The Great Leap Forward (article on the Newly Rich in China)

The great leap forward

China’s first generation of only children is waving goodbye to the Party and saying hello to Prada and Ferrari. Carole Cadwalladr joins the millionaires turning Shanghai into the biggest boom town in history

Sunday January 21, 2007
The Observer

The last time the Chinese police really captured the world’s attention was back in 1989, when they appeared on the TV hitting Chinese students over the head with big sticks. They still have the sticks, it turns out, and the ability to look impassive in the face of a large and determined crowd. But outside the Shanghai Oriental Arts Centre, more than anything else they just look a bit confused. There are people waving thick white invitations at them and bunches of flowers.

Read any human-rights report on China and sooner or later you’ll see the word ‘policeman’ coupled with words such as ‘torture’ or ‘brutality’. And yet here they are, a 200-strong battalion, stationed out the front of the China Fashion Awards, ensuring that no celebrity should suffer the indignity of walking more than two yards from their chauffeur-driven limo to the red carpet, and that the footballers’ hairdos don’t get drizzled on.
Worse, it turns out that the event’s sponsors include OK!. The official role of the cops therefore appears to be to protect the global business interests of Richard Desmond, the founder of OK! and former publisher of Asian Babes, Big Ones and Horny Housewives, titles unlikely to get past the Chinese censors any time soon. Protecting ex-porn barons is one thing in the People’s Republic of China, but possessing pornography is a crime that can result in the Re-education Through Labour Committee sending you to a labour camp for three years.

It’s not hard to see why OK! wants a piece of the action, though, for the cream of Shanghai society is here, as well as crowds of eager but incredibly well-behaved fans, and celebrities galore: singers from Taiwan in head-to-toe Versace; actresses from Hong Kong in slashed-to-the-thigh Liz Hurley-style numbers; a 14-member boy band consisting of the finalists of the Chinese version of Pop Idol, and great flocks of 6ft models who skitter up the red carpet like nervous gazelles expecting an attack by water buffalo.

Inside, a Jeremy Beadle lookalike from Taiwan with impressively bouffy hair is compering. A 24-year-old from a local English-language magazine, Claire (like all the English-speaking Chinese, she’s taken an English name) translates for me with an increasingly surreal commentary.

‘She was Chinese Vogue’s first cover star,’ she whispers when one of the gazelles walks on stage. ‘We think she is very ugly. He is very famous because he changes his hairstyle often. That singer in the band – he is deaf. And dumb.’

‘Is he… popular?’ I ask.

‘Oh yes,’ she says. ‘People love him!’

In fact, the show doesn’t require all that much translation. The evening largely consists of a succession of glossy, shiny people coming up on stage, each glossier and shinier than the last, right up until the moment a middle-aged man in a drab suit with bottle-lens glasses and a balding head sweeps into the spotlight.

‘He is the chairman of Shanghai Media,’ whispers Claire. ‘The government.’

He’s so alien, so totally out of place, that I half-expect him to speak in the synthesised electronic tones of R2D2. He’s here to present the Male Fashion Icon of the Year award, and as a man with spiky red hair steps up to accept the prize, they form a tableau vivant: old China meets new China. Can this really be what ex-president Deng Xiaoping meant when he talked about ‘socialism with Chinese characteristics’ almost 30 years ago?

When I ask Claire how they decide the winners, she shrugs her shoulders, but it all seems a bit of a stitch-up. Procter & Gamble is another of the sponsors, and although there’s a whole football team from Prada and another from Hermes taking up the front two rows, Brand of the Year goes to Lux, a cheapo soap bar that P&G just happens to make.

But the evening is as good an introduction as any to the forces at work in modern China. For a start, there’s the unedifying spectacle of western companies desperately ingratiating themselves with a Chinese audience (China’s economy grew by 10.4 per cent last year, with foreign investment reaching £2.27bn). The Dutch chairman of Unilever goes on stage and thanks the producers for a show that he declares is ‘so edgy, so groovy and so swinging’. There are whispers among the audience that the awards aren’t totally above board. But I learn later that that’s how business is conducted here, namely by the traditional virtue of guanxi. Or in other words, through elaborate social relationships rather than on merit.

