Pan Yue’s Unique Vision of Green China

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The news that Mr. Pan Yue, Deputy Minister of China’s Ministry of Environmental Protection, will soon move to a new position outside the environmental apparatus (a promotion) leaves many people with mixed feeling. In his capacity as a deputy environment minister for the past 13 years, he has been a symbol of the Chinese government’s green commitments, winning himself the unforgettable nickname “Hurricane Pan” (an allusion to the numerous high-profile campaigns he waged to crackdown on polluting industries).

While he pioneered many initiatives that are later considered groundbreaking (his creation of a Green GDP system is one of them), one legacy of his could be easily overlooked especially after an extended period of low public visibility of him in recent years. It is his articulation of a kind of environmentalism that is so organically Chinese that it takes deep root in China’s national environmental narrative without being noticed. Today, upon the departure of Hurricane Pan from the environmental field, it is a good moment to review that mark he has left.

In 2007, Pan made a speech in front of a group of young students which was later published online as an article. It was at the height of his reputation as China’s “environment tsar”, and he demonstrated an eloquence unparalleled among Chinese bureaucrats. The article provides an interesting snapshot of Pan’s thinking on an issue that has occupied a special place in his heart ever since he became one of China’s first environmental journalists in the 1980s.

Unlike mainstream environmental narratives of the West, which often have Nature at the heart of their concern, Pan’s message is one of national rejuvenation. The fundamental issue he grapples with is not the relationship between Man and Nature, but the one between the environment and the Nation. Titled “Green China and Young China”, the article tells the audience that China has reached the stage where continued environmental disasters not only degrade its natural resources and harm its economy, but also hamper its prospect of (re)rising into a great nation.

He places China’s current environmental crisis in the same historical vein as the imperialist invasion of the country in early twentieth century and its self-inflicted political turmoil during Mao’s time. He maintains that every generation of Chinese in the past century shoulders their own historic mission in overcoming the seemingly insurmountable obstacles and bring the country back to its rightful place in history. And the new generation will have to grapple with their own: the environmental challenge. Such elevation of the environmental issue might seem self-serving. After all, Pan was at that time the spokesperson of a weak ministry badly in need of attention and resources. But much of his “scaremongering” predictions then, that the environmental crisis would quickly worsen to shake the country’s still wobbly economic foundation, proves to be prescient after the world watched first-hand how apocalyptical air pollution shrouded large part of the country in a matter of a few years after the article was published.

What’s striking in Pan’s vision of national rejuvenation, beyond the possible intention of mobilization for support, is that it does not just inherit an old-fashioned narrative of “enriching the country and build up its muscles”, but develops an alternative vision that contains a set of distinctive aspirational features such as social justice, democracy and sustainability. In this line of thinking, the environment adopts another layer of significance, serving as the Chinese society’s “laboratory” to experiment on some of these elements.

This is probably Pan’s biggest contribution to China’s environmental field: the direct linkage of environmental protection with a set of broader progressive agenda items. In his own words: “Every aspect of the environmental issue today mirrors an aspect of the Chinese society in general. And every solution to it is an experiment to reform China.” The greening of manufacturing is a step towards the upgrade of China’s industrial capabilities; Ecological compensation, the practice of downstream regions paying upstream regions for its ecological services, is a pilot for larger social justice initiatives; Public participation in environment-related decision making lays the foundation for reforms in governance structure.

The 2005 controversy over the seepage-proofing of a lake in the Old Summer Palace became a showcase of Pan’s “laboratory” metaphor. In that case, the Old Summer Palace administrative office irritated the public for its project to cover the bottom of its historic lake with impermeable membrane, in an attempt to prevent water loss. Environmental groups were concerned that it would destroy the ecosystem of that area. They were even more outraged by the fact that the project had already been underway without undergoing a proper environmental impact assessment. Pan’s agency seized upon the opportunity and pushed the Old Summer Palace administration to redo a proper impact assessment for the lake project. Moreover, they went one step further by organizing an unprecedented public hearing for the assessment, inviting the park administration, NGOs, researchers and the press to openly debate the merit of the project. When commenting on the case, Pan said that he would like the case to be a demonstration of the agency’s transparency and respect for procedural integrity.

