After spending the night in tashkorgan and newly made bread for breakfast we continued to the border at Pakistan and the famous kunjerab pass, also called the valley of blood due bandits often attacking caravans there in the past. The pass consists of the Chinese/Pakistan border at an altitude of about 4700 meters (according to my gps) and zero degrees. My previous intel of the Chinese also making the road into Pakistan might have been somewhat of an exaggeration. Where Pakistan starts the tarmac ends and all you have is muddy roads.

After taking photos with Pakistani border guards, we went  to the karakul lake and spent the night in a yort. For 40 rmb we also got dinner which we shared with the kirgiz family in their house. Nice experience and they took good care of us serving tea and bread during the day, and warming up the yort in the evening. The son, and the only one speaking Chinese and limited English, also worked as porter for expeditions to Muztha ata and has reached the summit six times.

After watching the sun rise around 0830 (Beijing time which is almost a difference of three hours) against the view of beautiful snow covered mountains and the muztagh ata summit we packed our bags and tried to find a ride back. Our jeep arranged for the whole trip went back the evening before as the German girl sharing the car got very sick, either from food or altitude. At lunch we got a local who offered to drive for 70 per person and of we headed. Passing the spots that were destroyed going up we felt happy to have a smooth trip. But, right after that a long line of cars became visible. Walking to the front and talking to the special military guys (Wu Jing) we learned there had been recent  landslides and two to three days required to fix it. Not in the mood turning back we took our bags and continued on foot. It was not one landslide we had to cross, we climbed over rocks and walked through mud for almost 10 kilometers, passing abandoned cars stuck in between before we got to the end and a line of waiting cars. We negotiated a ride back to kashgar for 150 rmb. Halfway the driver didnt want to go any further and we were “sold” to another car and after 20 minutes of negotiation we were on the move again. After more than six hours on the highway we were back in kashgar.

Lessons learned:
1. The road is great all the way to the kunjerap pass. Although the road often seems to be under reparation from landslides, but if it is broken not even a jeep can cross so normal car or bus works fine.
2. No special permits needed. everything is arranged along the way at checkpoints. To reach the kunjerap pass a fee of 10 rmb per person had to be paid, nothing else.
3. Guides and drivers don’t really work for your best conveniency, more for their own benefit. This means it is more fun and rewarding doing things on your own. For example was our driver trying to convince us to follow his advise at the lake as we were not allowed to stay in local yorts. Well, it was possible and a lot cheaper and nicer…

Date: March 06, 2010
Location: From JinShanLing in Hebei, to Simatai in Beijing.
Weather: -3 degrees Celsius, blue clear sky

On one of the best day for a long time in Beijing, I visited a beautiful part of the Great Wall. Stunning views and challenging climbs made it a good and fun day trip. Could feel it in my knees and legs the day after. Toughest was the second part of Simatai that climed straight up on the mountain. A just crazy achievement to build a wall up there.

this a defence structure of the wall. it enables the defenders to fight at each step while withdrawing if the wall is overrun. the enemy can only climb using the narrow steps while the defender can fight from behind the walls with small openings to fire projectiles.

the famous simatai. not as beutiful to walk as jinshanling but just amazing in the achievement to build it. on the stones used to build the steps can names of the soldiers who built it be read as seen below.

On a short visit to Beijing I decided to refresh my memories of the city and do some quick sightseeing to what I thought was the easiest accessible. Well, with a just started National Party Congress and CPCC meeting it was not that accessible. Still beautiful and magnificent though like a lot of things in Beijing.

One of the things I really like with Beijing is that it has kept is culture and chinese style. Photo below is from the hotel where I stayed. Located in the Hutong it is very traditional and was a nice feeling staying there and walking around in the lanes.

A new report claims China is about to become world leaders within innovations. One project, with support from both USA and China’s governments, is a new centre to be built in Chongqing for electrical cars. This investment is a clear sign of how resources within research and development is being attracted to China.

When it comes to the number of patent applications, Japan will probably be passed by 2012.And an interesting things is that a large number of patents is coming from the academic world.

With a global financial turmoil affecting industries and ordinary people, and the west fallen into a crisis with governmental rescue packages launched, they question on all lips is: When will it hit China? Discussions in newspapers are talking about coming blood baths and bubbles to burst.

Of course is China dependent on its export, but it is also in a somewhat different and compared to USA, not as sophisticate financial market. From the financial crisis 2003 China has built up their banking industry and continues to improve it. It is still far behind and different tools to manage it. As a banker in China, 2008 has been an exiting year where you have been able to face several regulatory changes and improvements, plus a limited liquidity on the market driving up prices. It all started December 2007 with a change in monetary policy from prudent to tight. The reason? A rising inflation and rapid growth in GDP and investments. Rather than using interest rates, the government have been relying on tools such as credit quotas, reserve ratios and liquidity ratios for banks to restrict liquidity on the market. The affect of this has especially disadvantaged small and medium sized firms fueling informal and illegal financing methods that has grown up like mushrooms in areas with cash rich companies.

