night—and
Among passenger airports, Atlanta’s is still the world’s busiest, with about eighty-nine million passengers in 2010. But Beijing’s Capital Airport is already second and gaining, with about seventy-four million passengers and traffic growing by well over 10 percent a year. In 2000, the three largest cargo airports, by tonnage carried, were Memphis (as the hub for FedEx), Hong Kong (for southern China’s exports to the world), and Los Angeles (where many Asian imports arrive). In 2010, the three largest were Hong Kong, Memphis, and Shanghai. Traffic at both Hong Kong and Shanghai was up more than 20 percent from the preceding year, versus 6 percent for Memphis.
Perhaps the strongest and most important of these general trends in China is the sense that things are possible. Many Americans and Europeans have that in their personal lives; it’s very strong for those in the scientific, technological, and pop-culture businesses, but it has all but vanished from public life in many developed countries. The electorates in most of North America, Europe, and Japan know very well what their countries’ main problems are. They just lack any belief that their governments will grapple with those problems or even that governments should try.
When it came to genuine factories, those still producing the nation’s trucks and tractors and locomotives and few airplanes, Mao developed a strategy known as sanxian (), or “third line,” as in “third line of defense.” Factories were moved away from the coastline and distributed through interior provinces, often nestled into remote valleys in the middle of mountain ranges. Thus an attacking enemy—presumably the United States, but after the Sino-Soviet breakup the Soviet Union became another perceived threat—would face the daunting prospect of fighting a land war through the center of China if it contemplated destroying these facilities.
The nationwide dispersal of industries, while intended as a national security measure and as a way of bringing opportunity to the hinterland, also meant that areas of rural China you might expect to be “pristine” now can have as heavy a pall of industrial smoke as the biggest cities do.
This doesn’t mean that Americans suffered more deeply than Europeans, overall. Americans got Franklin Roosevelt; Europeans got Hitler, Stalin, Franco, and Mussolini.
But its very role as global exporter made the United States unusually vulnerable when global demand collapsed in the 1930s. Having had more than its “fair” share of the world’s jobs to begin with, it had more of them to lose. This doesn’t mean that Americans suffered more deeply than Europeans, overall. Americans got Franklin Roosevelt; Europeans got Hitler, Stalin, Franco, and Mussolini. But as a matter of plain economics, the layoffs and unemployment of the Depression years were worse in the United States.
China today, like America then, has a trade surplus equal to about 0.5 percent of global economic output. But as a proportion of its own economic output, China’s trade surplus has been much bigger than America’s ever was. In proportional terms, China has in recent years been five times as reliant on foreign customers to create domestic jobs as America was in 1929. So unless China can find a sustainable way to keep selling when its customers have stopped buying, it will face proportionately greater employment shock.
The smiley curve is a U-shaped graph (named after the smiley-face symbols of the 1970s) that covers the different stages of a product’s development. On one end of the curve, at the highest point on the left side, are corporate brands, with the extra market value they bring—Apple, Mercedes, GE, Samsung, all of which command a premium compared with their generic counterparts. Next comes product concept and industrial design—thinking up the iPad, the S-class car, GE’s new turbine engines. Then, moving down the curve, come high-value components—turbine blades, graphics chips, advanced displays. Then the commodity components, like simple memory chips. At the bottom of the curve comes assembly—the process of combining the elements into a finished product. Moving up the other side of the curve, as it rises, are transportation—DHL or FedEx—and then retailer’s margin, and then after-sale service. The height of the curve indicates the relative profitability of each stage of the process. The highest values are at its two extremes—the extra profit that goes to an Apple- or Mercedes-branded product, and the margin from retail sales and service. The lowest value is at the bottom of the curve, where the actual manufacturing takes place. And that lowest niche is the one that China has occupied throughout the first thirty years of its growth. The work was done in China, and the money went everyplace else.