It is probably not too far-fetched to say that Pan’s “experiment” narrative opens up political space for the country’s nascent environmental movement. By connecting the field with noble objectives of nation-building, Pan lends it newfound legitimacy. The result is a relatively free atmosphere where advocates can touch on broader governance issues such as information disclosure and procedural rights in ways that their counterparts in other issue areas do not enjoy. Years later, when China’s dominant environmental narrative has turned more personal and right-based (the emergence of NYMBYism is an example), Pan’s “environmental nationalism” may seem a bit vintage. Yet it is exactly because of that legitimacy early on that a more diverse discourse on the environment can take hold.

There are elements of Pan’s environmental thinking that are more idiosyncratically his. For instance, he believes that environmental problems are fundamentally rooted in ethics and culture, and should be addressed in such dimensions. His critique of the country’s ecological plight is morally charged, accusing people of a single-minded, short-sighted pursuit of materialistic wealth, without regard for their moral responsibilities. His invocation of Confucian values as a way to approach the era’s fundamental challenges reflects not just a nationalistic leaning, but also a conviction that problems in the material world originate from the heart. Such a moral and cultural critique of China’s environmental crisis has largely been absent after the passing away of prominent environmental intellectuals such as Liang Congjie (founder of Friends of Nature, China’s earliest environmental NGO). In a field that is now filled with discussions over technical fixes and policy configurations, a look back at Pan’s words from 2007 serves as a reminder of the multi-dimensional nature of China’s green conundrum, and the different possibilities in intervention.

January: a Moment of Reflection

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The advantage of blogging is the flexibility to revisit and revise what has been written before. I started this blog slightly less than a year ago. In the process I have made observations, ventured hypotheses and passed judgments on events that defined the contour of Chinese public opinion in 2015. My intention is to be as rigorous as possible by staying vigilant about hasty conclusions and logic gaps. But the limitation of publicly available information dictates that what I can see is always just the tip of the iceberg. My mental image of that part underneath is subject to all kinds of distortion.

The only antidote to intellectual hubris, a false sense of mastery of truth, is time.  Things change, new information emerges, and situations evolve. Sometimes they require a correction of original views, sometimes they clear up the mist hung over facts like the north wind that blows away Beijing’s notorious smog.

In February 2015, when Chai Jing’s groundbreaking documentary “Under the Dome” swept across China, I considered it a stress test of the Chinese society’s environmental consensus. The result, I believed at that time, was good: the consensus was largely sound despite some pressure on the left. A major sign of that consensus was the seemingly strong endorsement from the authority. The official People’s Daily website was among the first sites to carry it. The newly appointed Environment Minister openly congratulated her. What happened to the documentary later proved that there were plenty of tensions between the public narrative about smog and the official tolerance for participation. The documentary was abruptly and thoroughly purged from the Internet days after its wildly popular debut. Chai Jing was removed from public sight. The “endorsement” turned out to be a mirage: it was probably just a bunch of progressives within the propaganda apparatus that engineered the documentary’s initially “legit” appearance, which gave an impression of governmental acceptance, a pre-condition for its light speed spread on the Internet. The backlash against Chai, both from the authority and from the conservative left, indicates that the Chinese society’s current stand on air pollution should better be understood as an equilibrium than a consensus. Even though on surface the result may look the same: society is moving slowly towards addressing pollution, the concept of an equilibrium better captures the tensions involved. While the authority has to maintain a reasonable level of supply for clean air actions, the public’s ability to demand more has also been severely curtailed with social media platforms heavily policed and key opinion leaders suppressed since 2013. The energy needed to break that equilibrium from both sides is non-existent at the moment, which prompted observers to bemoan the pathetic stalemate in the middle of December’s Airpocalypse episodes.

