RJB
8th November 2010, 07:43 AM
http://www.bloomberg.com/news/2010-11-02/china-seen-using-more-copper-than-world-produces-now-with-yang-s-new-stove.html
China Can Use More Copper Than World Has Now With Yang's Stove
By Bloomberg News - Nov 2, 2010 China’s worldwide search for copper begins in the gnarled hands of 76-year-old Yang Caiguan, who is fiddling with the cables of his digital television tuner.
“The red plug should go into the red hole,” he mutters to himself, hesitating to make the connection.
Around him sit amenities of modern life -- flat-screen TV, air conditioners, washing machine, water heater and gas-ignition stove -- that were foreign to him and his wife until this year. With their new apartment in the central Chinese town of Daojiang in Hunan province, the couple acquired at least 41 kilograms (90 pounds) of copper in electrical wiring and appliances, about 10 times the nation’s annual per capita consumption of the metal.
As subsistence farmers they had used little copper for most of their lives.
The Yangs’ transformation into urbanized consumers epitomizes the Chinese government’s vision for the next -- and potentially biggest -- phase of its economic rise: bringing the prosperity of its coastal boomtowns inland, where more than half of its 1.3 billion people live, mostly in rural homes.
China is on pace to almost triple its annual use of copper to 20 million tons in 25 years, according to CRU, a London-based metals and mining consulting firm. That’s more than the world produces today. Rising demand will create a potential global shortage of 11 million tons a year by 2035, CRU forecasts.
‘Very Long Term’
“There is absolutely torrid growth taking place in central China,” says Daniel Rosen, a principal of the Rhodium Group, a New York-based economic advisory firm. “It’s going to build an Eastern China over again.”
The per-capita gross domestic product of inland provinces is less than half of that on the coast, according to data from China’s National Bureau of Statistics. Even nationwide, China’s GDP was $3,734 per person in 2009, ranking the country in between Albania and El Salvador, according to the International Monetary Fund.
“When politicians say China is a developing country, it’s true,” says Wu Jian, director general of the Rio Blanco Copper SA mine in Peru, owned by Fujian province-based Zijin Mining Group Co. “It doesn’t all look like Shanghai or Beijing.”
The rapid expansion of suburbs like Levittown on Long Island after World War II helped lift consumer demand in the U.S., the world’s largest economy. China, which leapfrogged Japan in the second quarter this year to become the second- biggest, similarly wants to grow towns and cities that will create jobs, raise living standards and boost consumption.
The country’s 10 percent average growth rate since the 1980s puts its economy on a trajectory to surpass the U.S. within 20 years, based on data compiled by Bloomberg.
Boost Consumption
Accelerating the urbanization of central and western China will push economies there to grow, Vice Premier Li Keqiang said in a speech in February. Boosting domestic demand and moving people into cities are priorities to maintain China’s fast long- term growth, he said. The government aims to quadruple per- capita GDP from 2000 to 2020.
Copper is at the heart of the development. China’s consumption of the metal has tripled in a decade to an estimated 6.8 million tons this year, according to CRU.
Atomic number 29 on the periodic table, the material is one of the best conductors of heat and electricity. In use for 10,000 years, it provides the electrical core of homes, cars, computers and mobile phones.
‘Xiao Dao’
The Yangs were thrust into China’s consumer society by their factory-owning son, Yang Dongsheng. He spent 350,000 yuan ($52,500) to buy and equip their four-bedroom apartment in Daojiang, 500 kilometers (311 miles) from China’s southern coastal manufacturing belt where he made his fortune.
He wanted to make them comfortable out of a feeling of “xiao dao,” the Chinese expression for filial piety, says Yang Dongsheng, who is 35 and the youngest child.
Before, the couple had lived eight kilometers and seemingly a century away in a mud-brick house Yang built in the village of Caoxieping, Chinese for “straw shoes floor.” There was no running water, the toilet was an open cesspool and his 84-year- old wife, Jiang Hejiao, cooked hunched over a wood-fired stove.
Their new home is in a gated development of 17 red-and- yellow apartment blocks called Songlinyuan, or Pine Forest Court for the trees that cover the hills behind. It’s the first of 10 new mid- and high-rise residential communities planned for the town, according to Wang Xianjie, deputy chief of Dao county’s urban planning bureau, in an attempt to attract natives back from the coast and wealthier local residents.