There’s also the stark division between rural China, where 900m people live largely in poverty, and urban China – the 400m people who have already made the country the third-largest consumer of luxury goods in the world and by 2015 are predicted to have shopped it into first place. Indeed, the crowd grows restless when a film is shown of some barefoot Chinese children, and only snaps to attention again when some models in short skirts are brought on.

And then, finally, there are the brands, the labels, the designer dresses – lots of them. Or as Julien, a Frenchman who works for Prada, sums it up: ‘It’s all money, money, money. Even two years ago it was normal; now it has gone totally crazy. We have eight stores already, but we are opening more. Dozens more. You have to see these people when they come in to the shop. Oh my God! They carry bags of cash with them! Plastic bags full of cash!’

Although it’s not just Julien who tells me this, it’s everybody I meet. A model-turned-PR asks me to guess the worst social crime you can commit in Shanghai. It’s not a very good game, to be honest. ‘Child abuse?’ I hazard. She shakes her head. ‘No! It is to give someone a fake!’ she says, just a little too solemnly. ‘This is the worst thing! Unforgivable!’ And then she wags her finger at me.

The real action takes place at the after-party, a glamorous affair held on the 66th floor of the Le Royal Meridien hotel, where the champagne flows and from every window there is another staggering view: skyscrapers upon skyscrapers; neon pinks and greens and yellows whichever way you look – up, down, sideways; and on the river below, vast floating video screens that cruise silently by projecting images of speeding Chevrolets and Jaguars. It’s like Blade Runner: The Cocktail Party, and I’m beginning to see what the chairman of Unilever means. It is so groovy and so edgy and so swinging: we’re 66 floors up a skyscraper in the most successful city of the country with the fastest economic growth in the world. It feels like being at the epicentre of the future.

PT Black, the American partner of a company that conducts market research for western firms desperate to crack the secrets of the world’s biggest market, tells me about a recent survey which asked people in 80 countries whether they thought tomorrow would be better than today. ‘Only three countries in the world answered positively. And by far and away the most positive was China: 83 per cent said yes. People really believe in progress here.’

But then how could they not, when the view from the windows is of Pudong? Fifteen years ago it was swamp land; now it’s home to 4m people and headquarters to dozens of international companies. But when I start talking to Lu Kun, a couture designer, and ask what he thinks of fashion in Shanghai, he makes a face.

‘Not much,’ he says. ‘Everybody is just copying [counterfeiting western designs]. Do you know what the greatest social insult is here?’

‘Yes! It’s to give someone a fake!’

‘Exactly! They are buying stuff that is made in China, shipped to Italy, marked up 500 times and then shipped back to China. Where they put the price up again!’ I later find out that between 15-20 per cent of all well-known brands in China are fake.

But tonight, with a lot of people getting drunk on free champagne, there’s the golden whiff of opportunity in one of the greatest boom towns in history. Only Charlie, it seems, is sober. He’s an advertising exec from Beijing, in his mid-thirties, and the only doomy person in the room. Maybe the entire city.

‘It’s insane!’ he says. ‘Everything – the money. The poverty. The urbanisation. The exhaustion of our natural resources. These opportunities that are beyond anything that anybody in Europe or America has seen before or will ever see again. It’s mad, if you think about it. But no one is thinking about it, because it’s impossible to hold it all in your head.’

It’s 4am, and we’re at the after-party of the after-party in a newly opened private members’ club called Volar designed by Philippe Starck. But Charlie has things to get off his chest.

‘My sister is nine years older than me and she is completely different because she grew up during the Cultural Revolution [1966-1976], and I grew up after it. It’s like we are totally different breeds. She had to go and work in a factory. I cannot even imagine how hard her life has been. And she’s my sister.’ Charlie pauses, then says, ‘There is this overwhelming optimism. But at the heart of us all is this enormous insecurity. Look what happened to our parents. Me? I’m always looking for escape routes.’