If the fate of Chai Jing’s documentary looks intriguing, the Qing’an gunshot incident is almost mystical. At its most confusing moment, no one understood why a simple gunshot case inside a tiny train station lounge could not be resolved once and for all. When I wrote my blog post on this incident, I opined that the force field of dominant narratives tended to bend the ballistic trajectory of truth. What I did not know at that time was that the “dominant narrative” of injustice and suppression was to a large extent intentionally fed to the public by activists whose motivations remained opaque until now. It was the dramatic crackdown on rights lawyers a few months later that brought the activists’ involvement in the controversy to public knowledge. Official stigmatization notwithstanding, why would activists choose to concentrate the full force of national wrath on a victim who seemed to have little immediate grievance and an incident that by all means looks uncomplicated? If anything, the case serves as a caution for future interpretations of the eruption of societal anger as spontaneous. Insomuch as the state has the interest to mold public opinion, the resistance has the same.

At times my depiction of that resistance’s power is probably too optimistic. The public outcry against the Tianjin chemical blast and the intensity of media probing rekindled hope that a daring, professional press corp might lead to changes otherwise elusive to this country. But five months have passed and the highly anticipated investigation by the State Council is yet to be unveiled. Media inquiry into later man-made tragedies, such as the December landslide in Shenzhen, quickly relapsed into the good old mode of shock and oblivion.

It is also in this area that inconsistency emerges. As a tragedy of the same magnitude as the Tianjin blast, the sinking of the Yangtze River cruiser “Oriental Star” manifests the authority’s well-honed ability to shape media agenda and channel public mood to “desirable directions”. But only months later that ability seemed to have completely evaporated in Tianjin. Does this warrant a reassessment of the Party’s grip over domestic public opinion? If you buy into the assessment that the past three years were all about the state winning back its once lost battleground in social media, the Tianjin incident, where the authority seemed to have blundered in this regard, should be seen as a setback rather than a reversal. Even so, it is still worth asking what combination of factors in Tianjin managed to catch a formidable force of propagandists and “Internet patrols” off guard, whether it’s the sheer magnitude of the accident or it’s the structural lack of coordination among relevant authorities in that particular situation.

After a year of blogging about Chinese public opinion, I realize that the biggest challenge, besides the limitations of available information and the constantly evolving situation, is to assess its actual impact. Just how consequential is the collective airing of certain sentiments or viewpoints?  As a recent WeChat post perfectly summarizes the dilemma: “On the one hand, members of the public constantly discount the importance of their own opinions, seeing them as nothing more than useless ‘words’ that seldom translate into real world actions. On the other, authorities treat such ‘words’ with all sincerity and try to block them at every turn. ” So as observers, do we take the public’s pessimistic views about their own power, or do we value it based on the authority’s (over)reaction?

I think this is something I need to keep in mind and grapple with while blogging in 2016. The new year began with a spectacular stock market plunge and a public outcry against China’s largest search engine Baidu. It does not bode well for the Chinese economy but should prove fertile for a blogger. I am grateful to all of you who were patient with me in the past year. Life got a bit busy for me lately. But I promise this blog will regain its rhythm very soon. Stay tuned!

“In Danger”

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On the morning of Nov 14, I woke up to the bloody massacre in Paris feeling blunted in my head. It’s terrible, it’s huge, it’s immense. But beyond that, there was very little I could say about what had happened there. A state of speechlessness descended upon me more or less like a cold: a part of your sensory capabilities is trapped in your own body by an external condition. It’s uncomfortable.

