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BLOG – Daily missives from around the world

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China accounts for one-third of the world’s economic growth, so data related to its GDP is likewise met with a massive amount of interest around the world. But this has also become a point of contention, with many saying that China’s economic data — which is mostly collected by the Chinese government — is unbelievable, that it’s altered to make the country’s economy look better than it actually is. This is to the point that if you cite China’s official GDP growth rate in an article or conversation you are sure to find someone piping up claiming that it can’t be believed, as though it was concocted out of nowhere to fill the same function as a propaganda poster.

I don’t necessarily have a problem with this perspective — maybe they’re right? Providing a platform for debate is one of the primary functions of the modern journalist. The problem that I have with this is as follows:

A) I have yet to read or hear anything from anyone doubting China’s GDP statistics cite any reliable data — or, very often, any data at all — to back up their claims. Basically, they’re saying, “We don’t believe the Chinese government because it’s the Chinese government.” Which is fine, but doesn’t leave us with much to work with. I don’t believe that some American lady standing on the side of a highway outside of Beijing counting trucks is going to present a more believable data set on China’s growth rate than that of China’s Bureau of Statistics — even if the later are a bunch of lying commies who for some reason find it worth their time to try to dupe the West.

B) This perspective has become trendy. The believability of China’s GDP data has become a social topic that people talk about over drinks. Everybody is name-dropping someone who knows the real figure or someone who “doesn’t believe it.” Like with most trends, contrary positions are often met with condescending smirks or scoffs — as though you’re too naive or uninformed to be an insider to their exclusive group of non-believers. Now this, in and of itself, doesn’t mean that this perspective is inherently incorrect, but it does diminish the propensity for a productive conversation on the topic.

As usual, the Yale economist Stephen Roach put this well:

The fixation is on headline GDP. The 30-year trend was 10 percent, the latest number was 6.9 percent or 6.8 percent if you want to look at a quarter-to-quarter basis. There are those that tell you that the number is a third of that, and somehow they know more than the Chinese statisticians do. I would dismiss that.

The story of China is not the slowing of top-line GDP, but the shift in the mix of GDP from manufacturing to services, from investment and exports to consumption.

I’ve written for years about the inaccuracies of U.S. economic statistics. I think that China has comparable problems in majoring its economy with accuracy, but not for reasons that most would lead you to believe, because it’s a conspiracy on the part of a bunch of communists that are trying to pull wool over our eyes or whatever. It’s very difficult for them, it’s very difficult for us to measure the pace of economic activity in a system where the structure is changing as rapidly as it is in China. Services are notoriously hard to measure, and that’s true in the United States, and that’s true in China. Shifting to this hard to measure service sector is a big challenge for government statisticians all over the world.

The World Bank and economists from the Federal Reserve Bank of San Francisco sort of conclude that there is standard error around the growth rate of about 1 percentage point in either direction in terms of GDP. And I think that that’s a fairly reasonable guess as to how far the numbers are off. The important thing to note is that the numbers, as flawed as they may be, are doing a good job of capturing this big shift from this slower growth in the Chinese economy and a shift in the mix again from manufacturing to services, from investment and exports to consumption, and I think that we have to look at the numbers with that in mind. They’re giving you a good approximation of the big stories that are emerging right now in China.

GDP growth rate is just another macro-economic indicator to be taken together with many others — like the employment rate, tax revenue, income growth, consumption, the state of the housing market, corporate profitability — to determine the trajectory that a country’s economy is on at any point in time.

China’s GDP growth rate says that the country is economically leveling off, maturing, diversifying, and is taking some major hits while going through a historic transition, while still growing at an incredible clip. You can see this from the street — which is the only point of view that really matters.

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The above map is what my route of travel during bout four of my New Silk Road research travels actually looked like, while below is what I thought these travels were going to look like before going into them:

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A big difference.

I have no idea where to start summing up this most recent bout of research travels for my upcoming book on the New Silk Road. I criss-crossed the region from Western Europe to the Caucasus multiple times, leaving a path of travel that has more of the attributes of a knot than a nice smooth line.

