China’s Ambitions in the 12th Five-Year Plan

Source: the Atlantic

As the annual sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference closed this week, it is time to look over the highly anticipated draft of the 12th Five-Year Plan. Xinhua News Agency did a good job on summarizing the key words of the 12th Five-Year Plan. Let’s take a closer look at China’s ambitions:

Economic targets

GDP to grow by 7 percent annually on average;

— More than 45 million jobs to be created in urban areas;

— Urban registered unemployment to be kept no higher than 5 percent;

Prices to be kept generally stable.

Economic restructuring

— Rise in domestic consumption;

— Breakthrough in emerging strategic industries;

Service sector value-added output to account for 47 percent of GDP, up 4 percentage points;

— Urbanization rate to reach 51.5 percent, up 4 percentage points.

Innovation

— Expenditure on research and development to account for 2.2 percent GDP;

— Every 10,000 people to have 3.3 patents.

Environment & clean energy

— Non-fossil fuel to account for 11.4 percent of primary energy consumption;

— Water consumption per unit of value-added industrial output to be cut by 30 percent;

— Energy consumption per unit of GDP to be cut by 16 percent;

Carbon dioxide emission per unit of GDP to be cut by 17 percent;

Forest coverage rate to rise to 21.66 percent and forest stock to increase by 600 million cubic meters;

Agriculture

— Annual grain production capacity to be no less than 540 million tones;

— Farmland reserves to be no less than 1.818 billion mu.

Livelihood

— Population to be no larger than 1.39 billion;

— Life span per person to increase by one year;

Pension schemes to cover all rural residents and 357 million urban residents;

— Construction and Renovation of 36 million apartments for low-income families;

— Minimum wage standard to increase by no less than 13 percent on average each year;

Social management

— Improved public service for both urban and rural residents;

— Improved democracy and legal system;

— Better social management system for greater social harmony;

More than 10 percent of all residents will be registered as community volunteers.

Reform

— Encourage qualified enterprises to get listed in stock markets;

— In-depth reform in monopoly industries for easier market entry and more competition;

— Improved government efficiency and credibility

After being the world’s second largest economic entity, Chinese government finally realizes that the export-driven, GDP-oriented economic development should be replaced by a more sustainable developing way, because there are so many problems being brought up: the high inflation, the real estate bubble, the environment  pollution and energy waste, the underdeveloped social security and so on.

One another thing is also worth to emphasize: the community volunteer is a total new concept for most of the Chinese. China haven’t had a community culture as Western society. Back into the “Red Revolution” period, people are belonging to “Danwei“, which means a work unit. According to Wiki, “a work unit acted as the first step of a multi-tiered hierarchy linking each individual with the central Communist Party infrastructure.” Now building a community culture to replace the Danwei culture indicates that the hierarchy linkage between citizens and the CCP is officially weakened, which I think is a good signal for Chinese society.

It is also interesting to know how Western looks at the 12th Five-Year Plan. Here are two totally opposite opinions: one is criticizing that Chinese government just have a “big talk”- alway has some glorious goals, but never releases any details about how to achieve these goals in its plan; another is hoping the United State could learn from China to have some clear directions in a certain period.

Which one you agree more?

http://www.youtube.com/watch?v=ON9hJ7NVIcM

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CSA: A new way to deal with food safety concerns in China?

By 46137 (flickr.com)

China is notorious for its unsafe food. While Americans go to weekly farmer’s markets to purchase products that they could get cheaper in supermarket, Chinese farmer’s markets are still waiting for effective regulations to meet food safety standards (read my previous blog about Chinese farmer’s markets). Now Chinese consumers are looking for a new wayto solve this problem, by running organic farms that is enlightened by Western community-supported agriculture (CSA) model, reported by USA Today.

Shi Yan, 28, a rural development expert, says she was inspired by the CSA model when working for six months in 2008 at the Earthrise farm in Madison, Minn. Shi says she shocked her parents by choosing the life of a peasant despite her degrees from a top Chinese university.

At the Little Donkey Farm, which she opened in 2009 in Beijing’s semi-rural suburbs, Shi hears from other people planning similar projects. “Their first question is usually ‘Can I make money from this?’ ” Shi says. “The purpose is not making money, but sustaining farmers on the land, and teaching city people the importance of protecting our planet and the soil.”

China has about 40 “real” CSA farms, she says. A CSA conference in Beijing last month attracted more than 250 people. At Shi’s farm, about 100 members pay to work their own plot of land and 500 members pay a $600 annual fee for a weekly supply of vegetables grown without the chemical fertilizers and pesticides used on most Chinese farms.

