When Anecdotes Happen to You

dali rainbow
This is the last picture I took from the house I’d been staying at here in Dali.

It’s been a few weeks since I wrote here. While laziness explains some of my absence, a somewhat frightening, bizarre, and ultimately tragic episode that took place is mostly responsible. I’ll share it here since it sheds light on a problem that’s looming in China.

For some background, I moved into a new place at the beginning of the year and wrote about it here. I rented the third floor of a nice house near Dali Old Town and paid rent up front for January through June. The house was owned by the family of one of the students in my adult EFL class. Let’s call her “Ann” to protect some privacy, even though using her English name probably wouldn’t lead anyone back to her and everyone here in Dali that might read this already knows who she is and has heard at least part of this story.

About six weeks ago, I was heading out on an off day around 4 p.m. to do some food shopping when Ann’s parents, daughter, and niece arrived at the house to do some yard work and take care of the dog. As I passed by them in the house’s courtyard, Ann’s father muttered something to me that I didn’t quite understand. At that moment, someone started knocking on the door (the house, like many in Dali, has a big courtyard enclosed by two parallel walls extending out from the house, with a third wall connecting those two out in front, with a large gate in it). I turned back and told Ann’s father someone was knocking on the door, but he was acting very strangely, kind of hiding behind the front door to the house itself and continuing to mutter. I asked him to repeat what he was saying, but he muttered again and feeling frustrated, I turned back around to open the gate and leave. When I did, three men were standing out front and let themselves in as I started to walk out. Not liking the vibe, I followed them back into the house. Ann’s daughter and niece were already on the third floor, where I was staying in one of the bedrooms. The three men sat down in the first floor living room and began speaking with Ann’s parents.

After an hour passed, I really started to worry about the situation. I asked Ann’s daughter and niece, both in their early teens, if they knew those men or knew what they wanted. They both said they didn’t know anything about them, and while they didn’t seem particularly interested in what was happening, they also seemed embarrassed by my questions. They both continued to chat, do their homework, and play on their phones. I tried to eavesdrop on the first floor conversation, but couldn’t really catch much. The men seemed to be making some sort of demands, occasionally raising their voices. I wanted to go do my shopping, but I also didn’t want to leave two elderly people and their teenage granddaughters alone with those men.

This went on for four and a half hours. I grew increasingly worried, and had sent text messages to Ann after her daughter and niece proved entirely uninterested and useless in figuring out what was happening. Ann replied that she didn’t know these men and not to worry.

Then men finally left around at 8:30 p.m., just before Ann and her husband arrived. The family quickly left. I didn’t even have a chance to see Ann, who I guess was waiting outside the house. I found this odd because Ann is very friendly and always keen to practice her English. After texting her again about the situation, she replied that I shouldn’t worry, those men were just looking for her brother.

I knew that her brother owned an Audi dealership, and the one time I met him he seemed flamboyantly nouveau-riche. That assessment may be influenced by what has transpired since, but I’m pretty sure I had that sense of him. He was surrounded by some of his staff members, and they were all fairly drunk, rambunctious, and pleased with themselves.

Either the irony of saying both “strange men are looking for my brother” and “don’t worry” was completely lost on Ann, or she was aware of a growing problem and trying not to make me panic. In any case, the whole thing had felt a bit like a hostage situation, and I was not convinced it was finished.

Sure enough, the men returned the next day, this time meeting Ann’s parents as they exited the front gate after finishing the yard work. The timing of that suggested to me that someone had been watching the house. The men came inside the courtyard and then the house with Ann’s parents, and again the men sat them down in the living room. I stayed on the third floor and tried to listen, but again could only catch occasional raised voices and vague references to “demands.” This time the men only stayed an hour and a half. After they left, I asked Ann’s parents if they were okay and they smiled politely but didn’t say anything relevant. They left to return to their family in Xiaguan, the “new city” here in Dali.

The next afternoon, about a minute after I got home from going shopping, someone knocked on the door. I didn’t answer it, and after knocking off and on for ten minutes the person stopped and went away. I texted Ann about it, to which she again replied that I shouldn’t worry, some men were just looking for her brother. She also asked if I could feed the dog for at least a week because her father had “low energy.” Over the next week, I must have been home when someone knocked on the door every other day. I had the distinct sense that I, or at least the house, was being watched.