Let’s start:

I flew into Amsterdam, and then went to The Hague, Rotterdam, Brussels, Duisburg, Berlin, Lodz, Warsaw, Riga, Tallinn, Helsinki, Vilnius, Kiev, Tbilisi, Anaklia, Kutaisi, Berlin, Warsaw, Terespol, Sosnowiec, Krakow, Prague, Belgrade, Pristina, Skopje, Nicosia, Girne, Larnaca, Poli, Paphos, Larnaca, Athens, Tbilis, Baku, Naftalan, Baku, Tbilisi, Yerevan, Dusseldorf, Boston — 19 countries in 5 months — in that order.

Most of the time I was working on my book about the New Silk Road, sometimes I just jumped on a bus, train, or boat to go somewhere just for kicks, sometimes I was traveling with my wife and two daughters. Taken altogether I’ve accumulated a massive amount of data, observations, and interviews to spend the next month or so processing.

New Silk Road research travels bout five are set to begin in December or January. It will more than likely be the most challenging so far, going down the China-Pakistan Economic Corridor, Afghanistan, Kyrgyzstan, Uzbekistan, hopefully Turkmenistan, and then back to Kazakhstan.

It’s going to be cold.

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CSIS Reconnecting Asia Event

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A couple of weeks ago I was in Washington D.C. doing an event at the Center for Strategic International Studies. It was the official launch of their new web portal, Reconnecting Asia, which maps and tracks developments along the New Silk Road, and I was one of the panelists.

Watch the event here (skip through it if you just want to see me, I believe I start talking for the first time at the 36 minute point):

For those who haven’t been following here, I’ve been working on a book about the New Silk Road — the infrastructural, economic, and political mega-project that is restructuring the dynamics of the Eurasian continent. So far, I’ve traveled through around 20 or 30 countries working on this project. Most of my articles about this are being published on my channel at Forbes.

Visit the CSIS’s Reconnecting Asia portal. It’s really showing how this paradigm-shifting project is coming together.

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If you’re not fast enough at changing the channel after the football game you may be exposed to an unfortunate glimpse at 60 Minutes — a generally hype-based, fact-check lax network TV “news” program of the most heinous faux-authoritative sort.

The five minutes of it that I was subjected to today had their anchor going into a decommissioned Ohio steel mill town. The reporter claimed that the most recent steel plant to go out of business was because of imports of cheap Chinese steel and lamented about how the next era of global economic dominance may not belong to America, with the implication was that it would instead belong to China. I believe he said that 500 or so people were laid off from the plant.

It was enough to make you think that steel production is booming in China and that Chinese steel workers have swallowed American jobs. That couldn’t be farther from the truth. While 500 workers lost their jobs in Ohio, China is in the process of laying off millions — yes, millions — of workers in their heavy industries, mainly focusing on steel and coal. There are ongoing protests in various cities in the industrial northeast of the country that are being virtually liquidated in the transition:

China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment program in almost two decades.

China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.

The overall figure is likely to rise as closures spread to other industries and even more funding will be required to handle the debt left behind by “zombie” state firms.

Industrial production is now global. The worry is no longer Chinese oversupply, American under-supply, etc . . . but global oversupply. To block oversupply in one country in an artificial attempt to bolster it in another misses the point. We’re all in the same boat. Where something is made will become more and more irrelevant.

On almost the exact same day that the announcement came out of cuts in China’s domestic steel industry came another about a state-owned Chinese steel company buying a giant steel mill in Serbia.

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Skopje Floods – Missed Them Entirely

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This morning the international media is running stories of the floods that overtook Skopje during the weekend. There are images of overturned trucks, destroyed homes, and washed away roads. 22 dead.

I was there.

It rained hard from around five PM to midnight, whereupon I went out for a beer at the rock and roll bar across the street. I drank with a few long haired guys listening to Led Zeppelin as, apparently, homes were going under water.

The part of the city I was in was well drained, cars were rolling by as usual, and the rock and roll guys in the rock and roll bar seemed more interested in Black Sabbath than anything else. In fact, it seemed as if nobody had any clue what was going on. I sure didn’t.

The next morning was sunny and dry and I took a taxi out to the airport and left Macedonia, still completely unaware that the city was supposedly in a state of emergency.