I spent hours swiping my telephone screen pointlessly, browsing Weibo posts one after another, most of which were about the terrorist act. It’s interesting how fast Chinese online discussion about the incident turned into a collective lamenting about the entire agenda of the European Left, ranging from its foreign policy (supporting Syrian Rebels against Assad), to its moral tendency (the limitation of “tolerance”), to its cultural norms (excessive political correctness). While these could be legitimate shortcomings of the Western liberal camp, it’s still amazing how a part of the Chinese society, which is in no way bound by the moral codes, the cultural taboos and the political constraints of the Western liberal-democracies, can be so worried about a “Europe turning Muslim.” Equally fascinating is how much of that discourse is imported through the Western ultra-right (even Zionist). Two articles that went viral on the Chinese cyberspace last week were translations/summaries of writings from pundits who openly lambast Muslims, one about the “demise of Europe” through population decline and welfare state, the other approvingly describing Japan as “a land without Muslim” by setting up all kinds of restrictions in its society, which is highly dubious. There seems to be an underlying craving for homogeneity manifested by the popularity of the second article, whose subject Japan is probably one of the most homogeneous societies in the world.

The propensity of Chinese online opinion to be carried away by misguided judgment prompts some influential figures on the Internet to openly declare a “shut-up”, claiming that they are not informed enough to comment on such a perplexing issue as the rise and spread of ISIS. There is also a part of me that resists the daunting task of doing a rundown of the clearly misinformed commentaries or the shoddy analyses provided by mainstream media outlets. So I turned to someone who I knew was intellectually more equipped than me to take on the Paris attack and terrorism in general.

Below is a solicited commentary written by my college friend Xymbolic, whose critical mind and erudition I have admired ever since we shared the traumatically cramped dorm room in Beijing fifteen years ago. The views expressed here are all his, but his call for a “planetary response” and a “cosmopolitan order” does invoke in me Philip Allot’s famous critique of the international order as “a glove turned inside out”. While the French Revolution got rid of kings for France, on the international level our world is still essentially ruled by the “princes” (sovereign) who do not respond to an “international society” the same way as they do to the societies within their own arbitrary boundaries. The very chaos of Syria today could be rooted in the fundamental inability of our “princes”, who get so accustomed to dealing only with other sovereigns, to relate to, negotiate with and be held accountable for a part of the human society that has been suffering too profoundly too long.

 

“In Danger”

by Xymbolic

Perhaps one of the most disturbing, albeit truthful, descriptions of the recent terrorist attacks in Paris is “not unexpected.” Actually, not only the recent attacks, but the Charlie Hebdo attacks, at the time it happened, was described in the same way by many. Though its cruelty is still shocking, and the loss deeply grieved; though the same feeling of powerlessness resulting from the inability to grasp the meaning, or total lack of meaning, of the event, still haunts the public, the strange undertone that the attacks had been somehow vaguely foreseen; and that by now such events even carry an eerie familiarity,  is definitely disconcerting.

November 1, 1975, almost exactly forty years ago, Pier Paolo Pasolini gave what turned out to be the last interview of his life.  During the interview, commenting on the murkiness of the situation of the struggle, Pasolini said: “We’re particularly pleased with conspiracies because they relieve us of the weight of having to deal with the truth head on. Wouldn’t it be wonderful if, while we’re here talking, someone in the basement were making plans to kill us? It’s easy, it’s simple, and it’s the resistance. We might lose a few friends, but then we’ll gather our forces and wipe them out.” However, when asked by the interviewer, Furio Colombo, to give a title for the interview, Pasolini said: “Here is the seed, the sense of everything. You don’t even know who, right at this moment, might be thinking of killing you. Use this as a title, if you like: ‘Because, we are all in danger.’” A couple of hours later, Pasolini was brutally murdered. The details of the murder, even the identity of the perpetrators of the crime, remain a mystery to this day.