A few days later, Ann’s husband, with whom I’m friendly, stopped by the house to check on the place and see how things were going. I told him that people had been by a few times to knock on the door, but I hadn’t answered. He told me that men were looking for his brother-in-law but I shouldn’t worry, it wasn’t any business that concerned me, and I shouldn’t open the door for anyone. While he was preparing to leave a man came and knocked on the courtyard door. He went out to answer it and I watched them have a heated argument through the courtyard gate peephole. When Ann’s husband came back inside, he said that it was someone looking for his brother-in-law again, but that hopefully they wouldn’t be coming back.

Fast forward to the Wednesday evening of May 25th. I was reading the news when someone started pounding on the front gate. They pounded for about ten minutes straight with only very short breaks. It started around 8 p.m., so very soon it was dark. Whoever it was could obviously see that the light was on up on the third floor where I’d been sitting at my computer. A man walked back from the front wall to find a spot where he could angle his flashlight beam up into the third floor windows. I ducked behind the curtain, but with the light on they almost certainly assumed, correctly, that someone was in there anyway. I couldn’t tell how many men were out there, but at some point it became clear it was at least three and that they had a car parked outside the front gate. They kept banging on the front gate, and they even tried the gate handle to see if they could simply let themselves in. Someone went around to the back of the house and tried the back door as well, but that was also locked.

By this time, I had gone downstairs to lock the front door to the house and returned to the third floor with a meat cleaver and a knife. Anyone who knows me knows that I don’t have the physical stature or any real desire to fight. But while these weapons almost certainly would’ve been ultimately futile, I at least felt like I was doing something to deal with the situation.

About an hour into it, someone got the bright idea to cut off the power to the house. So then it was about 9 or 9:30 p.m., I had no power and therefore no internet access (important because I’d been using WeChat, China’s ubiquitous online chatting/sharing platform, to send some messages to Ann), and it was clear that men were surrounding the house and didn’t really seem anxious to leave. Fortunately, I had just fully charged my phone that afternoon, so I knew I was good on power for at least two days. My phone bill was paid up, so I’d be able to message and call people. For an hour or two more, someone would occasionally pound on the door or call out for me, or whomever they thought it was in the house, to open the door. I sat down in a chair to alternately read SPQR on my Kindle and stress out, all the while updating Ann through text message about what was happening and not feeling at all like she was in any control whatsoever of the situation.

I think I went to bed around 1 a.m. I was pretty sure that some men were sleeping in a car outside of the front gate. I hadn’t seen lights reflecting off the neighboring house’s wall in a while, nor had I seen the car leave, so I figured they were done chain-smoking and playing cards in the car or whatever it was they were doing to pass the time that evening and were then trying to sleep.

I was awake early but didn’t get out of bed until about 8 a.m. I figured the men were still there, though I couldn’t see anyone or catch sight of the car I knew had been out there from the lights turned on the previous night. The dog chained up by the front gate was barking angrily, which meant he could probably sense people just outside the gate. I went downstairs to take a look out the front gate. However, they had covered the peepholes set in the two front gate doors with dirt. Now convinced they were still out there, I went back inside and sent Ann a message saying something like “the men are still here, this is crazy and i’m scared.”

We finally talked on the phone, and I told Ann that if her family couldn’t figure out what was happening soon, I’d have to ask my friends to help me out of the situation, perhaps by calling the police. Ann seemed more confused about why I thought the police would be able to do anything than she seemed worried about me getting the authorities involved, but I finally impressed upon her that whatever was happening, I felt threatened and wanted out of the situation, the sooner the better. She said she was sending her father, whom I hadn’t seen in four weeks, and that he would get there soon.

The men continued to occasionally bang on the door and call for me to open it. As the morning progressed, I started feeling more and more sheepish about the whole thing. I knew intellectually that these men were not there for me. My Chinese is good enough that I could’ve spoken with them the night before when they first showed up to figure out what was happening. But something about them trying to let themselves in and then cutting off the power made me feel threatened, or too annoyed to give in, or some combination of both.