I think organic farm is a promising industry in China – maybe it is not attractive to most of the Chinese right now, but it will be the trend. Think about the booming young consumers who are like Shi Yan in this story: they were born in 1980’s, a generation that never worry about lack of food. They went to college to receive high education. They are picky about their lifestyle and life quality. They have more connections with the outside world through the Internet. All of these make them not easily be pleased by just having enough food to eat and not easily be fooled by mainstream propaganda.

But the CSA model also cannot avoid an issue: regulation. Without a complete and effective food regulation supervising the whole process, speculators who only care about “Can I make money from this?” will ruin the CSA farming industry in China. How could they establish their regulation system, either depending on government or contracts? It is going to be an issue haunting this emerging industry for a long time.

Watch videos from Youtube to learn more about CSA:

What could China learn from American agriculture?


I had a general idea of American farmers (mostly learned from news media and movies) before I came to the United States: having a very big farm; growing and harvesting large amount of crops with the help of modern machines; possessing the land as their private property; being well educated; and the most important part, getting decent incomes from their land. The life of American farmers sounded amazing for me, since what I learned in China is being a farmer equals to being a poor without much education (I mean the real farmer). But I was not surprised by it at all. I could easily assume that the productivity of land is credited to the improved technology and the scientific research on agriculture.

What I learn by reading four books of American agriculture confirms some of my assumptions, but completely turns over some others.

In the book A Revolution Down on the Farm: The Transformation of American Agriculture since 1929, the author Paul K. Conkin shows a general picture of the agriculture revolution in the past century, changing from a small family model to a large agribusiness model. He gives the credits to the new machines, the electrification, the chemical inputs and the plant and animal breeding, which confirms my assumption. But what I didn’t know is that the productivity revolution causes surpluses and lower prices, and leads to the government intervention, described by Paul as “an institutional framework for this growth”.

It is an interesting point for me: while the American government subsidy in farming is to reduce the amount of crops production, the Chinese government is subsidizing the agriculture industry to increase its production, in order to bring down the competitive disadvantage of Chinese crops in the international market, and to reduce the agricultural products imports from the United States. In the United States, the agriculture revolution took place spontaneously and smoothly in the middle 20 century; however in China, the competition from the international market gives the local agriculture industry too much pressure to grow healthily in the pace of nature. The pressure reflects on the Chinese government too, whose subsidy is only focusing on the industry’s total output, without doing enough scientific researches on how to increase the productivity. As a result, the land is overused: the arable land is decreasing rapidly in China.

But the agriculture revolution is not a good thing in all aspects, that’s what Wendell Berry talks in his book The Unsettling of AmericaCulture and Agriculture. The agricultural industry changes from a small family farming model to a large agribusiness model, at the same time, the role of the farmer changes from the nurturer to the exploiter. Farming is a form of business now, Wendell argues, “productivity combined with processing and marketing efficiency”, and the business management ability is more important than the real farming skills. The whole traditional agricultural culture built on the intimate relationship between human being and the land, is destroyed by the agribusiness system.

The angle of Berry’s book is unique. “Get big or get out”, the philosophy of the agriculture transformation in the United States makes the agriculture highly developed (and also competitive in the international market). But the philosophy is actually the law of the jungle, which emphasizes the “agripower”, which cares more about quantity than quality, which the mass production and consumption culture is built on.

But how could the Americans solve this problem? How should the Americans deal with the agribusiness? I think Josh Kilmer-Purcell and Lisa M. Hamilton both answer this question in their books by narrating the personal stories of several farmers. In Kilmer-Purcell’s book The Bucolic Plague: How Two Manhattanites Became Gentlemen Farmers, the two young New Yorkers are trying so hard to become two gentlemen farmers, which I interpret as the attempt to escape from the mass production and consumption culture and the desire for a simple, idyllic life closed to nature and land.

Although I don’t think any of their stories can be simply copied to China, the desire is showed there. As Harry, an African-American dairyman in Texas, said in Hamilton’s book Deeply Rooted: Unconventional Farmers in the Age of Agribusiness, “I learned from him that you worked not to be rich, but to be free.”

Would like to read more book reviews on the four books ?

When Wisconsin Ginseng Met A Fake China

 

It was 2004. Butch Weege was in a trade mission to China with a Wisconsin governor. A year ago, Weege was elected as the executive director of international marketing at the Ginseng Board of Wisconsin (GBW), the official organization of Wisconsin ginseng growers. He had been growing ginseng since 1982, the crop that has a high value in oriental medicine, and has a large market in China.