‘Yes,’ I say, looking around, thinking that maybe Philippe Starck’s brothel look is not my favourite and wondering how on earth I’m going to get back to my hotel, when Charlie interrupts: ‘This is what the whole of China is like! It’s like being in a dodgy club! And never knowing if you will be able to get a taxi out!’

The next night I’m back on the 66th floor of the Le Royal Meridien for a ‘private shopping evening’ organised by Qeelin, China’s first luxury jewellery brand. The signature piece is a panda pendant, studded with 300 diamonds, on sale for £6,000. One of the shoppers is a man called Joe, who’s in his late twenties and runs the Ferrari club. ‘It’s for me and my friends. We turn up and drive around places in our Ferraris.’

It’s quite equal opportunities, though: they’ll also let you in if you drive a Porsche.

He already owns nine cars (a Porsche 911, a Mercedes, a BMW X5, a Mitsubishi Evolution, a Toyota Yaris, a… oh, my pen simply gives out at this point) and is about to buy a Lamborghini. Then there’s his apartment in Shanghai and his house in Eastbourne. Eastbourne?

‘It’s near where I went to school.’

Boarding school, it turns out, for Joe is a member of that other elite club: the first generation of Chinese to have inherited wealth. His father owns several hotels and ‘around 2,000 apartments’.

You get blase about meeting the super-rich in Shanghai. It’s a city of newly made bao fa hu – the ‘explosively rich’. Yuan Yuan, 32, an events organiser with a PR company, tells us about her friend Steven. ‘He makes just this one tiny component for Sharp mobile phones. This one,’ and she points to the little socket into which the charger plugs. ‘And he has six factories, and 6,000 employees, and each factory makes RMB2m [renminbi – £130,000] a month. Each factory! And he doesn’t know what to spend it on.’

The next day we go off to the golf academy, where we meet Michael Dickie, a Scottish golf coach, who tells us about a golf club that costs $180,000 to join.

‘My one is much cheaper – only $100,000.’

We take a taxi to go and meet one of his students, 35-year-old Wu Xin, or James, and drive through a scrappy little neighbourhood until suddenly we arrive at Rancho Sante Fe. It’s a private compound with huge villas made of fake adobe and a whole mini-army of private guards. James’s villa has manicured lawns, a deck overlooking the lake, a barbecue pit, an ornamental well and a perfectly groomed labrador retriever called Wang Wang.

Ten years ago James had nothing; now not only does he have this house, which he bought for £3m, he’s also bought apartments for his parents, his wife Vina’s parents, his sister and his wife’s sister. And he’s only in his mid-thirties. He built his own chain of clothing stores from the ground up, and now owns an empire that spans China, although these days he’s mostly concentrating on his investments. His son attends the British school and goes horse-riding, and as a family they holiday in Europe, South Africa, Australia and southeast Asia.

They’re so friendly and they give us a tour of the house, but there’s a rather unsettling moment when they show us a girl’s bedroom with a doll’s tea set and flowery bedspread.

‘For a daughter,’ says James.

‘But you don’t have a daughter,’ I say. And there’s an uncomfortable pause, as James looks at his wife as if they’ve been found out.

‘The designer did it,’ he says. But then, for all the Wisteria Lane-style decorative features, it’s not America. And Californian style only works up to a point in a country with authoritarian social policies of the one-child-only variety.

After the house, we tour the ‘clubhouse’ across the road, with its bar, restaurant, gym and two swimming pools.

‘Did you have a private swimming pool when you were young?’ I ask him jokingly.

‘We were just so happy if we had something good to eat,’ he answers, but less jokingly.

In the taxi back to central Shanghai I start thinking that although the house was expensive, it really wasn’t that different from millions of suburban homes all across America. But then, that’s Shanghai: from one angle it all looks quite ‘normal’ – the bars, the shops, the fashionably dressed young folk – and yet from another, it’s anything but.

In the business centre of the Shangri La Hotel, not far from the construction site where the tallest skyscraper in the world is being built, I attempt to do a bit of research on the internet, but the server seems to be down. There’s no Wikipedia, no BBC, no New York Times. And only then does the penny drop: I’m behind the great firewall of China. I spend half an hour trying to establish what it is exactly the Chinese government doesn’t want me to know and then, somehow, quite by accident, I slip through an electronic loophole and find an article by someone who’d written something on a chatsite and was taken off to be ‘re-educated’ in a labour camp. The hairs on the back of my neck prickle. I can’t help wondering if there’s somebody watching. But then, of course, there probably is.

