Maco Polo a big fat phony?

Daniele Petrella, an Italian archeological trouble-maker, recently claimed Marco Polo never went to China.  His smoking gun, or lack thereof, is the fact that the fabled explorer claimed Mongolian warships had five masts, when in fact they only had three.  Because everything everyone has ever said is without exaggeration.

In an era when Europeans still believed in mermaids, giant reptilian sea monsters and a fictitious Christian Kingdom in the Far East, overstating the size of the Mongolian armada is pretty darn excusable.  Had it not been for the massive tidal waves that thwarted the Khan’s ambitions, Japan would have had a real mess on its hands.  And nothing is crazier than when Mongolians get messy.

 As far as world travelers go, no one comes close to Marco Polo.  Not only is he remembered whenever kids play in swimming pools, but he literally wrote the first travelogue.  But as party-pooper Dr. Fances Wood puts it, his travelogue is merely the first data-base of traveling.

Loath as I am to admit it, Dr. Wood made a pretty good case for Polo being a fibber in her 1995 book.  More damning than his bogus and audacious claims of extravagant Mongolian masts, Dr. Wood has proven there is no record whatsoever that Polo ever went to China.

When Europe was reeling from the Black Death, and was considered too dirty to conquer by the Mongolians, China already had a sophisticated publishing system in place.  The Yangzhou Gazzette is one such publication to come out of the Song Dynasty, and as earthshaking as the epic East-Meets-West should have been, there isn’t a single mention of the Venetian in any article.

Does that mean good ol’ Marco made up everything about high-fiving the Emperors?

One time I thought I met the governor of Jilin province, which made me feel like I had also met an Emperor.  As it turned out I didn’t meet anyone that cool, but I still wrote about the experience.  At the same time I’m not the guy who shaped history textbooks from Beijing to Timbuktu.

Then why do Chinese students, and I mean incredibly intelligent Chinese students with BAs from prestigious institutions, take it as fact that a Venetian went to China?

I’ve been told by a number of close Chinese friends that he wrote a book about his travels.  And since books are never wrong, especially during an era when Europeans believed Jews caused the Black Death and brushing your teeth with urine was kosher, it must be true.

Dr. Wood explained it in a funny sort of way to me in an email exchange:

“The Chinese like Polo because they consider he 'discovered' China for Europe- in the same way, they liked Edward Heath because he recognized China and raised our relations to Ambassadorial level, ditto Richard Nixon.”

She went further by saying he probably made it well into Persia, and heard stories from traders along the Silk Road.  He collected their stories, added an Italian re-tweaking, and there you have a book that served as the basis of European knowledge until the Age of Discovery.

 Marco Polo in Hangzhou, there! Indisputable proof he went to China!

 Who's your Great Khan?

Nonetheless, his statue remains tall and prominent in Hangzhou, the temporary capital of unoccupied Song China for 100 years (the Mongolians conquered China in stages, and when Chinese tribute from the south stopped flowing they collected with interest).

I’m not happy about it, but the arguments against Marco are pretty airtight.  I’d love to hear from any Italians out there by the way, like, is it a little fishy that an Italian archeologist from Naples would try and smear the good name of a Venetian explorer?

The #1 thing I miss about China:

You don't tip in China.

I was at a bar recently, and at the end of the evening I paid for my drinks in cold hard cash. Arguably it was a rash decision, but I had a twenty bill to cover $14 in gin and tonics. The bartender took the money, and said something to the tune of "your credit is good here" and kept all my change. Infuriating.

My first month in Changchun some friends and I decided to splurge on fancy restaurants because why save money? Spending $14 on a meal in the US isn't out of the ordinary, maybe gets you a nice buger, fries and a drink. In China, well, developing China like in Changchun, that buys a feast in a posh environment.

So my friends and I ate out, and we were for the most part amazed by the level of service and decided to leave a 20% gratuity. As we were walking out of the restaurant our waitress ran outside with the money and said "you left your money at the table!" When we tried to comfort our distraught fuwuyuan by telling her not to worry, it's yours and you should keep it, she steadfastly refused.

So yes, without being preachy I can still be honest and say that particular Chinese custom works for me.  Tips are not a right is all I'm saying, shouldn't a satisfied customer be all the necessary reward?  Maybe that's just my excuse for being cheap :p

 The best dumpling restaurant in Shanghai- great food, great service and no tips!

Coming soon! Dating Chinese!

I've been busy recently and haven't had so much time to spend on the blog, but the next installment should have less words and more gossip!

Without getting into specifics, there won't be real names, but real events!  Maybe I can fit bears into the post as well..

Royal Dutch Shell’s perspectives on the South China Sea: Balanced and Unbalanced security dilemmas

In January of 2011 Royal Dutch Shell released a grim outlook of the world energy situation.  Codenamed the “scramble” scenario, Shell predicts that starting around 2017 the pressures related to surging Asian energy demand will boil over, and nations will take unilateral action to secure resource-rich areas.  Among other places would be the vast natural gas fields in the Spratly islands.

The RDS document, “Signals and Signposts”, takes a look at the South China Sea, and maintains that SCS resources are of greater concern to smaller countries than to China.  Despite China’s broad claims to the region, it has yet to establish a tangible and permanent foothold. (Source: FP Niel Goldberg, http://www.foreignpolicy.com/articles/2011/07/11/the_south_china_seas_georgia_scenario)  China’s motivation has everything to do with the American navel presence in the region.  Unlike ASEAN countries, China views the American 7^th fleet as a hostile force capable of destroying 90% of the Middle Kingdom’s energy imports (according to an analyst with CSIS the US Navy already has the capability to do so by chocking the straights of Malacca).

US 7th Fleet: between 60 and 70 ships, 200-300 aircraft and upwards of 40k personnel.

Straight of Malacca, 90% of Chinese energy imports currently flow through the straights

The resources in the South China Sea are immense, with the potential to supply SCS countries with natural gas for the foreseeable future.  There are over 25 trillion barrels of proven natural gas reserves in the SCS, more than sufficient to supply the estimated 3.5 trillion barrels per year of expected consumption by 2020.  (Source: Global Security: http://www.globalsecurity.org/military/world/war/spratly-oil.htm)

Competing territorial claims, however, remain the crux of the problem.  If “scramble” is to be avoided, then there must be energy cooperation and agreement between countries regarding who can access what.  Rather than shore up resources, a developed natural gas market would be key to easing tensions.  This goes hand in hand with energy cooperation, and is more secure and open than secretive long-term energy contracts currently the norm in Asia.