Though it is not terrorism in today’s sense that he had in mind, we can still detect the similarity between Posolini’s “prediction of his own death” and the current situation. (Pasolini’s view that consumerism contaminates the working class with middle-class hedonism and thus stifles class struggle in the social life is clearly related to the discussion of the emergence of terrorism in its present form in the context of global capitalism, but we will leave this aside for the moment.) We are aware that we are indeed “in danger,” an impending, gigantic danger, which is at the same time extremely elusive and protean. Efforts at pinning down the source of the danger often deteriorate into various forms of conspiracy theories, e.g. the 9/11 truth movement, the ungrounded belief that Saddam Hussein was harboring al-Qaeda, or even the most banal version of racism and islamophobia from the average person in the street. Though ISIS is perceived to represent the biggest threat at the moment, it only rose to prominence less than two years ago, and it is impossible to tell when the next deadly reincarnation of terror will emerge. And even about this present archenemy, much less than adequate is known. The fact that Obama made the remarks that ISIS had been “contained” just hours before the Paris attacks took place, even if these remarks correctly describe the situation in general, indicates the imprecision and inadequacy of information. There seems to be no measure that can be taken to stop the lurking danger from leaping at the people. As Patrick Cockburn has commented: “Because the potential target is civilian populations as a whole, no amount of increased security checks or surveillance is going to be effective. The bomber will always get through.”

Subtly different from the widespread #jesuircharlie hashtag and the Republican marches in response to the Charlie Hebdo attacks, social media hashtags like #prayforparis and #porteouverte, and also the most prominent spectacle: the world’s landmark buildings lit with the French tricolor, all emanate an air less of outrage than of composure and courage. The impression is almost as if Paris had been struck by a catastrophic natural disaster. But maybe this is indeed how the terrorist attacks could be treated, i.e., as if they were natural disasters.

By no means am I saying that no one should be held responsible for this inhuman cruelty. What I am suggesting is that the inhuman feels inhuman and should be treated as inhuman. First of all, both terrorist attacks and natural disasters are absolutely meaningless in human terms. Oftentimes, when a terrorist attack happens, the perpetrators would release a message saying that the attack is meant to “teach a lesson” to the victims or their country. There is, however, no lesson to be learned from a terrorist attack, which is pure meaningless violence, just as Slavoj Žižek says when commenting on the Charlie Hebdo attacks: “We have to abandon the idea that there is something emancipatory in extreme experiences, that they enable us to open our eyes to the ultimate truth of a situation.” To comprehend is a human intellectual activity. There is nothing human in inhuman violence. It is therefore incomprehensible, and there is in fact nothing to be comprehended in it. In fact, to assume the role of a spectator and attempt to extract or produce certain meaning from grisly scenes of both terrorist carnages and natural catastrophes is in itself obscenely presumptuous.

Perhaps the disconcerting sense of familiarity upon learning that a terrorist attack has happened is not so different from the way we feel when a natural disaster strikes. We experience terrorism much like the residents of an earthquake-prone area experience earthquakes: they are aware that earthquakes may strike any time, try they best to do precise predictions, take all cautionary measures, but are still unable to stop them from happening. Furthermore, terrorism seems to have evolved into a stage where it no longer has a face. (I would argue that this is the reason why the term “terrorism” has remained in use despite constant criticisms.) Even though our daily life is much more saturated with images than a decade ago, the image of Baghdadi is not as instantly recognizable to the average person as those of bin Laden or even Zarqawi, who were “the faces of terror.” However vague the term “terrorism” is, it conveys the feeling that it is an inhuman, nameless, shape-shifting force that constantly displays its horrendous forms in terrible manifestations. Derrida was right when he predicted that the way in which the 9/11 attack took place would one day appear outdated. When we now read news reports about how today’s terrorist groups recruit new members by lurking on the social media and corrupting those susceptible to their propaganda, we cannot help but somehow take the metaphor of terrorism as a contagious disease more seriously than we usually do with a common figure of speech. Thus, we are, as Pasolini has it, “in danger,” a danger that is very much like natural disasters, which we as humans confront equally, and in the face of which we are equally vulnerable.