It’s one thing knowing about the one-child policy in theory, quite another seeing it in action. The present crop of twentysomethings is a demographic freak, a generation consisting predominantly of only children. With everything that implies: it’s why China has the highest number of mobile-phone users in the world, why western brands are salivating at the riches to come, and why, in every glamorous bar in town, I seem to meet a young girl who refers to herself as a ‘Shanghai princess’.

Yuan Yuan, the events organiser with the mobile-phone billionaire friend, is not a Shanghai princess – she’s in her thirties, defiantly independent and single – but she knows Shanghai princesses and rounds up a bunch of them for us, along with a couple of princes. They’re all such polite young things, articulate, interesting, with good jobs at western firms. And encouragingly, only one of them, Tim, is dressed head to toe in designer labels.

‘Talk me through your outfit, Tim,’ I say, and Yuan Yuan translates: ‘The sunglasses are YSL. The jacket’s Vivienne Westwood. This necklace is Dolce and Gabbana. The bracelet is Cartier. The gold chains are Dior Homme. This is a Gucci bag, Gucci key ring, Gucci belt…’

‘And how much did it cost?’

‘The outfit… at least 300,000 RMB. But he doesn’t like the logos, he just likes the style.’

(It’s not until later that I check the exchange rate: £20,000! That’s not an outfit, it’s a car.)

Finally, I attempt to ask them about politics.

‘Ask anything you like!’ they say. ‘We are the new generation, we’re allowed to talk about it. Western people think that we are all heavily controlled by the government. But we don’t really feel like that.’

‘Does anyone ever criticise the government?’ I ask, pointing out that they can talk to me with the assurance of strict anonymity.

‘Of course,’ says someone I’ll call Lily. ‘They say the government is hiding stuff. That they don’t tell the truth.’

‘And do you agree with this?’

‘Sometimes,’ she says.

‘Actually, the media is not really controlled by the government,’ says ‘Pete’. ‘We can get a lot of information over the internet.’

‘And what about democracy?’ I say. ‘Hmm? Any thoughts on that?’

‘We can vote for representatives. But our problem in China is that we have too many people. It’s impossible for us to have true democracy. The country is too big,’ says George. They could be reading off a script entitled something like Young People in China Don’t Give a Stuff About Politics. But they really don’t.

‘What about human rights?’ I say, a plaintive note rising in my voice. ‘Like detaining prisoners without trial. Like torture.’

‘Like Guantanamo?’ says George. ‘America has the same problem as us.’

It’s a fair point, but largely a rhetorical one. They really aren’t interested. They were toddlers at the time of Tiananmen – in their experience, Chinese policemen provide security at red-carpet events. And everybody’s getting better off: industrial profits grew by 30 per cent in the first 10 months of last year, investment by 27 per cent in the same period. Total retail sales by 14.3 per cent – in just one month, October. Shanghai is building 400 new high-rises a year. Ten new cities are emerging on the city’s outskirts, each of which will house more than 1m people. It’s hardly surprising that China now consumes 40 per cent of the world’s concrete and 90 per cent of its steel.

These are astonishing times, and even among this group of young Burberry wearers you get a glimpse of how far the country has come, how quickly. I chat to one of the girls, idly, while we’re doing the photos. She’s wearing a raspberry cashmere sweater and designer leather boots. Her bag is by Chanel. She loves Chanel, she tells me. She loves shopping. Oh, blah blah, I think, and put down my notepad because, really, there’s only so many conversations about designer handbags you can take. And then she mentions that she was brought up in Xinjiang, in the far, far northwest. Her parents were forcibly relocated there in the Seventies.

‘They didn’t want to go,’ she says. ‘They were taken there and then left in the middle of the countryside. They had to build their own house. We were miles from anywhere – they wanted to keep us apart from the local people. The nearest village was a two-hour cycle ride away and it had nothing, only a little market.’