I’m now sitting in Cyprus, drinking my 8 AM Efes, and someone back in the USA alerted my wife as to what happened in Skopje when we were there. They were in that particular type of anxiety when someone knows someone that’s in a place the international news is showing in turmoil. They wanted to know if we were safe . . My wife was forwarded photos of the destruction and articles about how the city was in a state of emergency and how the place was overtaken by a “water bomb.”

We traveled across the city during the catastrophe and saw or heard about none of it. Everyone was sitting in sidewalk cafes smoking cigarettes like they always are.

Distance de-contextualizes places and events, diminishing them to the lowest common denominator as us in media try to make places like Skopje relevant and engaging to the global audience. Some parts of the outskirts of a city flooding turns into city under water.

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At The Galle Face Hotel

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I’m at the Galle Face Hotel in Colombo, Sri Lanka, which is without a doubt one of the most famous hotels on the planet. Founded in 1864, it is one of the oldest hotels in Asia, but that’s not nearly the full extent of its appeal. There is a mystique here that’s derived not only from the continued preservation of its colonial decor and feel, but from the awareness of who has stayed here: princesses, popes, presidents, dukes, prime ministers, revolutionaries, actors, and writers. Names which have created a gravitational pull that has only brought in more names for over a hundred and fifty years. It is still a place to be.

I must admit that I’m not really staying here. I’m just drinking a beer in the bar. I’m actually staying at the unaffiliated Galle Face Hostel that’s in some worn-out residential building across the street. I’m paying $14 per night to be packed into a room with some 20-year-old Brits and random Sri Lankans, not $158 to stay in the place of traveling writers from another age.

I sat in the corner of the dim, golden-lit room, drank my beer, and looked at the pictures of the writers who once stayed here that were spread over the walls — a defacto hall of fame of literature: Mark Twain, Arthur C Clarke, George Bernard Shaw, Somerset Maugham, Evelyn Waugh, DH Lawrence, Rudyard Kipling, Hemingway.

Maybe I’m just not ready to stay here yet.

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It is an uncomfortable experience looking through the photo album of someone from Hambantota.

A small town at the southern tip of Sri Lanka, this place was nearly wiped out of existence by the tsunami of 2004, which killed at least 30,196 people in the country.

Almost invariably, every second or third person in the pictures are no longer around anymore.

“He isn’t here anymore,” Mahesh said. “He was killed by the tsunami.”

He then flipped the page in his old photo album as we sat together on the beach.

“He isn’t here anymore,” he pointed out a young guy whose arm was interlocked with a young version of himself. “He isn’t here anymore,” he pointed to another.

Eventually he began just pointing at people in photos and say a single word: tsunami.

“Tsunami.”

“Tsunami.”

“Tsunami.”

“Not many people talk about what happened here,” he continued. “More than 1,000 people died here on that day.”

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“What was this place like before?” I asked.

“I wish I didn’t have to remember anything from before,” he began. “I used to have a bungalow hotel on this beach. Look here, you can see it.”

He pointed to photo of him smiling in front of a bamboo and palapa house.

“It is gone now. I used to have a very nice jeep. It was taken away too.”

There were photos of him taking tourists into the jungle in that jeep. His jungle tours, his small hotel, and with his stall in the market where he sold fish was how he made up his livelihood. All of it was washed away in an instant.

“Here’s a picture of me selling fish.”

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The rippled and bent old 35mm photos that he was showing me told of a different era here. He was invariably smiling big in all his photos. He was young, muscular, and always with friends. Looking at his photos were like looking into someone’s rose-tinted memories of the past — only here it was unarguably the truth. The guy’s entire life was cleared away as he was in the jungle guiding a group of tourists. He returned to find everything gone.

Mahesh is now the night guard at a hotel on the beach that gets few guests. He touts at the bus station. His face is worn, his hair fell out. He never seemed to have recovered.

The entire place hasn’t. Much of what was destroyed was never built again.

Another man walked up to me later and told me his story. He was 58, lived his entire life in that small village.

“I once had a wife and two children,” he said. But they are all gone. Tsunami. Now I am all alone.”

He now sleeps at night in whatever unoccupied plastic lawn chair he can find on the beach. Tonight he is curled up on one in front of my door.