Recognizing the inhuman, natural-disaster-like aspect of terrorism may provide insights into the necessity of international cooperation in response to terrorism. In a letter written the day after the attacks,  Judith Butler says: “…[P]ublic services are curtailed, and no demonstrations are allowed. Even the “rassemblements” (gatherings) to grieve the dead were technically illegal. I went to one at the Place de la Republique and the police would announce that everyone must disperse, and few people obeyed. That was for me a brief moment of hopefulness.” Such gatherings in defiance of the ban from the police, I believe, exemplify what Walter Benjamin refers to in Thesis 8 of his “Theses on the Philosophy of History” as the “real state of emergency.” Hollande’s declaration of the State of Emergency has been greeted largely with mistrust and scorns from the Left. “The State of Emergency has become a synonym for the government doing as it pleases,” writes Paul Alliès. Echoing Giorgio Agamben, he also points out “a violent paradox: the institutionalization of exceptional powers reduces the scope of public liberties even as it is justified by the need to defend those liberties. ” According to Agamben, Benjamin’s idea of “a real state of emergency” aims at breaking out of the Carl Schmitt’s rigorous constructed “state of emergency” which is an anomic space where law has been suspended, while the force of law remains effective, and which, according to Benjamin, has become the norm. The prolonged “War on Terror” since 9/11 has witnessed such a process where it is no longer possible to differentiate between laws and exceptions to laws enforced by the force of the law. As Alliès oberseves, the State of Emergency “is therefore less a democratic mobilisation of society as it is its demobilisation.” If, however, the violence of terrorism is perceived as akin to that of natural disasters, which poses an equal threat to the life of every individual as a living organism, then this is a violence coming from out of the state of emergency rigorously controlled by the sovereignty. It may not be what Benjamin calls a divine violence, but it is clearly a pure violence that human beings, provided that we want to guarantee our survival as a species, must give a planetary response. When responding to the crisis of 9/11, both Habermas and Derrida proposed that it was necessary to begin a transition from the framework of international laws still based on 19th-century nation-states to  “a cosmopolitan order.” Yet what we have seen since that time was exactly the opposite to this vision. International cooperation has become an oft-mentioned yet empty promise, and the space for such cooperation is torn up by sovereignties operating in their respective states of emergency. So maybe it was too optimistic to expect the international alliances of sovereignties to transition automatically into a cosmopolitan order. Maybe what we need is, like the gatherings Judith Butler has mentioned but probably on a grander scale, self-organized responses to inhuman terrorism by people whose very lives are in danger, which may render the state of emergency declared by sovereignties superfluous.

Though since the attacks took place, given the background of the Syrian refugee crisis, the discussion has been carried out largely within a framework of the relationship between the West and the Middle East. As the ensuing events have demonstrated, however, China will by no means be able to assume the role of the spectator in the current situation. The ideal scenario, however pale its imitation in the real world would turn out to be, is that China will be able to take part without superficially taking sides, i.e., without submitting to the dichotomy of Eurocentrism versus Anti-Eurocentrism, which, according to Derrida, has its possibilities already exhausted; and according to Žižek, is but a trap set by global capitalism to counter that which, in the legacy of the Enlightenment, is still powerful as a resistance, viz. egalitarianism, fundamental rights, freedom of the press, the welfare-state, etc., the values that may ultimately fulfill the promise of a cosmopolitan global order that protects us from inhuman danger.

From “Crazy Chen” to “Made in China 2025”

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We first met “Crazy Chen” at the Hong Kong Football Club two weeks ago. The venue still retains a somewhat cute residue of colonial snobbishness (alert: you are not allowed to make calls with your mobile phone in this venue, but the vintage landline phones at the lobby are ok!). It was part of a two-week workshop for professionals from major global corporations (banks, funds, insurance companies and manufacturing corporations) and non-governmental groups to better prepare themselves for the challenges of the 21st century, with a focus on Asia. A key component of the workshop was to spend a week with a real Chinese SME (small and medium-sized enterprise) to help it solve problems and in return gain some insights for ourselves.