The importance of Floating Liquefied Natural Gas platforms:

The key factors at play regarding FLNG platforms are two fold.  These floating natural gas extraction platforms can stay in place over natural gas fields for 25 years until the field is can no longer produce sufficient quantities of NG, at which point the structure will simply disengage and float to another field.  Royal Dutch Shell is the only player that can produce such an engineering marvel at this time.

As Professor Ronald Ripple bluntly stated at an Australia Embassy event on the future of Asian natural gas markets, no other energy company has the resources or the will to implement a competitive FLNG program.  Chevron, however, will be looking to gauge the success of its competitor, and should all go well this multinational oil firm would follow suit.

The importance of FLNG platforms cannot be overstated.  Capable of withstanding category five typhoons, these platforms have an exceptionally long lifespan of 50+ years averaging 100,000 barrels of liquefied natural gas per day.  To put this into perspective:

2010 NG Output and Demand in barrels equivalent per year:

Vietnam:            Output:            50 billion             Demand:  50 billion

China:                Output:            522 billion           Demand: 547 billion

Taiwan:              Output:            2.3 billion            Demand: 75 billion

One FLNG:        Output:            365,000

Midterm sweeping FLNG program (four platforms):  1.5 billion           

Source: 2010 World Fact Book

Furthermore, increasing bulk orders of FLNG platforms will eventually drive the costs down.  Samsung Heavy has disclosed the total cost of producing an FLNG is a mere 3 billion USD compared to the selling price of 13 billion USD for the initial FLNG platform.  (Source: Fox Business News, http://www.foxbusiness.com/markets/2011/06/01/samsung-says-shell-prelude-flng-vessel-cost-3-billion/)  Samsung is clearing a ten billion dollar profit from the deal.  Further down the line, as more companies, like Chevron, compete for FLNG contracts the price could very well fall within the means of many SCS countries.

Why Energy Deals are important to understanding the political developments in Asia: Asian petroleum companies are state owned enterprises, and need the go-ahead from the top levels of government.

Energy deals in Asia are inherently political, for no other reason than the national petroleum firms are national firms.  The actions of these firms must be blessed from top government officials, especially when sensitive topics are involved.  In terms of Taiwan, a top tier core interest of the PRC, any form of energy cooperation would have to be agreed on and negotiated with the utmost forethought.  This leads to geopolitical ramifications in the form of balanced and unbalanced energy deals.

Balanced:

At a Carnegie Endowment for Peace conferences on China/Taiwan relations, Foreign Minister Dr. Shin Yuan Lai was enigmatic regarding the current state of play regarding energy cooperation with the mainland.  CPC Corp, (Taiwan’s national oil firm) and CNPC (China National Petroleum) entered an energy partnership to jointly develop gas fields in the Taiwan straights back in October of 2010.  The minister’s lack of an answer is also an answer.

A conspiracy theorist may argue she was holding back information on purpose.  If her response is taken at face value, however, it can mean one of two things.  If she really is out of the loop, the importance of the energy deal could be above her need-to-know status and thus something quite serious.  Another possibility would be that the national oil firms were simply working together and there is nothing note-worthy to speak of.  As the saying goes, business is business.

There are telling signs, however, that the energy pact is indeed happening at the highest level.  According to the US-China economic and security commission, the PRC is taking a “carrot and stick” approach to Taiwan.  The carrots include beneficial economic arrangements, including trading privileges, as well as cultural exchanges that favor Taiwan.  While Taiwan has a 2,000 Chinese student quota in place, China has no such restriction.  As a result, there are nearly one million Taiwanese living in China.  The willingness of China to except anything less than a 50-50 deal shows the preferred way forward is friendship and integration, even when that means operating on uneven grounds.

Unbalanced:

On the other hand, the energy cooperation between Vietnam and China is unfolding in potentially troubling ways.  On July 10^th, ConocoPhillips ended its partnership with Vietnam Petroleum.  (Source: http://www.reuters.com/article/2011/07/08/vietnam-energy-conocophilips-idUSL3E7I80EZ20110708)  The oil giant and Vietnam’s national oil company parted ways following years of joint development.  Several factors may help explain ConocoPhillips actions.

The company may have swallowed the sunk costs of developing joint projects with Vietnam Petroleum, realizing the end game would be far too costly.  This is troubling news for the development of Asian gas markets.

The company may have also been unsettled with the security situation in the SCS, and fear any degree of association with political happenings.  Chinese vessels fired on a British exploratory ship near the Philippines last year in contested waters.  Being in partnership with Vietnam’s national oil firm, which hedges its maneuvers with the Vietnamese Army and Navy in ways that provoke China, could hamper trade relations with the Middle Kingdom. 

As a result of ConocoPhillips ending its partnership, Vietnam Petroleum has decided to scrap the project all together.  The national oil firm has instead reached an agreement with China Petroleum.  These two national oil firms have agreed to a joint pipeline venture, in which the Qinzhou fields of Guangxi Province will supply all of Vietnam’s energy needs for the near and mid term.  (Source: http://www.reuters.com/article/2011/07/11/vietnam-petroliex-refinery-idUSL3E7IB0A020110711)  Top Vietnamese officials were needed to sign off on the deal, a decision that may jeopardize Vietnamese energy security.

China has already proven it is willing to restrict critical material as a policy tool.  The decision to halt rare earth elements to Japan following territory disputes is a clear indication that national firms are subject to political orders from Beijing.  Should China be in a position to supply Vietnam’s entire natural gas and petroleum needs, and territory disputes arise, there is a clear likelihood energy resources will be halted.

If Vietnam Petroleum does not choose to develop traditional gas fields, an alternative would be the acquisition of FLNG platforms.  Over time, once the FLNG program is successful, the high price tag of FLNG will drop dramatically as Chevron enters the fray, and more FLNG producing companies are able to compete.  Samsung Heavy Industries is one of four companies in Asia capable of producing FLNG platforms.  In the future Samsung Heavy Industries may find it desirable to produce FLNG at lower costs.