In biology there is the concept of the “apex predator”—the lion on the savanna, the wolf or puma in the forest, the hawk or eagle in the air, the marlin or salmon in the sea. Their existence depends on many tiers of prey beneath them. If they survive, it suggests that the ecosystem as a whole is robust. Aerospace provides that same capping symbolism for an economic and technological establishment,
So if Chinese companies could succeed in aviation, that would be an “apex” indicator that they could succeed at anything.
Beijing and Shanghai have set a model for other cities in creating “building museums” that present scale-model replicas of the entire urban sprawl, with tiny representations of every structure. What is happening in Chinese cities is two centuries’ worth of development compressed into ten or twenty years. And as with previous episodes of high-speed expansion, this one has already been characterized by waste, fraud, extravagance, and scandal.
At an aerospace conference in 2010, I met a FedEx official who was brimming with excitement about an announcement that he said would change outsourcing: cargo planes that could go efficiently nonstop from Hong Kong to Los Angeles. This would cut several hours off the existing cycle, with flights through Anchorage, Tokyo, or San Francisco. That in turn would make it easier for Apple, for example, to have Chinese-made products delivered in America the day after a customer pressed the “buy now” button on a Web site.
And of course there is the largest movement of people in human history, the billion or so trips made each year at Spring Festival time, or lunar new year, which usually occurs between mid-January and early February. The 2009 documentary Last Train Home captured the predictable crisis and drama of the migrations: there are not enough seats, and train tickets are generally not sold for round trips. You have to wait in line at one station to get the outbound ticket, and then wait in line at the other station, in the other city, to get a ticket for the trip back. Think for a moment about the stress and inconvenience this creates.
Although the authors of the report could not have known or foreseen this, the Chinese government’s willingness to listen suddenly increased after the devastating Sichuan earthquake, when thousands of survivors died of blood loss, shock, and exposure in the following two or three days, as rescuers tried to reach them on foot through steep terrain where existing roads had been wiped out. Because China’s total helicopter fleet was smaller than, say, Portugal’s, and barely one thousandth as large as that of the United States, there was simply no way to get supplies in or survivors out in time. Japan had suffered a serious though not catastrophic earthquake at about the same time; rescue helicopters were overhead in less than five minutes. In many devastated areas of Sichuan, it was five days before rescuers appeared.
A “threat assessment” of the Chinese Air Force, prepared for the U.S. government in 2010,8 reported that “one of the biggest Achilles’ heels is the aero-engine sector, which has struggled mightily to develop and produce state-of-the-art high performance power plants.” (Instead, the PLA Air Force still uses Russian engines in most of its planes, although it is trying hard to change that.)
“The imperative to prioritize quarterly profits today over long-term profits and strategic concerns may be exacerbated as long-term military spending constraints in Europe, Japan, and now even the U.S. may drive Western aero-engine manufacturers even further into Chinese joint ventures to replace revenue.”
carbon emissions, followed by transportation in all forms. What drew the international airlines’ attention to the emissions problem was the likelihood that as world CO2 emissions keep going up, those from aviation will be going up even more, and might double by 2030.
And the military’s control of nearly all the airspace between Chinese destinations means that flights within China, even by the favored national carriers, fly indirect routes that are the equivalent of going all around the city on a ring road. These inefficiencies in air-traffic control are the main reason flights are more often delayed in China than in other major aviation countries; why their scheduled travel time, per mile flown, is much slower than in North America or Europe; and why they burn up to twice as much fuel per passenger mile as their counterparts in Europe or North America.
As with so many infrastructure projects in China, the big, new Linzhi airport with its broad runway had been built first, with practical questions about its feasibility coming second. “They just picked a location and built an airport there,” Steve Fulton told me in Beijing. “Only after that did the operational people look around to see whether anyone could actually fly there.”
Foreigners are in theory forbidden to do this kind of mapping in China, because of holdover national-security concerns. Fulton explained that he had to make the measurements, because the official Chinese maps were so imprecise or wrong. “Through this process, I think the Chinese themselves began to see the importance of accurate terrain information,” Fulton said. “If it’s wrong, you crash.”