With a large inflow of hot money during the first quarter of 2008, new rules and regulations have been issued for foreign exchange administration control – incoming and outgoing payments have to be declared and supporting documents provided; common financing solutions such as advanced and deferred payments have received quotas; and a decreased amount of capital can be converted and kept on CNY accounts.

During the summer 2008 the effect of these changes and new regulations have also been visible by smaller banks failing to live up to ratios and quotas. The first action from the government was to lower the reserve ratios for smaller banks. Since then several other small changes have been done. When stocks all over the world fell in mid September, the government rapidly removed the stamp duty on stock purchasing and CIC went in and bought shares from the three largest banks. The one year interest rate have been lowered twice in one month from 7.47% to 6.93%. The inflation is reported to be below 5% and the GDP forecast is a decrease to 9.8% 2008 and 8.5% 2009 (according to the economist intelligence unit). The trade deficit was reported to have grown but the question is when we will see the result of this period that most likely is delayed 6 months.

Not much has really been felt in China so far, and until recently even media was pretty quiet. Those affected is mainly those who have had something to invest in the stockmarket. With low deposit rates people have been encouraged to spend money instead of saving which have led most people to buy stocks on a market that now have lost almost 80 percent of its value. The Chinese banks seem to have made it fine so far with  little exposure to the sub prime crisis and American banks (but don’t forget their own non-performing loans). Looking at the tight regulations in China it make sense. On the other hand, a global recession will affect China’s export and have negative affect on the economy. With smaller and medium sized companies entering into a recession with decreased demand they will with their low margins face increased cash flow problems. With tight restrictions on liquidity local banks refuse to lend money except for the largest and most credit worthy. This have led the government to encourage banks focus on SMEs and provide loans.

Another of China’s probably more challenging tasks is how to foster its internal consumption. This might be a key for China’s continued growth as it can not depend on overseas consumption. China finished its party congress a week ago and new plans have been made to reform the agricultural system and bring up the rural areas with financing, education and health care.

2008-04-26 16-58-58, originally uploaded by AndSig.

After spending Saturday afternoon on Tomson Golf Club, sitting on the fairway club’s balcony just above 18th green sipping on a glass of champagne watching BMW Asian Open, I decided to end a perfect day with some foot massage. I started to chat with the guy massaging my feet and learned that he was from Henan province about two days away from Shanghai by train, and he was travelling around China working at different places. Now he had been working in Shanghai for one month. He was young, about 25 years old with a girlfriend back home that he visited once a year during the Chinese holiday. Why he didn’t worked back home where his girlfriend lived, he explained simply because he could make a little more money at other places such as Shanghai. Working in Shanghai he lives at the massage place.

One of the more interesting topics we touched base on was his own perception of China and other countries. He was clearly unsatisfied with his own country as he felt the poorer just got poorer and the rich too rich, that the gap was just getting bigger. He also showed a great dislike towards countries like USA and France. USA due to their involvement in the Taiwan issue and now CNN criticising China and the Olympics. France due to its support of Tibet and comments from the president and others.

These findings are interesting and recent news often talks about the growing gap between China and western countries due to the Olympics. But it is not the only challenge waiting China. This year China’s economy had a small dip in GPD growth the first quarter to 10.6% but still shows that it is going strong. More worrying is its inflation that during the first quarter of 2008 reached a CPI of 8.7% (Food CPI 23.4%). The problem with an inflation can lead to something even worse, social instability. As my massage guy said, he was not happy to see that some people just got richer on the cost of others getting poorer. Reasons behind the recent inflation are among many such as harvest problems due to epidemics and water problems due to Algiers, as well as the winter storm that struck large parts of China in end of January.

With a middle class of maybe 400 million people, there is a less wealthy class of another 700 million that are even more directly affected by the rising prices. There are already demonstrations across the nation due to corruption affecting farmers and the land they use – and it can be a lot more problematic if things get worse. China as a local market is to a great extent depending on the development of rural areas. Today people are saving more than they are spending, this because they are afraid of additional costs such as healthcare. To address this the government has already introduced what they call “Harmonious Society” policies to improve eduction, health and and rural areas. Especially after the Olympics is it said that rural areas will see an increase of low cost housing. A big injection will also be done into medical care with the hopes that if they manage to bring health costs down they will also increase the level of consumption creating a more attractive local market.

Other changes worthy mention is the industrial upgrade going on. A more value added industry is being created with entire unit assembly. Both air-planes and cars are being assembled in China for companies such as Airbus and Chrysler. So in order to move up on the value-added industry less competitive players have to be phased out. Low-cost manufacturing that most foreign countries associate China with is being phased out and therefore moving to the west or out of China. This phase out might therefore also result in labour unrest as factories have to close. The labour law that was supposed to contribute to welfare funds and give workers better rights resulted in large western companies closing down factories and moving to other places (where they still can benefit from weak labour laws to the benefit of customers in western countries….). In fact, the minimum wage in shanghai has now reached 960 RMB per month and despite the forecast that it will be double the wage of India in 2012 China is expected to have an advantage due to its fixed asset investment into infrastructure as well as its scale, cluster effects and local market.