She lets out a little shiver of horror at the memory: ‘There was no McDonald’s, no KFC, no shops. There was no Chanel – I didn’t even know about Chanel at the time.’

From rural to urban, from poverty to designer cashmere, her transformation has taken just over a decade. She’s gone from grinding rural poverty to a good job with a western computer firm. With her immaculately groomed hair, her manicured nails and her fluent English, she is China in miniature. The economic miracle made flesh.

By the end of my trip, I’ve learnt so much about Chinese millionaires and billionaires. But it’s an American woman I meet by chance in a bar who really drives it home. She’s the vice president of the International Finance Corporation, the private investor arm of the World Bank. And when I’m left slightly befuddled by her descriptions of capital markets and corporate governance and investment assets, she puts it very simply for me: ‘These people are going to win. And they are going to win big.’

I give you the Shanghai princes and princesses. The masters of the universe of the future. Or China, as it’s otherwise known.

Jin Yuan Yuan, 32, events organiser

My mother’s staying with me at the moment, but she didn’t want to come today. She said, ‘Don’t let them take your picture in public.’ This is a result of the Cultural Revolution – she thinks you shouldn’t draw attention to yourself. The Chinese way is to always be in the middle, never say yes or no, always say ‘maybe’.

My parents were teenagers at the start of the Cultural Revolution and as all the universities were closed down, they couldn’t get an education. So when I was old enough, they paid for me to study fashion PR at the London College of Fashion. My father hoped I could come back and help them, but I’m not really interested in the fashion industry. Instead, I’m trying to build up the first professional photographer’s agency in Shanghai.

My parents don’t really approve of my lifestyle and there’s this huge generation gap: my mother doesn’t like me wearing make-up and she doesn’t know I drink alcohol. They also worry that things could change again very quickly, just as they did with the Cultural Revolution.

They also want to know when I’m going to get married. I have a boyfriend, but it’s not really long term. All my girlfriends are the same – except they have three or four boyfriends at the same time. They never commit to anyone until they marry. They say you have to tell men they have competition otherwise they think you are easy to get.

Chen Hang Feng, 32, graphic designer

I paint what look like traditional Chinese designs, but up close you can see that the patterns are actually made up from logos – I use the C from Chanel, the Converse star, Lacoste alligator.

People aren’t really interested in politics now. You should never believe anything in the papers or on TV, but the taxi drivers know everything. My father and my uncle used to talk about politics all the time, but even they’ve stopped. Money has taken over everything.

Qian Cui Fang (Hang’s mother), 58, member of the neighbourhood committee

The Cultural Revolution was the greatest disaster of my life. Before the civil war my grandparents had been landlords, so we were considered to be capitalists. I was very good at my studies, but I couldn’t go to university. I was sent out to work in the fields; it was a very hard life. I became a tailor after that.

Part of my job now is to enforce the one-child policy. Sometimes pregnant women come from the countryside to my compound, and we have to ring the authorities in the area they are from to see if they have a licence. If they don’t, they are supposed to have an abortion, but it doesn’t always happen. They sometimes run away.

Michelle Ma, 35, marketing manager

I’ve been to this restaurant – Jade on 36 at the Shangri La Hotel – eight times now. Two years ago I’d never even tasted a glass of wine or eaten western food, but now I’m addicted to fine dining. My boyfriend and I go to restaurants at least once a week, and while many Chinese people probably think I’m mad to spend £100 on a meal, for me it’s as rewarding as going to the opera or the cinema. My lifestyle is very different to a lot of Chinese girls my age. My cousin, for example, loves to play mah jong and drink tea, just like our parents before us. If I’m going to a restaurant for lunch and a glass of champagne, I would never call her, because I know she wouldn’t enjoy it. We’re very close – in China, cousins are often like sisters – but we are two different types of Chinese women. I hate mah jong. I just think it’s a waste of time.

My cousin’s married, but none of my friends are. I’m in the most stable relationship out of any of them. We all have foreign boyfriends. It’s funny, because some of the western men go out with girls we consider really ugly. We have a joke that if you’re so ugly that you can’t get married, go get a western guy.