Shopping Malls
Local government officials aim to double the size of Daojiang, the main town in Dao county. By 2012, three new highways will connect it to the east and south coasts, as well as to Inner Mongolia in the north. The first rail line through Dao opened last year, connecting it to Luoyang in the north and Zhanjiang on the south coast.
“Now the city is not a comfortable place to live,” says Tang Xianglin, the party secretary of Dao county, citing a lack of decent housing complexes and nice shopping malls. “We’re getting them now.”
In February, two weeks after moving to Songlinyuan, the Yangs celebrated Lunar New Year’s Eve with 23 relatives. Yang tells how the home buzzed with energy as they played cards or watched TV in the heated living room under the lights of a pink chandelier.
Traditional Banquet
Their traditional banquet of chicken, fish, duck, beef, pork, and a dog stewed in soy sauce was prepared for the first time on the burners of a China-made gas stove made with at least 4.6 kilograms of copper, according to its manufacturer Guangdong Chant Group.
“A new home needs a celebration,” says Yang, his left eye blind because of keratitis.
After their guests left, the couple found themselves surrounded by a sudden wealth of modern electronics they didn’t know how to use. For a time, Yang would phone his children daily asking how to operate them.
Jiang stopped cooking, afraid to use the electric-ignition gas stove because of the way it whooshes when it lights up.
“They’re not used to modern life,” says their son.
For all the creature comforts, the older Yang isn’t sure if their new life is better than the old.
“It’s a bit more comfortable living here,” Yang says. “In terms of the routines, I’m more used to my old house. There we were more at ease. I could spit on the ground freely and walk around.”
Ice Cream
An inventory of their new conveniences shows how copper underpins the hopes of leaders like Vice Premier Li.
One of the elderly couple’s favorite accoutrements is the freezer drawer of their refrigerator, which has 2 kilograms of copper, according to Li Peng of Hunan Vary Tech Co., which recycles large appliances. It’s brought them the simple joy of all-you-can-eat ice cream at any hour. Yang opens it to show a plastic bag of ice cream bars.
“Now we can buy them in bulk,” says Yang, whose other pleasures include smoking tobacco in a bamboo pipe and drinking the yam wine he brought to Songlinyuan from his village house.
The Yangs’ washing machine, with about 750 grams of copper, is seldom used in summer, when they wash their clothes by hand. In the bathroom there’s an unused shower connected to a Usaton water heater that comprises another 500 grams of copper, according to the manufacturer. They prefer to bathe in a brown plastic tub they brought from their old home.
13 Kilograms
The air-conditioning is taking some getting used to. Yang says he often gets up in the middle of the night to turn off their bedroom’s wall-mounted Midea Group Co. unit because he’s cold. Their home has two such models that contain 6 kilograms of copper each, the Guangdong, China-based manufacturer says.
The wiring in a Chinese home of that size typically uses about 13 kilograms of copper, says Liu Yuan, chief engineer of China Building Decoration Association. The TV has at least 110 grams of copper in its circuitry.
The number of kilograms of copper consumed per capita in China last year was 3.9, compared with 6.5 for the U.S. and 8.6 for Japan, says Jeremy Gray, global head of resources at Standard Chartered Plc in Hong Kong. As the country develops, China’s consumption per person may rise to 5 kilograms by 2015, he says.
Scores of other residents in the complex of seven-story buildings were as flummoxed as the Yangs by their move into 21st-century housing. Wen Tao, a 20-year-old security guard, says he’s grown tired of them asking questions, and arguing over who uses the development’s basketball court.
Fulfilling Aspirations
“These people don’t know how to turn off the water valve,” Wen says. “They buzz me for the pettiest things.”
He dreams of quitting his 800-yuan-a-month job and one day starting a business that, he says, would enable him to live in such modern housing and buy a foreign-brand car. He points to an Audi A6 he admires parked alongside cheaper China-brand Chery models in the parking lot of Songlinyuan.
Fulfilling such aspirations means China’s appetite for copper will be “relentless,” says Andrew Harding, chief executive officer of Rio Tinto Group’s copper unit in Santiago, Chile. The world’s third-largest mining company by revenue generated 25 percent of its sales from China in the first six months of this year, up from 14 percent from the same period in 2006.
“If you believe as I do that there’s a desire to match the standard of living that’s seen in places like the U.S. or the U.K. or Australia, then they’ve got to do an enormous amount of infrastructure, building of houses, cars and all that sort of stuff,” he says.