When this Wuhan-based businessman refers to himself as “Crazy Chen”, you know it carries a sort of pride in it. It’s not lunatic crazy. It’s Steve Jobs crazy. He is the Chairman and founder of this Chinese start-up that makes a kind of environmentally-friendly plastic (I will not reveal too much technical details here). As someone who moved from real estate into manufacturing at the age of 54, Chen carries the mixed disposition of new money shamelessness and entrepreneurial respectability. He spent the first ten minutes of his speech boasting about how rich he was (he had a dozen debit cards each containing over 5 million RMB). He used inappropriate language to refer to women (a common feature of Chinese men of his age). He even bragged about how young he looked (indeed he did not look like someone over 70. Not sure how much money he had spent on cosmetics). On the other hand, his personal story of self-elevation does carry a flavor of legend on the verge of mythology. He decided to pursue a master’s degree in polymer science well after middle age, with almost zero preparation in math and English (two key subjects of the entrance exam). He claimed that he mastered math by himself within a few month and gave up completely on English (got only 26 in 100). Even so he still managed to get into one of Hubei province’s major universities and got his degree in a few years. Through the exposure to the academic world he developed this weird idea of citations: that citation means borrowing from others without innovation. And he wanted to do something new. So he started to spend long hours in his laboratory developing new materials, materials that are more friendly to the environment than traditional fossil based plastics. He claimed that once he stood in the lab for a straight seven days without rest. After he got home, his legs were so swollen that his wife had to use a scissor to cut off his pants before he could get into bed. He fell into sleep and stayed in a coma-like state for 48 hours.

When the 25 of us landed in Wuhan last week, we were immediately shuttled to Chen’s company headquarters, the fruition of his crazy hard work in the laboratory. The company is now managed by his son, “Crazy Chen Junior”. He brought us to our first stop inside the office building, a fancy showroom with all their products, certificates and awards on display. Two years ago, China’s President Xi took some interest in their products when he visited Wuhan. And not surprisingly his picture was featured prominently in the exhibition.

Our immediate next stop was their research labs which they seemed to take particular pride in. The director of their R&D department, a young petite woman, showed us around and introduced the working of their equipment and devices. The labs betrayed a resemblance to those rudimentary ones that you saw in high schools. But the company’s technological edge is not to be underestimated. It held dozens of international and national patents and was among the first Chinese companies to have had received the most stringent certificates from Europe and Japan for its materials. At this point I realized that this was not a poster boy Chinese SME that was complacent in making quick money by manufacturing fake Louis Vuitton handbags or tainted food. It is a technology driven enterprise that represents the break-away from the stereotype “made in China” workshops.

Yet the company was in trouble.

The reason why its management invited us to Wuhan was that it’s stuck. As a new material start-up, it was stuck in making two things: garbage bags and disposable utensils. It was not a very comfortable place to be in as a company. For one thing, it was a low-end, low-recognition category where price competition was fierce and no brand loyalty can be expected. Their biggest markets are those street-side restaurants and wholesalers who sell to those restaurants. But such customers are extremely price sensitive and would strive to cut corners particularly on items like disposable utensils. In this area the company faces formidable competition with cheap plastic products, especially at a time when oil price is at its low point. The policy environment isn’t giving them any edge against its competitors either. For years Chinese cities talk about setting up garbage separation systems and composting facilities which would favor more degradable eco-materials over non-degradable plastics. But such efforts are often fitful and are constantly stalled by a lack of political will and incentives. One city in China took the drastic approach of banning non-degradable plastic bags at the beginning of this year, but it was seen more as an exception reflecting the personal inclination of the mayor rather than a future norm. When we met with a group of municipal officials last week to discuss about this issue, their attitude was visibly tepid. I sensed it when they started to lecture us about the “complexity” of the issue. The underlying message was two-fold: first, they were not ready to disrupt the powerful industry of plastic makers; second, they fear if they did take measures, the “Crazy Chens” and their companies would not be able to bring production to a scale that would fill the opening, which would undermine the legitimacy of such policies.