The Solution: Develop Asian gas markets

Unlike North America, where the gas markets are firmly established with developed spot pricing based on gas-to-gas trading, Asian gas markets rely entirely on long-term contracts.  As a consequence, firms such as Shell sign secretive deals with countries guaranteeing long-term supply.  An important example is the agreement between Shell and Taiwan, in which Shell will provide 2 million barrels of liquefied natural gas per day until 2020, starting in 2017.  This deal will provide a significant percent of Taiwan’s total NG demand.  Shell has said it will supply the LNG from supply fields throughout its global supply network, however, the FLNG platform at Prelude and others in the Asian Pacific region will undoubtedly play a strong supply role; there are no pipelines to Taiwan and LNG must be shipped, making transportation costs a factor.  If all goes well, Shell will begin operating the initial FLNG platform before the 2017 date.

Asian gas is currently supplied by long term contracts, shipped to destinations

Expansive supply sources will help develop the market, while also mitigating the risk of SCS tensions from spinning out of control.  An energy secure Asia is a stable Asia, and one where “scramble” is avoided.

Introduction

After spending two years in Changchun, Jilin province, and another nine months at home in DC attending many conferences hosted by think tanks, I have decided to share some of my thoughts about China and the USA.  Let's not get ahead of ourselves though.  I am by no means a China expert, but I have some unique experiences that may provide insights.  I'm always looking for a discussion about China, and I value any thoughts or opinions you may have.  So check it out, and enjoy!

Some of my featured posts will include:

A comparison of the Dalian and BP oil spills
A look at the Taiping Rebellion and US Civil War
China/US energy cooperation
Rare earths
China's foreign development
Think tank event synopsis

Also some fun lite fare:

Chinese poems
Chinese eats
Business in China
The 8 seasons of Changchun
Travel in China
Teaching in China
Bears
Much much more!

I was attacked by a jaguar

My near death experience at a Chinese Zoo

My attention grabbing headline aside, I also wanted to say a few words about the state of Chinese zoos.  First, I really was attacked by a jaguar at a zoo in Suzhou. 真的。Let me back up a few years by saying, before my trip to China the only zoo I ever visited was the National Zoo here in DC.  Overall I would say the animals are well treated, well fed, and the cages are bolted in place.  The only disappointment at the National Zoo is the fact that the lions and tigers are in pits very far away from visitors, and you can’t get a close up view.

Not so in China.

The zoo I visited was in Suzhou, a garden city situated along the Grand Canal.  There are plenty of regional opera styles in China, and Suzhou opera is famous for horrific tragedies.  My potential fate at the paws, claws and jaw of a raging jaguar would have been fitting material.

Chinese zoos are depressing to begin with.  The animals are mistreated, starved and neglected.  Overall it is a dire situation, nearly as dire as the shoddy infrastructure containing the animals.

The saddest panda in the world, for instance, lives at the Suzhou zoo.  He was enormous, and my veterinarian friend informed me his size was due to malnutrition from not eating the proper bamboo.  He was dirty, and barley had enough energy to lift his hefty paw up to scratch his belly.

And then I visited the “wild cat” section.  I have never been face to face with giant cats before, I mean literally face-to-face.  The only thing separating me from the wild cats was a pane of glass.  Right away I should have noticed two things about the jaguar.  He was very thin.  He was also listless, pacing back and forth in his small rectangular cell.

In hindsight I know that means he was starving, and anxious because delicious human meat was passing his cage all day.

I did something stupid.  I sat down on my haunches, waved my hand at the jaguar, and said “hello friend! How are you? I’ve never seen anyone like you this close before!”  And then the jaguar smashed his entire body, with all his force and fury, against the thin pane of glass separating the two of us.  He was going for my face.  The thin glass pane shook, it seemed to bend outwards, and I saw, inches away from my face, the inside of the jaguar’s mouth.  In gory detail before me were his yellow teeth, quivering nostrils, and cold murderous eyes.

A raging death machine

 Image from worldwildlife.org

There would have been no contest.  None at all.  I can only imagine fending the starving jaguar off with my arms as he leapt on top of me, swiping away my pitiful defenses before having his fill of Montie meat.

The pane held, and I survived unscathed.  But the experience made me think: there must be incidents at zoos all across China where big cats break out and devour people.  Those statistics are people, and they probably suffered the scariest demise.

Needless to say, my advice for future zoo goers in the Middle Kingdom is straightforward: don’t get too close to the jaguars, the cages may not hold.

Tigers don't deserve it

The worst zoological offense I have ever heard of was the mass starvation of Siberian Tigers at the zoo in Shenyang.  The Provincial authorities were very proud of the fact that half the Siberian Tiger population lived at their zoo.  The only problem was that the zoo was privately owned, and when the owner began losing a fortune he wanted to close shop.  The local authorities would have lost a tremendous amount of “face” by the zoo closure, and forced the owner to keep the zoo open.  They did not pay the owner any money whatsoever, and so the keepers began feeding the tigers straw.  Then nothing at all.

http://www.peopleforum.cn/redirect.php?fid=10&tid=11458&goto=nextoldset

What resulted was the destruction of half the total Siberian Tiger population.  Why were half the Siberian Tigers in the Shenyang zoo?  I don’t know.  What will happen to the species?  I don’t know.

What I do know is that Chinese zoos need better maintenance, and this is an area where the US or other western countries could help out.  I know there are plenty of foundations and organizations out there, like PETA, which would probably do a lot more good feeding tigers than worrying about the number of pigs killed and eaten in the US every year.  That’s my take anyway.

Floating Liquefied Natural Gas platforms in the South China Sea: A Game Changer for Asian Energy Production or a New Dimension to an Ongoing Conflict?

This is a particularly interesting piece that has not been talked about by some of the major policy wonks around DC.  On Monday, June 20th, the Center for Strategic and International Studies (CSIS) will host a conference on the security situation in the South China Sea.  It promises to be an excellent event, and I hope to contribute with a story I’ve been following rather closely.  While many of the experts have focused on nation states and their territorial claims to the contested region, few if any have looked at non-state actors and their significant role in shaping negotiations.