Appliance Sales
Harding’s vision is beginning to play out in Daojiang. Hand-painted advertisements for Midea air-conditioners and Meiling fridges line the main road into the town from Guilin, a popular riverside tourist destination to the west. The center, where the Yangs’ daughters shopped for most of their parents’ new gadgets, boasts two electronics stores and a jewelry shop opened in May.
Inside the showroom of the Yinfeng Home Appliances Supermarket, sales hit a record 1.7 million yuan in July, according to the owner, Jiang Zhongli.
Rural customers spent 67.8 billion yuan buying home appliances in the first half of 2010, more than the whole of last year’s total, spurred on by government subsidies for farmers. About 600,000 tons of refined copper consumed in China last year went into home appliances, equivalent to the amount of metal that would be needed to build 82 Eiffel Towers.
The Yangs’ Journey
Among the casually dressed staff taking turns to belt out songs on a karaoke machine between serving shoppers is Cheng Zhifang. The best salesman on the floor, by his own account, the 29-year-old quit itinerant jobs on the coast last year to come back home in the hope of finding better prospects.
“Before, when villagers came into the shop and saw the prices they looked uncomfortable,” says Cheng, who says he can read buyers’ faces from the way they hold their eyes. “I’m seeing less of that now.”
The Yangs’ journey traces China’s history during the Communist era. Once local landlords living in a 300-year-old ancestral mansion, they were considered class enemies when Mao Zedong launched the Cultural Revolution, he says. The family escaped slaughter after village officials protected them during a bloody 1967 rampage through Dao, according to Yang.
They were allocated 4 mu of farmland (two-thirds of an acre, or 2,670 square meters) under reforms introduced after Mao’s death as leader Deng Xiaoping began opening China’s economy to market forces economy in 1978. Near there, Yang built them a house of yellowing mud bricks.
Yellow Mud Bricks
On a visit in August, he pointed to ventilation holes high in the walls of the tile-roofed house they relied on to provide relief from the humid summer heat because the house has no air- conditioning. He opens the door to an open-air toilet the family used under the watchful eyes of three bulls they kept to work the paddy fields.
“It doesn’t matter the bulls can see you,” Yang says, hushing the animals back behind the bars.
Illiterate, Yang raised cattle, grew rice and yams and later worked as a bricklayer to pay for his children to go to high school in the hope they could break out of poverty.
“I was doing construction work in my late 60s,” says Yang. “The job paid 20 yuan a day at most. My son wasn’t yet rich.”
Yang Dongsheng is one of more than 150 million migrants who have moved to the coast seeking better wages, an influx that fueled China’s economic growth by providing a workforce for labor-intensive export manufacturers.
One-Way Ticket
China’s industrial production has risen almost fivefold since the country’s accession to the World Trade Organization in 2001. That’s double the fastest recorded increase in the U.S., during the 8 years after the Great Depression trough.
In 2000, with 200 yuan in his pocket, Yang Dongsheng bought a one-way train ticket to Shenzhen. Working as a technician, he picked up enough computer engineering skills to set up his own business in 2004. His company, Shenda Automation Machinery, employs 40 people in the southern Chinese manufacturing city of Dongguan.
Yang Dongsheng says it’s too early to say whether he’ll return home. He turned down a tax break to set up a plastic- molding factory in Dao last year, he says. The area doesn’t have adequate transportation and supply-chain infrastructure, he says.
Foxconn Shifts Inland
Much depends on how many of his clients move inland, he says. Shenda Automation makes customized machines for factories that produce parts for companies including Foxconn Technology Group, the electronics behemoth that makes Apple Inc. iPhones, Sony Corp. PlayStations and other products for export.
Foxconn’s flagship, Taipei-based Hon Hai Precision Industry Co., is planning to join the migration inland, building factories in Henan and Sichuan provinces as it recruits 400,000 more workers. The company’s main factory in Shenzhen, a southern coastal city, had a spate of employee suicides this year.
“If Foxconn starts an operation in Dao, I will definitely move back,” the younger Yang says.
Central China’s growth rate in fixed-asset investment -- spending on things like factories, buildings and machinery --has outpaced the coast for the past five years, the Rhodium Group’s Rosen says. In 2009, investment grew at 36 percent in central China compared with 24 percent in the east.
China must succeed in building out counties like Dao, or risk social turmoil, says Zhang Jun, director of the China Center for Economic Studies at Fudan University in Shanghai.