Editor’s note: These events happened in March 2016 and names were changed.

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Writing To Remember

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The SCMP was the first big publication that I ever regularly wrote for, and my editor there provided me with my first lesson in big journalism. I wrote a story about how expats in China were transitioning from running export based businesses to service sector businesses and how this mirrored China’s broader economic transition. I framed this story as a narrative — I included myself.

“Uh, can you make it more like a news story,” my editor requested.

No problem, I removed the “me.”

The same thing happened on my next article, and I got the point. It was an important lesson to learn.

As the years have rolled on I’ve found myself taking on more and more positions in big media, and the subsequent work load meant that more personal, narrative stories have been getting delayed — often to the point of never being written or published.

I’m realizing now that I’ve missed a large part of the story.

I’ve built up such a large body of stories on Vagabond Journey that adding a few more — or a few hundred more — doesn’t really alter the balance of how much money I make. Earnings waver with the winds of advertising, not anything I do. If I don’t write here it makes me X amount of money. If I do write here it makes me X amount of money. There’s really no substancial difference.

It seems to be a common assumption that the writer works for the reader, and should strive to give them what they want. To a large extent that’s true. But there are other reasons to write. It’s not all commodity.

This is my collection. It’s just a story… so that I can remember.

Writing preserves time. It’s like taking a sequence of observations, conversations, thoughts, experiences, and emotions and enclosing them inside of a plexiglass box. Every once in a while you can stumble back through your own museum and look at the little exhibits you’ve stored there. This is why I do this.

I want to have a storage facility for conversations, impressions, and experiences. Sometimes they are eventually extracted for sections of articles; most of the time it’s just something for my seven year old daughter and I to look through and talk about

If someone can follow this and like it, maybe read it each morning on the way to work, that’s excellent; but that’s not really why I’m still doing this.

On Vagabond Journey, I’m just writing to remember.

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Hasan Yasien in Sweden
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Throughout the past year I’ve been covering the story of Hasan Yasein, a Syrian refugee who was entrapped in the transit zone of Moscow Sheremetyevo airport.

I first met Hasan while connecting flights at Shermetyevo after departing from Kazakhstan, and we kept in touch ever since. I would write a little about his situation — stuck in the airport next to the duty free shops — and eventually a little momentum grew. People would find out about him and bring him essentials or just go to meet him during layovers. He became a defacto attraction of sorts, and images of his little hermitage across from the Burger King began making their way onto social media.

After a nine month internment, I am pleased to announce that Hasan was released and is now in Kalmar, in the south of Sweden. The UN High Commission of Refugees finally took decisive action and sprung him loose. He is now studying Swedish and will soon get a job.

But the Russian authorities still didn’t give him back his bag, which had been a major side plot to this story. I’ve now found out why: there was $3,000 in it.

However, this story ultimately had a happy ending.

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Business Is The World’s Language

British meeting Indians
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Economics is a system of communication. It is no mistake that the first words you learn in a foreign language when traveling are those which enable you to buy things.

“How much does it cost?”

“Too expensive.”

“I want.”

Travel is a continuous exercise in buying shit.

Trade is something that people everywhere can easily understand; it’s something that as a species we just get. One of my favorite types of stories are those of ancient mariners showing up on the shores of some remote locale for the first time and meetings with the people there. Almost invariably, if the two sides don’t immediately start killing each other, the rapidly engage in trade. Completely removed cultures all understood the same market fundamentals — which we really haven’t evolved very much away from today.

My first profession was in archaeology. I was young then and I gave it up as an academic pursuit when I realized that it was in large part the study of ancient economics.  I wanted to believe that I would find these non-materialistic ancient cultures who understood the true essence of life that could be reinstated as a model for our time. (Like I said, I was young.) What I found instead were obsessive, and often violent, capitalists and empire builders.

You research migration via trade goods, you can watch how cultures changed over time by their commodities, the earliest forms of writing were accounting records. Trade shows cultural alliances, it showed who is up and who is down, who is driving innovation, and who is copying and trying to keep up. Every big social movement in history is shown in economics.

The central market is the most ethnically diverse place in any city.

Economics is the story of everything.

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