“As we turned each corner in the valley and went into each new segment of the approach, we kept being just under the clouds,” Fulton told me. Indeed, that is what the video shows—the cloud level coming down, and the plane descending just enough below it so that the pilots could still see ahead of them. “It was a kind of ballet down the river valley, with sweeping turns back and forth.” Then, at 200 feet above ground level—practically landing, from the layman’s point of view—the plane’s autopilots made an S-turn around a crag that sat between them and the runway. The plane automatically veered around the final obstacle, aligned itself with the runway, and touched down exactly on the center line. The fifteen people jammed in and around the cockpit—including brass from Air China and the CAAC—gave a round of applause. “Captain Jiang, the senior Air China pilot, turned to me and said, ‘I have full confidence in this technology!’ ” Fulton later told me. “We all knew that people from the minister on down would have been fired if we’d crashed.” To say nothing of the effect on those aboard.
By process of elimination, all these criteria have led mainly to algae. In principle it can produce hundreds of times more fuel, per acre of surface area, as oil palms (which are largely grown on land where tropical forests have been clear-cut), soybeans, corn, or other crops that can be used for biofuels.
“I have to say, Twitter, Facebook, Google Earth, and the rest didn’t do themselves any favors by telling the world they were responsible for Egypt and Tunisia,” a Western businessperson who had worked in China for decades told me during the Arab Spring. “What do you expect China’s response to be? You have given a gun to the hard-liners—not that there is any ‘soft-liner’ in the government, but you’re playing to the deepest fear of everyone in the government by saying there is a force outside China that they can’t control, and that will fundamentally change politics here. That, they will stop.”
What people resent isn’t wealth, it’s privilege. By and large, your average Chinese worker admires people who have gotten rich through cleverness or hard work, because that’s what they aspire to do themselves. What bothers them, though, is the growing sense that there’s a special class of people who get to live by a different set of rules than everyone else.
Soft power becomes powerful when people imagine themselves transformed, improved, by adopting a new style. Koreans and Armenians imagine they will be freer or more successful if they become Americans—or Australians or Canadians. Young men and women from the provinces imagine they will be more glamorous if they look and act like people in Paris, London, or New York.
But I know how much is in flux, and how much is at stake. It is not an evasion of analysis but a recognition of China’s complexity, and the world’s, to say that a wide range of outcomes is possible, and that it is worth watching very carefully signals like those I have mentioned to recalibrate our estimates. Nearly every day of these past five years—when watching the earth being scraped away for airports or highways, when seeing apartments put up within a week and the families who used to live in the knocked-down tenements sent scrambling to other parts of town, when seeing the beggars next to the Bentleys and the security agents watching students in the Internet cafés—I have thought to myself, How long can this go on? And nearly every day, when seeing those same sights, I have asked myself, What is this system not capable of? Anyone who says China is destined to succeed or fail, to open up or close down, either knows much more than I do, or much less. Anyone so sure is not willing to acknowledge the great unknowability of life in general and life in this quarter of mankind.
In flying school, you learn when the instructor asks you to close your eyes and try to control the plane by seat-of-the-pants “feel” alone. When he tells you to open your eyes a minute later, you are inevitably in a spiral toward the ground. Minus the instructor, this is the story of the John F. Kennedy, Jr., accident; he had not yet been trained in these “instrument rules” flying skills and got into an irrecoverable spiral when he lost sight of the horizon in the evening mist over the ocean.
Two veteran analysts explained the connection between passenger and freight traffic on China’s rail lines: “China’s businesses—ranging from manufacturers to coal mines—have complained for years about the difficulty of securing space on freight trains, which forces them to move a lot of their cargo on more expensive and less efficient trucks. An increase in rail capacity will enable them to put their freight back on trains, generating huge savings.