Five-Year Plan
“There is no alternative,” says Zhang. “A failure will exacerbate the imbalance with eastern China. That would impose a huge threat to stability, not only to China but the whole world.”
China’s next five-year development plan beginning in 2011 will promote domestic demand and more equitable social growth, according to a statement by top officials of the party’s central committee after an October meeting in Beijing.
It won’t be easy. Inland economies will find it more difficult than their coastal counterparts did because they are paying more for commodities, says Ben Simpfendorfer, the Hong Kong-based chief China economist at Royal Bank of Scotland Group Plc.
“Clearly China can’t follow on the same development path as did Europe and the United States,” he says. “It can’t continue to consume copper at the current rate because there aren’t enough mines.”
Rising Electricity Bill
State Grid Corp. of China, the country’s largest electricity distributor, will absorb one million tons of copper a year until 2015, according to Qu Yi, CRU’s Beijing-based copper analyst. Dao county’s electricity transmission capacity was boosted 150 percent after a new transformer with 20 tons of copper was installed in June.
Power use by the Yangs rose dramatically with their move. The couple were taken aback to find their new lifestyle led to a monthly electricity bill of 200 yuan, equal to what they paid for a full year back in the village, the family patriarch says.
A cool breeze stirs in the living room as he turns on the Blue Spirit air-conditioning unit that stands six-feet tall behind their three-seater brown leather sofa. The unit, with 8 kilograms of copper according to its maker, Zhuhai, Guangdong province-based Gree Electric Appliances Inc., bears a label saying it’s energy-efficient. Yang is skeptical.
“The meter runs really fast when this is turned on,” Yang says. “Does it really save a lot of electricity?”
The couple still seeks out remnants of their old lifestyle to escape the loneliness of their new environment.
At 8 a.m. most days, the two walk to a small road-side house to gamble up to 10 yuan playing a traditional Chinese card game with new acquaintances. Evenings are spent back at their apartment, eating dinner and watching TV, sometimes under the glare of colored spotlights in the ceiling that bathe the living room in red, blue and green.
“We’ve got to get used to it,” he says. “We didn’t want to move. My son wanted us to live here.”
To contact the Bloomberg News Staff on this story: Fan Wenxin in Shanghai at Wfan19@bloomberg.net
To contact the editor responsible for this story: Melissa Pozsgay in Paris at mpozsgay@bloomberg.net
.
China Can Use More Copper Than World Has Now With Yang's Stove
By Bloomberg News - Nov 2, 2010 China’s worldwide search for copper begins in the gnarled hands of 76-year-old Yang Caiguan, who is fiddling with the cables of his digital television tuner.
“The red plug should go into the red hole,” he mutters to himself, hesitating to make the connection.
Around him sit amenities of modern life -- flat-screen TV, air conditioners, washing machine, water heater and gas-ignition stove -- that were foreign to him and his wife until this year. With their new apartment in the central Chinese town of Daojiang in Hunan province, the couple acquired at least 41 kilograms (90 pounds) of copper in electrical wiring and appliances, about 10 times the nation’s annual per capita consumption of the metal.
As subsistence farmers they had used little copper for most of their lives.
The Yangs’ transformation into urbanized consumers epitomizes the Chinese government’s vision for the next -- and potentially biggest -- phase of its economic rise: bringing the prosperity of its coastal boomtowns inland, where more than half of its 1.3 billion people live, mostly in rural homes.
China is on pace to almost triple its annual use of copper to 20 million tons in 25 years, according to CRU, a London-based metals and mining consulting firm. That’s more than the world produces today. Rising demand will create a potential global shortage of 11 million tons a year by 2035, CRU forecasts.
‘Very Long Term’
“There is absolutely torrid growth taking place in central China,” says Daniel Rosen, a principal of the Rhodium Group, a New York-based economic advisory firm. “It’s going to build an Eastern China over again.”
The per-capita gross domestic product of inland provinces is less than half of that on the coast, according to data from China’s National Bureau of Statistics. Even nationwide, China’s GDP was $3,734 per person in 2009, ranking the country in between Albania and El Salvador, according to the International Monetary Fund.
“When politicians say China is a developing country, it’s true,” says Wu Jian, director general of the Rio Blanco Copper SA mine in Peru, owned by Fujian province-based Zijin Mining Group Co. “It doesn’t all look like Shanghai or Beijing.”