The most recent, and serious, dispute in the South China Sea involves Vietnam’s energy vessels.  In late May these vessels conducted exploratory maneuvers for potentially high yielding hydro-carbon deposits in the Spartly islands.  Parts or all of the Spartly Islands, however, are claimed by the Philippines, Malaysia, Brunei, Taiwan as well as China.  Although tensions are raised when these claimant countries patrol the contested territory with naval vessels, the presence of energy exploration craft significantly ups the ante; a warship will eventual leave the area after rattling it’s saber, however, energy vessels indicate a country’s resolve to permanently establish territorial rights.  In that sense, these energy ships are much more serious, and in China’s case a direct provocation.

On two separate occasions Chinese civilian fishing boats cut the cables of the Vietnamese exploratory craft.  Although China Daily, Xinhua and the Global Times all say it was an accident, that Chinese fishing boats were unwittingly tangled in the cables and had to cut themselves free, Vietnam perceived the incident as coordinated interference.  Vietnam has subsequently declared warships will escort future energy boat movements, and conducted live-fire drills as a show of force.
http://www.google.com/hostednews/afp/article/ALeqM5jC2NlCcBK5_w-_O43a60NLOV8EWg?docId=CNG.4533bdd2ca0ac7898dbba6d650dc2420.4e1

The stakes are high as China decides how it will respond.

To put things in perspective, the Spartly Islands are 650 km from the eastern coast of Vietnam, 1,000 km to the south of China’s Hainan, 160 km to the west of Malaysia, and 100 km to the west of the Philippines.  Brunei and Taiwan are also stakeholders.

Contested territory in the South China Sea

 Source: IEA.gov

Significant deposits of hydro-Carbons in the South China Sea, especially among the Spartly Islands, has led to high tensions.

Source: Nation Master Maps

The question on everyone’s mind is, who owns what and how can these disputes be resolved?

China, which claims 80% of the South China Sea, would prefer bilateral agreements with neighboring countries.  The Philippines, for instance, has been approached by China to jointly develop oil and natural gas fields.  This would be a win-win deal for China, which would theoretically split the resources with only one country.  If this plan were carried out to the fullest, engaging every country on a 50-50 basis, the net result would be China’s receiving the lion’s share of the South China Sea resources.

China's claims to the South china are based on ancient maps, some of which supposedly date back to 200BC.  Below, a Song Dynasty map of China's territory at land and sea.

Source: Asiafinest.com, http://www.asiafinest.com/forum/index.php?showtopic=270402

On a personal note, I tend to disagree with countries that cite historic precedence for territorial claims.  Taken to the logical extremes, Vietnam should still be Chinese territory (it was for 1,000 years)

The other approach, preferred by the United States, involves a multi-lateral resolution.  In a sense the end game might require multiple countries splitting the same resources, in which case neither China nor any country would acquire a majority of resources.  It could also take the form of a 19th century European diplomacy solution, in which the South China Sea is carved into territorial slices.  Brandy and cigars anyone?

Grounding the security dilemma by openly conveying national interests is essential to any permanent solution; the picture, however, is not complete without including all the stakeholders.  This includes, among other things, non-state actors.

Royal Dutch Shell: A Regional Game Changer

On May 21st, 2011, Royal Dutch Shell (RDS) announced plans to develop a Floating Liquefied Natural Gas (FLNG) platform, to be constructed by Samsung Heavy Industries in Korea.  The project, when completed in 2013, will deploy at the Prelude natural gas fields in Australian waters.  Three weeks after the initial announcement, RDS went public with plans to build a second FLNG platform at the Sunrise fields in the Timor Sea.   This second FLNG project, however, has come under fire by the Timor Leste government; how the company responds will be a sound indicator of how RDS deals with small nations as it seeks to expand the program in the Asia Pacific region.  The expansion of FLNG programs needs to be taken seriously.

So, what is FLNG and why does it matter?  According to the RDS press release, the FLNG platform is six times larger than the largest aircraft carrier, and once the platform is stationed at the Prelude site it will produce 110,000 barrels equivalent of natural gas per day for 25 years.
http://www.shell.com/home/content/investor/news_and_library/2011_media_releases/fid_flng_20052011.html
The second FLNG project at the Sunrise field will produce an additional 100k barrels equivalent per day.

Royal Dutch Shell's Floating Liquefied Natural Gas super-structure is six times larger than the largest aircraft carrier

What’s more, according to the General Manager of FLNG Neil Gilmour, “there are opportunities for upstream ventures… in places like the South China Sea when agreements are reached in terms of who can access what”.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1134934/1/.html

This news is shocking because the introduction of FLNG platforms, capable of reaching previously inaccessible deepwater deposits of hydro-carbons, adds a new dimension to the South China Sea security dilemma.  Engineered to withstand category 5 typhoons, FLNG technology is a game changer for Asian energy supplies.

The liquefied natural gas extracted by a single FLNG, for instance, would provide 90% of Hong Kong’s electricity for a year.  FLNG could obviously be deployed towards the Chinese market, as demand for natural gas is expected to triple by 2020, from the current 9 million tons to 30 million.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1134934/1/.html

At the same time, FLNG programs are unobtainable for the majority of countries in the South China Sea, given restraints on capital, technical know-how, or capacity to undertake the project.  Royal Dutch Shell is essentially the only regional stakeholder with the means to implement a sweeping program of deep-water drilling.  As a stakeholder with tremendous economic clout in the South China Sea, however, RDS is also the most secretive when it comes to announcing their preferences for the regional stability.

By the numbers, only a small portion of South China Sea claimant countries are capable of deep-water natural gas extraction platforms.

Capital:
The estimated cost of constructing a Floating Liquefied Natural Gas platform ranges between 10 and 13 billion USD.  For Vietnam, the purchase of such a platform would cost 10% of the economy.