Sadly, a country perplexed by its ever increasing stream of urban wastes is not ready to pay for an eco-friendly option yet. Left on its own, the company tried to move up the ladder of values by creating its own brand name products and found its way into large supermarkets where middle class consumers picked their household products. Unfortunately, even on those shelves they were unable to collect a premium due the lack of consumer awareness and demand for eco-friendly products. Worse still, they saw themselves squeezed on both ends by better known paper and plastic products on the one hand, and surcharges from the supermarkets on the other, in the form of “listing fees” and promotional expenses. To stay competitive, they had to keep their margin at close to zero or even negative in some cases.

The Chens have their rationale. They would like to make their material more visible for a wider audience to see its possibilities and potential. The retail adventure therefore morphed into an expensive marketing undertaking. The sad thing, though, is that people do not associate garbage bags and disposable stuff with a cutting edge material of the future. And the disposable nature of the products probably turns the really eco-conscious customers away. After all, the “throw away” culture is an antithesis to conservation, which is intrinsically contradictory to the image that the company would like to build.

After a few late night soul-searching sessions with “Crazy Chen Junior” and his management team, we began to realize where the problem was. The company’s core technical edge lies in its “resin”, for which they possess all the patents. Like Coca-Cola’s secret syrup that it sells to bottlers all over the world, the “resin” can be mixed with regular plastics such as PP and PE to create materials with new properties. They are the largest producer of this niche material in China, and the second largest in the world. Its key advantage is the lower carbon footprint and higher degradability compared to fossil-based counterparts. Being located in China, close to the world’s largest manufacturing powerhouse, also gives it an edge against international competitors. But these advantages are all based on a scenario where it sells its “resin” directly, which also gives it a higher margin.

Here comes the pitfall: there is a huge risk in this scenario, which is associated intellectual property. Their biggest fear is that Chinese copycat competitors can easily reverse engineer the resin, wiping out whatever technological edge they still enjoy today. The answer to this challenge is “camouflage”: mixing the resin with other plastic materials to render the resin indecipherable. To do that, they have to source such materials from the open market, allowing their margin to erode in the process. Moreover, they have to invest in blending facilities to be able to blend the resin with other materials. Essentially, it means they’d turn themselves from a Coca-Cola to a bottler just to protect their own syrup. But in China there are tens of thousands of converters who are better at this kind of blending job with a larger economy of scale. That’s why they have to move into consumer products in order to generate more added-value out of the blended material. They are even careful enough not to purchase its production lines in their entirety, but to buy parts separately and then combine them by themselves, which further undermines efficiency. The purpose is again to prevent competitors from following suit. All these factors cut into their profit and keep their bleeding wounds open.

This revelation makes me a bit frustrated. In the end, all we could do to help was to build a business model for them showing that a resin-based business is better for the company. Yet we all realized that they had known it all along. It’s the circumstance that had prevented them from moving toward that direction.

On May 18 this year, the Chinese central government unveiled its ambitious plan of “Made in China 2025“, with an intention to “upgrade” China’s manufacturing sector. In later speeches, China’s Premier Li Keqiang made it clear that his country was no longer content of making T-shirts and other low-end consumer products. He would like to see its massive manufacturing prowess turned towards industrial equipment, telecommunication and new materials, among others. This is not a simple re-configuration of the country’s manufacturing portfolio; it represents a change of business model that would allow Chinese companies to move up the value chain in the global market. A model based on the export of high-speed trains and commercial airliners is qualitatively different from one that’s based on selling toys and cheap plastic cups. But the plight of the “Crazy Chens” speaks to the challenge that lies ahead. The pains that those Chinese SMEs has to take in order to move one tiny step up the value chain illustrates the distance between a vision and the reality.