The rapid expansion of suburbs like Levittown on Long Island after World War II helped lift consumer demand in the U.S., the world’s largest economy. China, which leapfrogged Japan in the second quarter this year to become the second- biggest, similarly wants to grow towns and cities that will create jobs, raise living standards and boost consumption.
The country’s 10 percent average growth rate since the 1980s puts its economy on a trajectory to surpass the U.S. within 20 years, based on data compiled by Bloomberg.
Boost Consumption
Accelerating the urbanization of central and western China will push economies there to grow, Vice Premier Li Keqiang said in a speech in February. Boosting domestic demand and moving people into cities are priorities to maintain China’s fast long- term growth, he said. The government aims to quadruple per- capita GDP from 2000 to 2020.
Copper is at the heart of the development. China’s consumption of the metal has tripled in a decade to an estimated 6.8 million tons this year, according to CRU.
Atomic number 29 on the periodic table, the material is one of the best conductors of heat and electricity. In use for 10,000 years, it provides the electrical core of homes, cars, computers and mobile phones.
‘Xiao Dao’
The Yangs were thrust into China’s consumer society by their factory-owning son, Yang Dongsheng. He spent 350,000 yuan ($52,500) to buy and equip their four-bedroom apartment in Daojiang, 500 kilometers (311 miles) from China’s southern coastal manufacturing belt where he made his fortune.
He wanted to make them comfortable out of a feeling of “xiao dao,” the Chinese expression for filial piety, says Yang Dongsheng, who is 35 and the youngest child.
Before, the couple had lived eight kilometers and seemingly a century away in a mud-brick house Yang built in the village of Caoxieping, Chinese for “straw shoes floor.” There was no running water, the toilet was an open cesspool and his 84-year- old wife, Jiang Hejiao, cooked hunched over a wood-fired stove.
Their new home is in a gated development of 17 red-and- yellow apartment blocks called Songlinyuan, or Pine Forest Court for the trees that cover the hills behind. It’s the first of 10 new mid- and high-rise residential communities planned for the town, according to Wang Xianjie, deputy chief of Dao county’s urban planning bureau, in an attempt to attract natives back from the coast and wealthier local residents.
Shopping Malls
Local government officials aim to double the size of Daojiang, the main town in Dao county. By 2012, three new highways will connect it to the east and south coasts, as well as to Inner Mongolia in the north. The first rail line through Dao opened last year, connecting it to Luoyang in the north and Zhanjiang on the south coast.
“Now the city is not a comfortable place to live,” says Tang Xianglin, the party secretary of Dao county, citing a lack of decent housing complexes and nice shopping malls. “We’re getting them now.”
In February, two weeks after moving to Songlinyuan, the Yangs celebrated Lunar New Year’s Eve with 23 relatives. Yang tells how the home buzzed with energy as they played cards or watched TV in the heated living room under the lights of a pink chandelier.
Traditional Banquet
Their traditional banquet of chicken, fish, duck, beef, pork, and a dog stewed in soy sauce was prepared for the first time on the burners of a China-made gas stove made with at least 4.6 kilograms of copper, according to its manufacturer Guangdong Chant Group.
“A new home needs a celebration,” says Yang, his left eye blind because of keratitis.
After their guests left, the couple found themselves surrounded by a sudden wealth of modern electronics they didn’t know how to use. For a time, Yang would phone his children daily asking how to operate them.
Jiang stopped cooking, afraid to use the electric-ignition gas stove because of the way it whooshes when it lights up.
“They’re not used to modern life,” says their son.
For all the creature comforts, the older Yang isn’t sure if their new life is better than the old.
“It’s a bit more comfortable living here,” Yang says. “In terms of the routines, I’m more used to my old house. There we were more at ease. I could spit on the ground freely and walk around.”
Ice Cream
An inventory of their new conveniences shows how copper underpins the hopes of leaders like Vice Premier Li.
One of the elderly couple’s favorite accoutrements is the freezer drawer of their refrigerator, which has 2 kilograms of copper, according to Li Peng of Hunan Vary Tech Co., which recycles large appliances. It’s brought them the simple joy of all-you-can-eat ice cream at any hour. Yang opens it to show a plastic bag of ice cream bars.
“Now we can buy them in bulk,” says Yang, whose other pleasures include smoking tobacco in a bamboo pipe and drinking the yam wine he brought to Songlinyuan from his village house.
The Yangs’ washing machine, with about 750 grams of copper, is seldom used in summer, when they wash their clothes by hand. In the bathroom there’s an unused shower connected to a Usaton water heater that comprises another 500 grams of copper, according to the manufacturer. They prefer to bathe in a brown plastic tub they brought from their old home.