2009 Country GDP compared to RDS revenue in US Dollars:

China: 5 trillion                           Royal Dutch Shell, 2009

Taiwan:  379 billion                    Revenue: 458

Malaysia: 191.5 billion               Assets: 282 billion

Philippines: 161 billion

Vietnam: 92 billion                   
Brunei: 10.5 billion               

*Source: CIA World Factbook

Royal Dutch Shell was ranked the #1 largest company in the world, according to CNN, earning 15 billion dollars more than the runner up, Exxon Mobil.
http://money.cnn.com/magazines/fortune/global500/2009/snapshots/6388.html

As the largest company in the world, RDS is in a unique position to invest 10 billion dollars per FLNG project.  The only other countries with the capital to invest in deep-water natural gas extraction would be China and Taiwan.

Technical Know-How:
600 RDS Engineers worked on the design phase of the project.  Barring corporate espionage or sophisticated cyber attacks, it would be particularly difficult for other regional players to design anything similar.  (If hackers could break into Lockheed Martin, a military contracting company, then hackers can get anywhere) China has struggled for years to build an aircraft carrier, so to expect the country to engineer a floating super-structure overnight is too far fetched.
Source: RDS website, “Prelude FLNG in Numbers”

Capacity to undertake FLNG:
According to Claire Wilkinson, a spokeswoman for the FLNG project, there are only four companies in the region RDS considered capable of constructing the project.  Although she was reluctant to identify the other three, there was at least one Japanese and another two Korean firms.  Deep-water ports, capable of accommodating the 600,000 ton structure, are limited and proved to be a minimal qualification.  Samsung Heavy Industries’ proven track record won the day.

“…when agreements are reached in terms of who can access what…”

So, what is the RDS position when it comes to resolving the South China Sea disputes?  Under what circumstances would Shell consider these disputes resolved?  Would the company accept a “Chinese solution”, a multi-lateral solution, or both?

As a significant player in the region, RDS opinions and company policy would greatly shape the course of resolving territorial disputes.  RDS has worked with China for over 100 years, and this relationship could play out in China’s favor should the Middle Kingdom argue “agreements have been reached” on a bilateral basis, in lieu of a multi-lateral approach.  Any comprehensive agreement in the South China Sea will produce unsatisfied parties, and potential holdouts to such a resolution will complicate “who can access what”.  A partial agreement may green light RDS entry to the South China Sea, which in turn would exacerbate tensions as potential holdout countries decide how far they will go to protect national interests.

Money Matters, and so do the events on the ground:
In April RDS stock prices surged with the announcement that it will access Alaskan fields.  The dramatic spike plummeted when news broke that RDS will be sued over a 2008 spill in Nigeria.  Both FLNG project announcements caused modest gains, and Neil Gilmour’s vague intentions of entering the South China Sea on June 13 could be a lurking variable for the hike.  There would be ramifications for RDS stock once any announcement to enter the sea is made official.

 Source: Stock statistics from Market Watch

For the moment, RDS is holding it’s cards tightly.  Claire Wilkinson, a spokeswoman for the FLNG project with direct communication to top company representatives from the Hague, provided few insights.  In an email exchange, she said, “we of course have an internal view on such things, but it’s not something we’d comment on publicly”.  The announcement would indeed have ramifications for RDS stock.  Entering the South China Sea would be huge news for investors, which could produce an unprecedented surge in stocks as RDS magnifies it’s access to the Asian energy market.  A premature stance in the region, however, could also have a significant effect if the security situation deteriorates.  The view of the world’s largest company regarding one the most dangerous hotspots in the world, however, is an important element to the equation as countries work towards resolution.

This is an ongoing story, and I hope to pursue it as more information unfolds following the CSIS conference, including China’s take on FLNG.

A post on teaching the good, bad, and lame

Teaching!

I figured it was just about time to talk about what I did in China, which among other things was teach English to some excellent post graduate Chinese students!

To my disbelief, I was told during the first professional meeting with the administrators of Changchun University of Technology that I was selected to instruct post-grad students at the university.  Wow, I thought, I just graduated from college, and now I’M RESPONSIBLE FOR POST-GRADS.  The admins buttered me up with some flattering remarks that, after reviewing my resume, they considered I was the most capable for the job.  I was in for a rude awakening.

Unlike some of the other foreign English teachers, I was not given a textbook to work from, and was responsible for developing a total curriculum.  What the admins neglected to tell me was that I was going to be teaching an army of eager students.

So, when I entered the classroom my first day on the job, I was greeted by raucous applause from nearly 90 students… what did I prepare for my first lesson?  Well, following my TEFL training I had prepared a simple meet and greet with some pronunciation drills.  The TEFL training, by the book, said I should form a circle with the desks.  The desks were ironed in place by blots.  I scraped the meet and greet, and some how made it through the first two-hour period by improvising group work presentations on Chinese education.  Clever me.

 Class 9, panel 1... a panorama of my largest class...

Panel 2

Panel 3

As post-grad students in their mid to late twenties, most were older than me, so I hid my age and let them think I was older and more mature.  Suckers.  We had a good time though, and they loved my first homework assignment: send me an email requesting the subjects they most wanted to study, and introduce themselves.

After my first week I gauged I was responsible for about 400 students.  The class monitors, semi-elected class representatives, were kind enough to provide a list of student names.  Roll call at the beginning of class consumed about 10 minutes, and it took about a month to get a grip on faces-to-names.

The sheer number of students was a major shock, and coming from a history of small schools with intimate class sizes, I was forced to eliminate some of my prepared lesson plans.  By the end of my second week I was already burnt out, and approached my boss asking for a modest raise in my salary, reflecting the new situation.  The other English teachers at the university had about half the number of students, I reasoned, it couldn’t hurt to ask I figured, given I was being asked to double my workload.  My boss’s response? A good chuckle, and some words of encouragement.  I was told quite frankly to give it another week or two, and watch as most of them would drop out.

True to her prediction, the class size dwindled to fifty, then twenty students.  As post-grad students with a long history of mandatory English classes, I was left with a core group that genuinely wanted to be there.  So for the rest of the term I was able to re-adjust my lessons, playing detective “who-dunnit” games and instructing them on the language of debate.

 Teaching English!

By the end of the first month the class size dwindled to a manageable level!