While I was waiting for Ann’s father to arrive, I started calling some friends to tell them about the last 12 hours and solicit advice. For the time being, it was thought best that I stay locked in up on the third floor and wait to see what would happen with Ann’s father. Meanwhile, people would be ready to come to the house and call the police at a moment’s notice.

Ann’s father arrived around 10:30 a.m. and opened up the front gate. Four men filed into the courtyard after him, several of them quite big and all of them wearing tightly fitting shirts and some version of a man purse. This outfit generally conjures up images of the mafia in China, but even now I don’t really understand who these men were or who they were representing if not themselves. Anyway, after discovering the front door to the house locked, they banged on it for a few minutes before realizing I wasn’t going to open that one for them either. I overheard Ann’s father explain that a foreigner lived in the house, which is why some of the men serenaded me with an infuriating “helloooooooo” from time to time. That morning, I had grabbed some sausage, cheese, and crackers from the kitchen, so I had a snack while I contemplated my next move.

Meanwhile, Ann could not get in touch with her father because he’d either set his phone to silent mode or was ignoring the calls. So she still didn’t understand what was happening and advised that I not open the door. She said she would be there after work, which would be around 6 p.m. I told her that wasn’t really an option for me. If nobody could confidently tell me that I could leave the house unharmed soon, I was going to ask my friends to help me get out.

For reasons I still don’t fully understand, I made sure to stay out of the men’s lines of sight. This also meant I couldn’t get close enough to windows to hear what they were saying to Ann’s father, though I did watch a ten-minute session when one of the larger men held a piece of paper in front of Ann’s father’s face and gestured at it emphatically. Ann’s father looked dejected, and I could see that his left hand was almost constantly shaking, something I had never seen before. And I had seen him every day for about two straight months before this whole ordeal started. Anyway, when I then saw nine muscle-shirted men congregate in the courtyard at once, I figured it was time to act.

My friends and colleagues, foreigners and Chinese, were great. We hatched a plan that two of my Chinese friends, both women, would come to the house and try to figure out what was going on. Meanwhile, three more friends – all somewhat big or very big foreign men – would wait down the street out of sight. An at then unknown number of other people would be ready to come to the house should anything happen. But our first priority was for me to leave peacefully and be done with the whole thing without the men even knowing we were prepared for worse. I would have a bag with essentials ready to go at 2:30 p.m.

My two Chinese friends arrived at the set time and immediately started talking with some of the men. It was animated but nothing about it appeared dangerous, and sure enough a few minutes into it one friend called me to say I should come out and we could leave. So I did, and some of the men were very apologetic, entreating my Chinese friends to tell me they were sorry about the inconvenience. They also said that I could come back for the rest of my things, but that it’d be better if I found a new place to live. Ann’s father was also very apologetic, and he and I shook hands and we took our leave.

When we met up with our other friends down the street, the two women told us what they had learned. Ann’s brother, the one who had disappeared, had a 10,000,000 RMB loan (about 1.5 million USD) outstanding and the house had been put up as collateral. The men were simply there to take the house as representatives of – or possibly as – the new owners.

Of course, I was never really in danger and felt pretty sheepish about that. But it was nice to learn, though I already knew it, that I have really good friends here. It turns out my friends had at least another 15 people just a ten-minute walk away who were all ready to come help if needed. I met a bunch of them for drinks later and thanked them. Thank you again, any of you who read this!

I know I was comically overcautious, but I justify it in a variety of ways. The simplest is that I leave China for good on June 28th, and now that I’m so ready to return to my wife and to go back to school in the U.S. and it’s so close, I don’t want anything stupid to happen that would prevent that. Getting caught in the middle of some dude whom I don’t even know and the people he owes millions of RMB is precisely the kind of stupid situation I want to avoid.

I’d also argue that my instincts about what was happening in real time were not totally crazy. In the U.S., if a bunch of strangers start violently pounding on your door, try to let themselves in at multiple points of entry, cover your peepholes with dirt, and cut off your power – all this after watching your house for a month – you’d probably think that that’s not going to end well for you.