The mission for his trip was to understand the end users of the ginseng market. He went to Shanghai, Nanjing, Guangzhou and Hong Kong and many others cities. In every city he stopped in, he found the trade mark of Ginseng Board of Wisconsin. In the Chinese traditional medicine portion of town, in the shops, in the pharmacies, he found the trade mark everywhere in the cities. The state’s prized Wisconsin ginseng seal was printed on countless ginseng products, but no one was authorized to be using it.

“People were taking our brand, our registered trade mark, and they were putting ginseng from other countries, they were putting on their home grown Chinese ginseng,” Weege said. “It made us realize why our market was falling apart.”

He knew he needed to do something. He needed to do something right now.

******

 

In the early 1980s Wisconsin had 1,400 ginseng growers. Now, it has only about 150. In middle 90s, Canada and China entered in the global market, and the largely increased supply has been making the price of ginseng plummet since then. In 2007 the price that ginseng growers received was lower than the profitable price by $5 per pound on average.

“That is a huge collapse in the industry,” Paul Mitchell, an assistant professor, agricultural and applied economics at UW-Madison.

“It was a hard time for us,” Kirk Baumann, a ginseng grower in Wisconsin. “Many of other farmers gave up the ginseng and began to grow other crops.”

Baumann stayed in the industry while his brothers started to grow corns or wheat. The bad economic situation made him almost gave up as well, especially considering that ginseng is extremely hard to grow.

“Kids are easier to raise than ginseng,” a ginseng grower said in an interview with WSJ. Kristin Johannsen wrote in her book Ginseng Dreams the ideal condition for ginseng: “The climate must be cool and temperate, with plenty of rain, but the water must not stagnate around its roots. …It needs protection from the direct rays of the sun by an unbroken canopy of forest. It needs soil that will keep the roots growing slowly as they force their way down. And most of all, it needs a particular combination of nutrients found only in the decaying leaves of certain hardwood trees that drop their leaves early in the fall, such as maples and poplars.”

But in his mind Baumann believed that the thing would work out one day, and it would come to a good end.

What Kirk didn’t know is that in the other side of the Pacific, a large underground ginseng market was taking advantage of Wisconsin ginseng’s reputation illegally. While ginseng growers in Wausau like him had to pay in 20 cents per pound of ginseng that they sold to Hong Kong, mainland China, Malaysia and Korea buyers, for using the GBW seal, the counterfeit Wisconsin ginseng market in China was using the trademark for free for many years and making great profits.

 

******

 

Liang Xie, had been taking ginseng capsules for 2 years. The stress from his job made the 45-year-old businessman fatigue all the time. A Chinese traditional medicine pharmacist told him that Western ginseng could relief the fatigue and make him full of energy.

Xie accepted the suggestions. He went to the nearest drugstore, and saw many different kinds of Western ginseng products produced by different drug brands. He decided to buy Eagle Stars and Stripes ginseng, the brand he was familiar with, whose advertisement of its Western ginseng played on different television channels all the time. The price of ginseng capsules was pretty high, but it was worth, Xie thought.

In the May of 2006, he went to the drugstore as usual, but the people who sold the Eagle Stars and Stripes ginseng told him that the product was out of stock.

“It is odd, I have been buying this for 2 years and it never sold out before,” he thought.

He asked when the products would be in stock, the people said they didn’t know. Driven by this curiosity as well as the need to consume the product, he finally forced the drugstore workers tell his the real reason why the Eagle brand’s ginseng products were gone: they were confiscated by the market supervisors from Industry and Commerce Ministry, because the Eagle brand as well as other ginseng production brands stole the trademark of Ginseng Board of Wisconsin and counterfeited the American ginseng, which was actually produced in Northeast China.

“They were basically confusing Chinese consumers and during the meantime, our farmers here were being paid for much less for their products,” Weege said. “In 2005 and 2006, we spent a lot of time taking people to court.”

A war without gunsmoke flared up. In 2005, GBW set up a bureau in Shanghai, appointing a sale representative to investigate the counterfeited Wisconsin ginseng products, as well as to promote their authentic ginseng. In 2007, the Ginseng Board of Wisconsin filed and won lawsuits against 30 to 40 Chinese Pharmaceutical companies in Chinese courts. The result of the lawsuit was a fine, for each vendor, of up to 22,429.5 US dollars, and more importantly, forced them to stop selling their products with the Wisconsin Seal.