The ability to interrupt, in a cordial manner, is something totally lacking when students are learning English.  That’s understandable to a degree, who would want to stop a student from speaking when he or she is on a roll? 

More than any single lesson, I felt it was important to teach originality and thoughtful analysis.  Route memorization, as I was told, was how students got into college.  Higher learning demands, well, higher learning.

I emphasized that in a debate, YOUR position is right, and THEIR position is wrong.  Think what the other side will argue, come up with counter arguments and hammer in outside-the box ideas.  Also, as I was taught at school, a good presentation, debate etc., follows a simple formula:

1.     Tell us what you will say

2.     Say it

3.     Tell us what you said

Actually, that’s a lesson I want to beat into the heads of some of the experts in Washington, D.C. whenever they give presentations at conferences.

As the term was winding down I was supposed to give a final exam covering the lessons we learned throughout the course.  The assignment was to work in pairs and write a four-page paper on their perspectives of International Relations, principally the relationship between the USA and China, and give a presentation to the class on their findings.  Easy enough yeah?  Wrong, and if you thought so you get an F-.

Things fell apart right-quick.  First, remember that legion of students who dropped out?  Well, they all came roaring back for the final exam, and they expected a decent grade.  What could I do except fail 75% of them, as I had been taking roll the entire term and many had only attended two or three classes?  The second problem was blatant plagiarism.  This was especially the case with the drop out students, who turned in the exact same paper they found and downloaded from the Internet.  Those downloaded papers were terrible to begin with, which mostly looked at eating habits in China and US; “in China we use chopsticks, and Americans use a knife and fork”. Worst. Analysis. Ever.  More importantly, the plagiarism felt like a slap in the face, and the next class I diplomatically explained that if this shoddy, unoriginal and downloaded work had been turned into profs in the US they could face the risk of being expelled from school.

I felt guilty for handing out so many failing grades, and I decided to take the extra time outside of class and give the students who wanted a chance to write a paper and explain, one-on-one, why plagiarism was so serious.  Not every student took advantage of this offer, and they failed, but others were genuinely apologetic.  The most common explanation was that plagiarism was endemic to university work and other profs accepted it.  (As a side note, the # 1 course for plagiarism at the university was the mandatory Marxism class, nearly every student handed in the exact same paper as the class was not taken seriously by anyone.)  One of my students went so far as to say, “but I worked so hard finding a paper online…” That one made me laugh, and told him next time, work as hard writing an original and thoughtful piece.

The worst offenders were the Political Science students.  It felt like a test of wills dealing with them: as an entire class they turned in the same paper, taken from the Internet.  These were Political Science students, and naturally should have done a bang-up-job.  These “Young Pioneers”, aspiring members of the Communist Party, focused their energies on crafting Marxism papers, and my guess is that they were embarrassed to tell me about Communist thought.  I’ve read the Communist manifesto, as well as translated works by Mao (any aspiring Chinese expert needs to do so) so I was bummed I couldn’t hear about their perspectives.

So, as Voltaire famously said, “pour encourager les autres” I stuck by my harsh position and failed the majority of students.  Simply put, I didn’t think it was fair to the great students who showed up to every class and handed in excellent, original and thoughtful work.  For the others, perhaps they learned something too, if not English then at least how to shape up and be better students.

For those interested I’ll post an example of excellent student work in the future, as well as another example of shoddy, plagiarized and terrible student performance.

Sordid stories of micro-business in China

There’s nothing special about a business venture that goes south, this happens frequently no matter which country, region or market.  Entrepreneurs learn from mistakes and try again.  In China’s case, ex-pats frequently come up with genuinely good ideas, and yet for one reason or another never make it.  Although I can’t honestly say I’ve put my eggs in a basket and tried to form a business in China, I know folks who have.  In Changchun three stories immediately come to mind, and they all have some common characteristics.  The run down, in a nutshell, is that a successful business must be inclusive to local Chinese.

The Mexican Restaurant

What struck me about the Mexican restaurant in Changchun was the price of a meal, which was sky-high due to the cost of imported cheese.  Cheese is not a staple in China like it is in many Western countries, and it sells for Western prices.  Mexican food isn’t typical in the Chinese diet either, because for many Chinese people dairy leads to upset tummies due to a high prevalence of lactose intolerance.  So, when you tabulate expensive products with undesirable food you get a recipe for failure.  The Mexican restaurant chugged along for a while, yet the client base was strictly expats and eventually the business went south.

 Mexican Grill farewell fiesta.  A business that relies on expats alone will not survive.

On a side note, Taco Bell tried and failed to make it in China as well.  I can only assume for the same reasons as the Mexican restaurant in Changchun.

The Doughnut Shop

I’m still convinced doughnuts could sell in China, however, the doughnut shop in Changchun lacked a proper doughnut machine.  The owners, who were smart Australian friends with a knack for Mandarin, knew that street traffic was the way to sell their product.  Several things went wrong.  Most obviously, they weren’t able to find a proper doughnut machine for a reasonable price.  The details are a little sketchy, but when they offered to buy a machine from a local Chinese vendor at an agreed upon price, then let the vendor sample a doughnut, she pulled the deal.  I was told she was afraid the foreigners had a great recipe and didn’t want to compete, again, kind of sketchy on the details.  After months of getting by on the local expats, the shop was handed over to the Chinese business partner and ultimately closed shop a year after I left.

The Coffee Shop

I heard an excellent program once on NPR about Chinese farmers who grow coffee beans as a cash crop, but detest the taste.  The farmer said something like, “I’ve never had a cup of coffee in my life, but I understand it’s so bitter people have to put sugar in it”.  The success of coffee in China revolves around being a status symbol, especially when a typical cup of brew runs 2-3 USD.  Regardless, I had a chance to meet several Chinese friends who started their own coffee shop in downtown CC, and I can only assume twelve owners is the key to any successful venture.  Their end game, however, was not exactly financial winnings.  As I was told, this was more or less an opportunity for each friend to build a resume with experience opening a business.  Academics alone certainly don’t cut it in the USA, and this seems to be increasingly the case in China.