Of course, I feel really badly for Ann and her family. Ann and her daughter were two of my first students here in Dali, and their family has been nothing but kind to me. I hate to see such terrible things happen to such nice people. I have since been able to go back and get all of my stuff out of that house (a story in itself, with how nice the muscle-shirted, boxing-loving guy watching it has been to me). I now only hope that Ann’s family doesn’t suffer any more harassment, and that the house, tragic as that is, is their only liability here. I really don’t know what to say regarding the brother. We’ve already heard stories of his and his wife’s extravagant lifestyle, that the Audi dealership is lost as well, and that he had borrowed even more money. I don’t wish him ill, but it’s hard to see how this ends well for him.

Everything about this story seems to confirm some of my and my peers’ worst fears about the Chinese economic system. Some of Ann’s comments after this happened – and of course she has every right to be upset and looking for a scapegoat is understandable – suggest that many people here do not understand basic concepts of risk that accompany investment in a market economy. She wondered how the government can let this happen, and that’s not a crazy view when we see repeated instances of the government bailing out poor investments, whether it’s in the stock market or it’s a state owned enterprise or it’s a wink and a nod to banks allowing them to lend money to failed businesses which then use the new loans to service the old loans. The credit flying around here, and the sense that businesses can’t fail, remind some of us of the pre-recession real estate bubble in western countries like the U.S., only this credit bubble seems to be spread among the wider economy as well.

Of course, I should be careful about using this one story of Ann’s brother to confirm such notions. I haven’t done the research necessary to be confident in them. It’s possible that Ann’s brother is actually a case of things working out the way they should when someone runs an unsound business and/or uses the loans to acquire personal possessions, and that people fully understand there are consequences for failure, like losing the property you’ve put up as collateral. Whether this is one data point in a largely healthy economy where risk is generally understood and accepted, or it’s a case that illustrates a significant trend of investments made with credit and limited appreciation for the risks involved…

This story is one anecdote among many similar that have already happened concerning private debt in China, and surely more are to come. It’s a growing problem: please find an eye-opening chart here and a great series of articles about it here. China has some unique circumstances in its favor, and there are reasons to believe China won’t suffer a 2008-style recession or something worse. But this type of situation Ann’s family found itself in, with all sides seeing wealth disappear and one side seeing a family member disappear – if that repeats itself millions or tens of millions of times without organized intervention to stop or mitigate it, well, I’m glad I’ll be gone.

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While I’m Musing About China and the US…

Not Tianjin, China. By Shane.torgerson [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)%5D, via Wikimedia Commons
A reminder from one of the most prolific writers on labor issues, Erik Loomis, that explosions don’t just happen in China and other developing countries. Almost two and a half years ago a fertilizer plant in West, Texas exploded and killed 15 people. Read Loomis’s piece for the policy issues involved.

I Love a Parade

President George W. Bush addresses sailors and the nation from the flight deck of the USS Abraham Lincoln of the coast of San Diego, California May 1, 2003. From [http://www.whitehouse.gov/news/releases/2003/05/images/20030501-15_lincoln6-515h.html] {{PD-

Here’s a good piece explaining what’s going on with China’s new Two Minutes Hate holiday kicking off tomorrow. Even though I recognize the genuine horror and humiliation China suffered at the hands of the Japanese during World War II, I’m too jaded by my experience in China to rise above my cynicism. I’ve had seven-year olds in class tell me unprompted how much they hate Japan. I taught middle school students who actively hoped for another war with Japan so that China can finally get its revenge. I’ve been out at restaurants or bars and had total strangers strike up conversations with me just so that they can tell me how much they hate Japan.

It’s weird, and I don’t understand it, and then I remember Bush’s “Mission Accomplished” speech. I don’t have much of a point here. This post is more an exercise in reminding myself that no country is immune to the allure of big set piece displays of nationalism, and before I get too critical of China I need to remember some of my own country’s Orwellian moments.