13 Kilograms
The air-conditioning is taking some getting used to. Yang says he often gets up in the middle of the night to turn off their bedroom’s wall-mounted Midea Group Co. unit because he’s cold. Their home has two such models that contain 6 kilograms of copper each, the Guangdong, China-based manufacturer says.
The wiring in a Chinese home of that size typically uses about 13 kilograms of copper, says Liu Yuan, chief engineer of China Building Decoration Association. The TV has at least 110 grams of copper in its circuitry.
The number of kilograms of copper consumed per capita in China last year was 3.9, compared with 6.5 for the U.S. and 8.6 for Japan, says Jeremy Gray, global head of resources at Standard Chartered Plc in Hong Kong. As the country develops, China’s consumption per person may rise to 5 kilograms by 2015, he says.
Scores of other residents in the complex of seven-story buildings were as flummoxed as the Yangs by their move into 21st-century housing. Wen Tao, a 20-year-old security guard, says he’s grown tired of them asking questions, and arguing over who uses the development’s basketball court.
Fulfilling Aspirations
“These people don’t know how to turn off the water valve,” Wen says. “They buzz me for the pettiest things.”
He dreams of quitting his 800-yuan-a-month job and one day starting a business that, he says, would enable him to live in such modern housing and buy a foreign-brand car. He points to an Audi A6 he admires parked alongside cheaper China-brand Chery models in the parking lot of Songlinyuan.
Fulfilling such aspirations means China’s appetite for copper will be “relentless,” says Andrew Harding, chief executive officer of Rio Tinto Group’s copper unit in Santiago, Chile. The world’s third-largest mining company by revenue generated 25 percent of its sales from China in the first six months of this year, up from 14 percent from the same period in 2006.
“If you believe as I do that there’s a desire to match the standard of living that’s seen in places like the U.S. or the U.K. or Australia, then they’ve got to do an enormous amount of infrastructure, building of houses, cars and all that sort of stuff,” he says.
Appliance Sales
Harding’s vision is beginning to play out in Daojiang. Hand-painted advertisements for Midea air-conditioners and Meiling fridges line the main road into the town from Guilin, a popular riverside tourist destination to the west. The center, where the Yangs’ daughters shopped for most of their parents’ new gadgets, boasts two electronics stores and a jewelry shop opened in May.
Inside the showroom of the Yinfeng Home Appliances Supermarket, sales hit a record 1.7 million yuan in July, according to the owner, Jiang Zhongli.
Rural customers spent 67.8 billion yuan buying home appliances in the first half of 2010, more than the whole of last year’s total, spurred on by government subsidies for farmers. About 600,000 tons of refined copper consumed in China last year went into home appliances, equivalent to the amount of metal that would be needed to build 82 Eiffel Towers.
The Yangs’ Journey
Among the casually dressed staff taking turns to belt out songs on a karaoke machine between serving shoppers is Cheng Zhifang. The best salesman on the floor, by his own account, the 29-year-old quit itinerant jobs on the coast last year to come back home in the hope of finding better prospects.
“Before, when villagers came into the shop and saw the prices they looked uncomfortable,” says Cheng, who says he can read buyers’ faces from the way they hold their eyes. “I’m seeing less of that now.”
The Yangs’ journey traces China’s history during the Communist era. Once local landlords living in a 300-year-old ancestral mansion, they were considered class enemies when Mao Zedong launched the Cultural Revolution, he says. The family escaped slaughter after village officials protected them during a bloody 1967 rampage through Dao, according to Yang.
They were allocated 4 mu of farmland (two-thirds of an acre, or 2,670 square meters) under reforms introduced after Mao’s death as leader Deng Xiaoping began opening China’s economy to market forces economy in 1978. Near there, Yang built them a house of yellowing mud bricks.
Yellow Mud Bricks
On a visit in August, he pointed to ventilation holes high in the walls of the tile-roofed house they relied on to provide relief from the humid summer heat because the house has no air- conditioning. He opens the door to an open-air toilet the family used under the watchful eyes of three bulls they kept to work the paddy fields.
“It doesn’t matter the bulls can see you,” Yang says, hushing the animals back behind the bars.
Illiterate, Yang raised cattle, grew rice and yams and later worked as a bricklayer to pay for his children to go to high school in the hope they could break out of poverty.