Beijing: the Kro’s Nest Fiasco

This is old news, and not necessarily my story to tell, however when I went to the Kro’s Nest pizzeria in Beijing I ran into the fury of several local expats.  The Kro’s Nest, located at Worker’s Stadium in the San Li Tun district, sells excellent American style pizza.  As per Chinese regulations, the American owner partnered with a local Chinese who officially held majority control over the business.  The pizza was this American’s personal recipe, and it turned into a smashing success.  In 2010, however, the Chinese business partner pulled some nasty strings and had his American counterpart expelled from China, completing a hostile takeover.  I’m a guy who enjoys a nice slice of pizza whenever I find one abroad, and I never thought I needed to stop and consider the political ramifications of ordering “sausage and green pepper”, medium, deep dish.  Not being from Beijing, I was unaware of a boycott by the local expats.  When I sat down at the restaurant with a few friends I made at the hostel, a group of Beijing expats demanded to know why we were there.  That’s a dumb question, I thought, we’re here because pizza is delicious.  Then they told me the sordid story.  So, I fired back, why are you breaking the boycott? It’s hard to give up the best pizza in China.

 Not the Kro's Nest Pizzeria

for an excellent re-cap on the full story, visit:
http://www.adamdanielmezei.com/beijings-kros-nest-debaclein-a-nutshell/2805

If there’s a lesson to take away from these examples of micro-businesses, the bottom line is to develop a Chinese customer base and don’t be totally reliant on expats.  Once a business makes it, you won’t even need the foreign devils.

The "Taxi" and "Espresso" index of regional development

There are two or three indicators, in my opinion, that best gauge a city or region’s development.  If Purchasing Power Parity can be summed up in the Big Mac index- the cost of the same Macdonald’s burger in different countries, perhaps there is also a “Taxi” or “Espresso” index that can help identify development in China.

Taxi Index: the base cost of a Taxi.  In China, the base cost of taking a taxi, usually the first km or so, can range between 5 and 16 RMB (compare at roughly 6.5 RMB to the dollar).  The way I see it, the higher the taxi base fare price, the more developed the city.  Of course, there are exceptions to this rule, and I could use some input to flesh it out.

Espresso index: is there a Starbucks in the city.  Plain and simple.  The more Starbucks in a city, the more developed it is.

I also toyed around with including a KFC, McDonalds and Wal-Mart index, however, this leads to complications.  I say so because my students informed me the price of McDonalds is simply too high for many of them (in Changchun a Big Mac Meal runs about 3 dollars…)

So it comes down to Taxis and Starbucks.  Taxis are a great way to judge because anyone can take a taxi to get around.  Starbucks are another clear indicator because there’s a financial threshold for the type of people who can afford a 3 dollar cup of coffee.

That being said, here’s a list of developed and developing cities/provinces in China.  Please understand these are based on my personal observations, and while I have yet to visit many places in China, I can safely say I traveled through at least half of them.

Also note, unless I mention otherwise, I just grabbed photos off the web. 

Jilin Province:  Developing.

Honest, I can safely say the long, cold winters of the NE hamper development in this area of China.  There may be other factors involved, like corruption, but I couldn’t tell you what kind of effect that has.

Province-wide, there are no Starbucks and taxi base fare is 5RMB.  Jilin would rank as one of the least developed Chinese provinces.  Changchun, the capital, does have a number of independent coffee shops, but I would say the city is ready for Starbucks.  Changchun has a Five Star hotel for crying out loud.  Also, back in the spring of 2010 the local government wanted to increase the base fare of taxis from 5 to 7 RMB.  The Taxi drivers would not have received any of the money from the fare-hike, and so they went on strike.  For three days, starting on Thursday.  The entire city was paralyzed, business suffered, and the authorities lost a tremendous amount of “face”.  The government caved in after just 24 hours, agreeing to keep the fare at 5RMB.

 In Jilin City.  In the background is the Snow Beer Brewery, although the place was restricted and I couldn't visit, a number of expats believe Snow Beer could be exported to great effect.  Also, I'm a lot colder than I look.

Heilongjiang:  Developing.

6RMB base fare with a 1RMB fuel surcharge.  No Starbucks.  I only had a chance to visit Harbin, however, but as the capital it might be a safe bet to say this NE province needs more development.

Liaoning:  More or less developed.

I visited Shenyang and Dalian multiple times, and they were excellent cities.  They each had at least one Starbucks, and taxi fare was about 7RMB base fare.  Shenyang has a rich cultural history, hosting the mini-forbidden city of the Manchus, and is the capital of Liaoning.

Although I could post photos of the Mini Forbidden City in Shenyang, the beer garden was also fun.  Again, Snow is the local brew in NE China, and who could resist such an advertisement?

Dalian is more the banking/finance city.  Dalian really is about my favorite place to visit, the people are friendly, the food is great and the city art is modern.

Soccer is HUGE in Dalian, as it turns out.  The tale of the rag-tag Changchun Friends Football club playing the Dalian expats is epic.  And embarrassing.

The Sea Shell museum in Dalian, circa 2008.  In 2010 the museum was demolished to make room for sleek new apartments.

Dalian’s city history is also rich, if limited, and I’ll probably write a post specifically about it (the Dalian oil spill shocked me to the core, you can read about it some more in one of the other posts).

Shandong:  Some cities developed, others not.

Qingdao was an excellent choice for winter travel.  The base fare for taxis is 7/8RMB, and there were several Starbucks.  There was also the Qingdao brewery, and a local custom of putting a pitcher of beer into a plastic bag.  The “beer-in-a-plastic-bag” custom naturally lends itself to frat parties, as you simply cut off one corner of the bag and chug the whole pitcher.

 Germany's sphere of influence included Qingdao, the train station looks like it came right out of Bavaria.  In WWI the German soldiers squared off against Japan, and despite overwhelming numbers held the city for over two months.  German morale was probably boosted by the creation of the Qingdao Brewery, "For the Kaiser, For Germany, For Beer" may have been the rallying cry.  The point is there should be a movie made about it.

The Stairway to Heaven.  Even though there wasn't a Starbucks I still managed to grab a decent cup of coffee at the top.

Beijing: a World Class city.

The Forbidden City, but I got in!

