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Storm uncovers China’s weak points

Scott Tong and Kai Ryssdal Feb 7, 2008

Storm uncovers China’s weak points

Scott Tong and Kai Ryssdal Feb 7, 2008


KAI RYSSDAL: Today marks a grim Lunar New Year in most of Southern China. Last week the region was hit with powerful snowstorms that knocked out electricity to millions of people. They also derailed travel plans for hundreds of millions more who were planning trips home to see family. Migrant workers were among the most severely affected. They only get to go home but once a year for this holiday. Scott Tong’s in our Shanghai bureau. Hey Scott.

SCOTT TONG: Kai, happy new year from China.

RYSSDAL: Xin nian kuai le, as it were, I guess, huh?

TONG: That’s right.

RYSSDAL: Listen, these migrant workers, they are all over the place in China, as you’ve been telling us about for the past couple of years. Remind us exactly who we’re talking about.

TONG: Well let’s talk about the Tong family nanny. We put her on a bus about three days ago to go back to her village. So she spent most of her adult life outside the village, and she’s gone, she’s come to the city for work, and her husband works in a different city, he’s also a migrant, and he’s an electrician. Now take that times 200 million and that’s the kind of movement of humanity that we’re seeing in China, and this is basically their one vacation every year. Except this year when Mother Nature intervened here, and we had the 100 year snowstorm in parts of China, which shut down highways, cancelled flights, downed a lot of power lines, so a lot of people were stranded.

RYSSDAL: What does this tell us about the Chinese infrastructure. I mean obviously the country’s growing and it’s trying to equip itself for life in the modern economy. What do we know now that we didn’t know a week and a half ago?

TONG: Well for starters, the infrastructure in China is fabulous for the most part, but a storm like this reveals stress points, and one of those is the power grid here in China. China runs largely on coal, and so these power plants need coal that’s mined in Northern China and needs to be transported all around the country, and what happened with this storm is the supply and the transportation was disrupted, and so the government had to start this massive response to keep all the lights on. They told ships that were exporting coal to turn around and bring it back into China. They reopened these mines that they’d shut down because they were too dangerous, so they mobilized this giant response to keep the lights on, to keep the factories going in China, and a lot of the power plants they only have a few days of coal left so we still may have some harrowing times to go and it may affect the export machine here.

RYSSDAL: Well let me pick up on that thread and channel the American consumer here. China is the factory of the world. We see their goods on our shelves all over the place. What might this mean for China as an export engine and the rest of the world economy?

TONG: Well most people think, as far as the storm, that China Inc. is going to be back and up and running pretty soon, but you have this longer-term fundamental energy question here in China, and it comes back to price controls. There are fears about inflation and prices of everything going up in China, and so the government has regulated the price of a lot of things, including energy. Now that’s good for buyers, but it’s terrible for the sellers, right? Say I’m selling you something. I’m selling Oreos to you, and the government says I can only sell them for like 5 cents a pack, well I’m not going to invest a lot. I’m not going to put a lot on the shelves and that’s what the power plants have done here in China. They don’t have a lot of extra reserve because they don’t have a financial incentive to do that, and that’s a longer-term question about China and energy.

RYSSDAL: Briefly Scott, before I let you go, what’s your guess as to whether or not your nanny’s going to be back on time?

TONG: Well we’ve told her to call us or send us a text message if the weather’s bad, and we cold be in for some freezing rain and some fog here, so come next Wednesday when everybody’s supposed to come back to their jobs and to the factories, we’ll see if everybody makes it back smoothly.

RYSSDAL: Scott Tong at the Marketplace bureau in Shanghai. Thank you Scott.

TONG: OK Kai. Thanks a lot.

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