“I was doing construction work in my late 60s,” says Yang. “The job paid 20 yuan a day at most. My son wasn’t yet rich.”
Yang Dongsheng is one of more than 150 million migrants who have moved to the coast seeking better wages, an influx that fueled China’s economic growth by providing a workforce for labor-intensive export manufacturers.
One-Way Ticket
China’s industrial production has risen almost fivefold since the country’s accession to the World Trade Organization in 2001. That’s double the fastest recorded increase in the U.S., during the 8 years after the Great Depression trough.
In 2000, with 200 yuan in his pocket, Yang Dongsheng bought a one-way train ticket to Shenzhen. Working as a technician, he picked up enough computer engineering skills to set up his own business in 2004. His company, Shenda Automation Machinery, employs 40 people in the southern Chinese manufacturing city of Dongguan.
Yang Dongsheng says it’s too early to say whether he’ll return home. He turned down a tax break to set up a plastic- molding factory in Dao last year, he says. The area doesn’t have adequate transportation and supply-chain infrastructure, he says.
Foxconn Shifts Inland
Much depends on how many of his clients move inland, he says. Shenda Automation makes customized machines for factories that produce parts for companies including Foxconn Technology Group, the electronics behemoth that makes Apple Inc. iPhones, Sony Corp. PlayStations and other products for export.
Foxconn’s flagship, Taipei-based Hon Hai Precision Industry Co., is planning to join the migration inland, building factories in Henan and Sichuan provinces as it recruits 400,000 more workers. The company’s main factory in Shenzhen, a southern coastal city, had a spate of employee suicides this year.
“If Foxconn starts an operation in Dao, I will definitely move back,” the younger Yang says.
Central China’s growth rate in fixed-asset investment -- spending on things like factories, buildings and machinery --has outpaced the coast for the past five years, the Rhodium Group’s Rosen says. In 2009, investment grew at 36 percent in central China compared with 24 percent in the east.
China must succeed in building out counties like Dao, or risk social turmoil, says Zhang Jun, director of the China Center for Economic Studies at Fudan University in Shanghai.
Five-Year Plan
“There is no alternative,” says Zhang. “A failure will exacerbate the imbalance with eastern China. That would impose a huge threat to stability, not only to China but the whole world.”
China’s next five-year development plan beginning in 2011 will promote domestic demand and more equitable social growth, according to a statement by top officials of the party’s central committee after an October meeting in Beijing.
It won’t be easy. Inland economies will find it more difficult than their coastal counterparts did because they are paying more for commodities, says Ben Simpfendorfer, the Hong Kong-based chief China economist at Royal Bank of Scotland Group Plc.
“Clearly China can’t follow on the same development path as did Europe and the United States,” he says. “It can’t continue to consume copper at the current rate because there aren’t enough mines.”
Rising Electricity Bill
State Grid Corp. of China, the country’s largest electricity distributor, will absorb one million tons of copper a year until 2015, according to Qu Yi, CRU’s Beijing-based copper analyst. Dao county’s electricity transmission capacity was boosted 150 percent after a new transformer with 20 tons of copper was installed in June.
Power use by the Yangs rose dramatically with their move. The couple were taken aback to find their new lifestyle led to a monthly electricity bill of 200 yuan, equal to what they paid for a full year back in the village, the family patriarch says.
A cool breeze stirs in the living room as he turns on the Blue Spirit air-conditioning unit that stands six-feet tall behind their three-seater brown leather sofa. The unit, with 8 kilograms of copper according to its maker, Zhuhai, Guangdong province-based Gree Electric Appliances Inc., bears a label saying it’s energy-efficient. Yang is skeptical.
“The meter runs really fast when this is turned on,” Yang says. “Does it really save a lot of electricity?”
The couple still seeks out remnants of their old lifestyle to escape the loneliness of their new environment.
At 8 a.m. most days, the two walk to a small road-side house to gamble up to 10 yuan playing a traditional Chinese card game with new acquaintances. Evenings are spent back at their apartment, eating dinner and watching TV, sometimes under the glare of colored spotlights in the ceiling that bathe the living room in red, blue and green.
“We’ve got to get used to it,” he says. “We didn’t want to move. My son wanted us to live here.”
To contact the Bloomberg News Staff on this story: Fan Wenxin in Shanghai at Wfan19@bloomberg.net
To contact the editor responsible for this story: Melissa Pozsgay in Paris at mpozsgay@bloomberg.net
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