Beijing has everything, including a base-fare price of 10RMB.  The only city I visited with a more expensive base-fare was Shanghai.  At the same time, taking a cab around Washington, D.C. is much more expensive.  I mostly traveled by metro in Beijing anyway, can’t beat 2RMB tickets and no traffic.  Of course there is the Forbidden City, but another incredible feature of this city is the largest LED screen in the world.  It isn’t turned on every night though, because the amount of energy it consumes would rock your socks off.  There’s also a billion Starbucks.

Tianjin: Yes it’s developed, and Yes I couldn’t stand the pollution.

An expat from Changchun, who had lived there for 15 years, once told me if an expat misbehaves he or she could be banished to Tianjin.

I spent 24 hours in Tianjin, and would have been more impressed with the city if there had not been a green/yellow haze of pollution.  Maybe things have cleaned up since 2009, but I didn’t want to spend time looking for a Starbucks.  As I recall the base-fare was 8/9RMB or so.

Hainan: Developing.

Haikou beaches.  There are plans on the books to seriously develop Hainan, and if a Starbucks or two pops up it will be a smashing success.

Haikou has nice beaches for sure, but the cab fare is 5RMB and a cursory glance around town could tell you this province needs more development, and less nuclear submarines.  No Starbucks.

Sporting my Russian beard.

Sanya was also nice, however I didn’t have to time explore more of the beaches outside the city.  Lots of Russians though, as I understand there is a special relationship allowing visa free travel for Russians who want to escape Siberian winters.

Guangzhou: Developed sections, inconvenient layout

Sun Yat Sen memorial hall- a great place to see a concert as it turns out.

I wasn’t a fan of Guangzhou, which has a nice airport but is an hour away from the city.  I missed my flight, by 10 minutes, which serves me right for trying to book a 7:30am trip to Chongqing.  A note for future travelers, don’t book morning flights out of Guangzhou.

I can’t remember the exact fare for cabs, but I would venture its 9RMB or so.  There’s a thriving downtown business section that has a Starbucks or two, however not so many cool places to visit.  The most notable locale, in my opinion, was the Sun Yat Sen memorial hall, which documents 20^th century Chinese history and was the place were Japan formally surrendered.

Chongqing:  Developing.

Fog or Pollution?

There are 30 million people who live in or around the city.

Look no further than Chongqing if you’re in the mood for developing China.  I stayed at a hostel in Ci Qi Kou district for 2 dollars a night!!!  The Old Town district is about an hour by bus to the city center- there was an old lady on the bus trip who brought her goose along for the ride- and when I did take a cab it was 5RMB.  I also rode on the back of a motorcycle for transport, it made me feel special :p

I really enjoyed my time in Chongqing, despite the fog/pollution, and there were a few Starbucks I could chill at.  I only met two foreigners during my week long stay, one English teacher and another businessman.  I was there mostly to just relax.

 At the Chongqing Zoo.  I understand there is an entire industry for Westerners who correct outrageous errors in translation.

Hubei:  Developing.

I had my shoes shined in Yichang City for 5RMB, about the same as a taxi fare.   This the final leg of the Yantze River cruise I took, and while the scenic overlooks are breathtaking, this city of 1.4 million people didn’t have a lot going for it, much less a Starbucks.

Wuhan was a side trip, and the cost of taking a boat across the river was more expensive than the taxi ride.  There was, however, a Starbucks!  I treated a former student of mine to coffee there, it was his first time going to one and it meant a lot to him.

Jiangsu: Developed

Nanjing was fabulous. Taxis were kind of steep at 10RMB as I recall, there were a few Starbucks around town to boot.  The Fu Zi Miao district was dreamy, complete with canals and ice-cream parlors.  The city also has one of the tallest skyscrapers in the world, as well as a developing metro system (there are two lines that make an X, not very convenient compared with Shanghai or Beijing).  The Nanjing Massacre museum is the elephant in the room, however, and for all the city’s charm it can be uncomfortable thinking about the ghosts of the past.

Fu Zi Miao, Nanjing

Suzhou had cheaper taxis, but I mostly took the bus.  There are also literally hordes of bicycle riders!  The interior gardens were great, with too many people crowding them, however, it can be difficult to take.  I much preferred Tongli.

Zhejiang:  Developed

Hangzhou is a pretty magical place, with Starbucks galore and enough expensive taxis to go around!  Base-fare is 10RMB, and the buses around town cost four renminbi.  Outrageous.  At the same time, Hangzhou really is the most beautiful city on earth.

A stroll along West Lake is about as good as it gets.

Ningbo was made for expats.  I even found a New York style pizzeria that served a mean slice.

Shanghai, well, is Shanghai.  There’s no other city like it in China.

There are plans to create "Shanghai Tower", which will apparently dwarf the Pearl tower.  Also, either the world's tallest street lamp or a crazy thing called "perspective".

Not everything in Shanghai is ultra modern.

Taxis were 16RMB, 20 at night.  There weren’t enough of them, however, and a French guy I met even suggested the rates needed to increase.  Like Beijing, there were a billion Starbucks, I couldn’t handle it.

Shanxi and Shaanxi: Developing

Sadly, I didn’t have enough time to explore Shanxi and Shaanxi.  I never made it to Taiyuan, but I figured it was another large city and I decided to hang out in Pingyao instead.  I thoroughly enjoyed getting my fortune read by a Toaist monk in Pingyao, and the beef was succulent.  There were no taxis inside the city walls.  Xian was another great place.

 Terra Cotta warriors outside Xian.  Once construction was complete the workers were summarily executed to hide the location.

A three thousand year old cup at the Shanxi Museum.  The curators said it was worth "half of Hong Kong"

Gansu province is very much developing.

The Lonely Planet identified Lanzhou, the capital, as the most polluted city in China, and there were few if any expats living there.  Dunhuang, on the other hand, was a great experience.  Again, no Starbucks and taxis were 5RMB.

Pondering the mysteries of Mingsha Shan

Dunhuang deserves it’s own posting, I’ll leave you with a teaser by saying this city will be mentioned in a future post on China’s energy policy…

I hope I’m not missing any other provinces, if I do come up with some more I’ll post an update.  I do think the “Taxi” and “Espresso” index of development works for the most part, at least in China, and it could be expanded in the future.