If there is a point, I suppose it’s something about how both Americans and Chinese would do better to remember that war is more a careful-what-you-wish-for kind of thing rather than something to lust after.

What’s Trump’s Deal with China?

Donald Trump’s worst nightmare By Shizhao (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)%5D, via Wikimedia Commons
First, click here and watch a fun mashup of Donald Trump saying “China” about a million times.

Trump seems to have several issues with China, most of them wrong or confused. The weirdest one to me is that Trump seems convinced that China’s authoritarian rulers are technocratic supermen running circles around the US, laughing all the way to the bank with America’s money. These would be the same leaders who recently have been grasping at straws as the stock market crashes and the economy slips partly due to those same leaders irresponsibly encouraging everyone in the country to pour their savings into the stock market. While China’s leaders have done quite well in many ways, such as by embracing policies that have lifted more than 680 million people out of poverty since 1981, they are hardly the geopolitical super-geniuses of Trump’s imagination.

The flip-side of Trump’s China love is his China hate. In Trump’s mind, he has identified problems in US-China relations that only he has the power to solve. Maybe Trump thinks he’ll really charm Xi Jinping with his classy impression of Asian business people and win all the concessions he demands.

Onto the substance. Trump seems to have five interrelated grievances against China. First, Trump has railed against China’s recent currency depreciation, which he says China has been doing for years but in fact the opposite is true. Believe me. I used to be able to buy 8.2 yuan for every dollar back in 2004. Today I can only buy 6.38 yuan per dollar. Here’s the nuanced explanation of why Trump is full of it.

The second grievance is the trade deficit between China and the US. Trump argues that China’s currency manipulation shoulders a lot of the blame, which was somewhat true five years ago but is mostly wrong today. He also argues that China’s theft of US intellectual property (Trump’s third complaint) is a big factor, which is partially right but exaggerated.

Now, I’m a bit of a trade deficit agnostic. International trade creates winners and losers in both countries engaging in the trade. Also, our most popular trade indicators are a bit outdated for understanding the modern global economy, where the idea and the design of a product like the iPhone originates in California; the parts are manufactured in several countries including Germany, South Korea, and the US; those parts are then shipped to mainland China for assembly in a factory owned by a Taiwanese company; and the finished iPhone is sent back to California at which time we count it as an import. At this point the iPhone adds $229 to $275 to the US-China trade deficit even though only a fraction of that is actually retained by the Chinese economy. (The linked paper estimates that $10 or less per iPhone is paid in labor costs in China, and gross profits mostly go to the foreign firms that own the factories.)

Many other high tech products like the iPhone follow a similar narrative. The cheap plastic stuff and poisonous dog food we import from China are different stories. But now we see how complicated this all is. It’s far from clear that the US-China trade deficit is a big problem, let alone hugely responsible for American woes.

Trump’s fourth criticism, that China is stealing American jobs, is pure demagoguery. Do you remember Deng Xiaoping or Hu Jintao coming to the US and forcibly removing America’s light manufacturing industry? No? Right, me neither. Sure, opening up trade with China has contributed to job loss and stagnant wages in the US, but these problems have a lot more to do with our own policies and values than nefarious Chinese plots. American workers are much more productive, yet their wages have remained stagnant for more than 30 years. Major shareholders and executives at the top of corporations eat up all the profits created by productivity gains. The guy who used make the dog food is now the clerk who stands in the pet food aisle at Walmart, but some time around 30 years ago the country decided it was okay to stop giving these kinds of service workers raises.

Trump’s fifth grievance is all the US debt that China holds. This is an oft-misunderstood issue that is not necessarily a sign of American weakness but rather shows that China has nowhere else to put its money (same goes for Japan). These countries are not loaning us money and then threatening to break our kneecaps if we don’t pay up plus 20% next week. They buy our debt even though interest rates are so low because our debt is considered the safest in the world, and what else is China going to do with its surplus cash, build more ghost cities?

So Trump is half right on one of his five grievances with China, and I’ll give him another half point on the trade deficit issue, since some economists I trust think it merits consideration. Should Trump somehow become president, maybe he can speak with Xi Jinping about something he actually knows about, bankruptcy.