The lawsuits went on successfully. Pharmaceutical companies paid the fine and stopped immediately, partly because local Chinese governments actively involved in the enforcement of these sanctions and they found no loophole that they could take advantage of anymore.

“I believe we had effectively cleaned up the market place, so we could go in there fresh, and began to re launch our Wisconsin American ginseng in its image, and regain the consumers’ confidence that had been tarnished by the counterfeited ginseng,” Weege said.

 

******

In Baumann’s business card, his Chinese name was printed in the opposite side of his English name. Keqin Bao, which is pronounced similarly to Kirk Baumann, is named by Mabel Zhuang, the Chinese sale representative of GBW, in order to make it easy for Baumann to communication with Chinese buyers.

In 2008, GBW signed a deal with Beijing Tong Ren Tang Health Pharmaceutical Company (TRT Health), a company with a 400-year history, and about 1,000 drugstores in China, to distribute genuine Wisconsin ginseng in the country. The Chinese drugstore giant is now the exclusive Chinese dealer for the Ginseng Board of Wisconsin, the only one that could use the “Wisconsin Seal”, certifying that the ginsengs are 100 percent Wisconsin grown.

The target consumer of TRT’s ginseng products is up class and up-middle class in China. The price of Wisconsin ginseng is too high to working class and major middle class, not everyone has the ability to consume the nutrient product on a daily basis.

But the obstacles for Wisconsin ginseng still exist. Although GBW won the lawsuits, and stopped the unauthorized usage of GBW’s trademark, there are still Chinese ginseng products using the name of “American ginseng”, “Western ginseng”, or printing American maps, the Star Spangled banner of America and the Statue of Liberty on the box to confuse consumers.

“It is hard on that level. We cannot stop them using the American map or flag, even American government has no such right,” Zhuang said. “What we can do is to try whatever we can to build the reputation of our organization in Chinese market and make as many as Chinese consumers know us.”

“They’re gonna to be there to maintain the presents. It’s important for them to know their market,” Mitchell said. “And I really think production control is important. Have a few selected marketers, maybe they should have more than one, I don’t know, but keeping that number small and controlled is important.”

Weege is now learning Chinese. He can already speak a few Chinese words like Nihao (Hello) and Zaijian (goodbye). He knows that winning the lawsuits and signing the exclusive deal are not enough. The potential of the Chinese market is waiting for him to explore.

Where does the American ginseng sold in China come from?

Ginseng, a bitter root looks like a carrot is a crop well known for its medical value in oriental world, especially in China. Chinese traditional medicine has regarded ginseng as one of the most valuable herbs for centuries, and has been using it to enhance the energy of the body and to cure ailments like fatigue and cold. It is also believed that ginseng can slow down the speed of people getting older.

Wisconsin ginseng has higher medical value in the eye of Chinese traditional medicine, than the ones produced in the other part of the world. The ginseng grown in Wisconsin contains on average much higher levels of ginsenoside, the active and valuable ingredient in ginseng, than the ones from Canada and China, the main competitors in the global ginseng market.

Marathon County, which is part of Wausau, located in the central part of Wisconsin has been producing the largest amount of ginseng in the world. The hills with rock, the granite to aid drainage and the topsoil rich in minerals and nutrients give the crop its desired characteristics. Wisconsin produces 95% of the nation’s ginseng by pounds. Marathon County produces about 85% of that.

In 2008, Ginseng Board of Wisconsin signed a deal with Beijing Tong Ren Tang Health Pharmaceutical Company (TRT Health), a company with a 400-year history, and about 1,000 drugstores in China, to distribute genuine Wisconsin ginseng in the country. The Chinese drugstore giant is now the exclusive Chinese dealer for the Ginseng Board of Wisconsin, the only one that could use the “Wisconsin Seal”, certifying that the ginsengs are 100 percent Wisconsin grown.

Let’s start a journey following the ginseng to see where it comes from!

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Check out more pictures of ginseng on Flickr.

China Vs America

It is an interesting way to compare China with United States. See a graphic made by mint.com.

It shows that the government revenue in China is much lower than in United States. Maybe that is one of the reasons why corruptions widely happen in China. When government officials cannot be satisfied from their salaries, their political power becomes more useful, especially in a society that the legal supervision system hasn’t be developed yet.

We can also see that the industrial productions growth rate in China is much higher than in the United States. But China’s electricity, oil and natural gas productions are all lower than America’s. It means China should pay more attention to its energy industry, which are the foundation of the whole society.

 

 

 

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