Magazine issues » Autumn 2013

INSIDE VIEW: An air of dissatisfaction

ShanghaiSocial awareness and environmental activism could be the catalyst for climate change in China. Karine Hirn at East Capital says its leaders also breathe this bad air, but they cannot afford to allow this air of dissatisfaction to become thicker.

When I moved to Shanghai three years ago, I remember all the comments I got from friends and relatives.

They thought we were irresponsible to take three children away from one of the world’s cleanest capital cities – Stockholm – to a megalopolis known for its polluted air.

I thought they were exaggerating. After all, the first few months were not so bad.

The day after the World Exposition in Shanghai closed its doors in October 2010, the sky became more grayish, or yellowish, depending on the day.

We got used to living in a city where blue sky is such a rare occurrence that I would take pictures on these exceptional days and send it to colleagues back in Europe.

SEEING STARS
My son laughed at me during our first Christmas, when I bought him a telescope to see stars that no one could ever see. But I really liked Shanghai and thought the pollution was the price one had to pay to live in a city with such great energy.

I also noticed that we were actually much better off in Shanghai than in any of the other places in China I travelled to – visiting companies, real-estate projects and factories.

I remember the thick smog in Chongqing, a 32 million population municipality in central China; my meetings in a smelly industrial haze in Shenzhen, perhaps the world’s fastest ever developed city in Guangdong province in the south; and the time I could not see the other side of the frozen river in the northern city of Harbin close to the Russian border.

During the three years I have lived in China, the only place I have visited where air pollution seems not to be a permanent problem is the remote province of Xinjiang, in the northwest.

Then the winter of 2012/2013 came and suddenly it felt as though things had become much worse for everyone living in China.

While foreign media focused on Beijing’s situation, which was indisputably bad, the problem actually did not spare any urban center of the world’s most populous country.

Yes, things were and are bad. Most importantly, however, people were now starting to talk about it. It was a like a sudden outbreak of environmental awareness.

Air pollution started to infect conversations at work and amongst friends: “Did you check the air-pollution index today?”; “I wanted to go jogging this morning but will wait until it's under 150 PM [particulate matter]”; “ Outdoor activities at school have been suspended until further notice due to hazardous air conditions.”

Air pollution has also affected postings on Weibo, the Chinese equivalent of Twitter, and newspaper headlines. It even made its way onto everyone’s smart phone, via the increasingly popular pollution meter apps.

Air purifiers and air masks rank high in the top-sellers’ lists on ecommerce sites such as Taobao. People share online maps of trash-burning plants, chemical plants, coking plants, insecticide factories, and thermal power plants, taking these factors into consideration when looking at buying a home.

Foreigners are obviously concerned. I noticed that Western media reported multinationals’ difficulties in attracting or retaining expats, especially those with families.

But to be honest, this is not what is most important. What is amazing is just how much this has become a major concern for the Chinese middle class and in such a short time.

People would not even talk about air pollution a year ago, whereas today one cannot have a conversation with anyone without the topic coming up.

CLEAN LUNGS
The middle class is concerned for its health. In China, people are obsessed with the question of well-being. Food and exercise, they say, are important ingredients for a good life and a good spirit. So what about the air we breathe?  

Also, when a family has only one child and one grandchild because of the one-child policy, they become obsessed about the environment in which he or she is growing up.

Test messages advertising is a “plague” in China and I recently received one that promoted the idea of holidaying in Switzerland – as a destination with pure air where the family’s lungs would be cleaned up.

This is actually what I usually do during the summer with my family, so not a bad idea at all.

This outbreak of environmental awareness has been complemented by another kind of awareness: is the government telling the truth?

Why do US consulates’ pollution meters – now also available online – usually report higher levels than the official Chinese ones?

If the people of China are victims (where all of us have to breathe in air that is worse than an airport smokers’ lounge), the question is two-fold.

Who is to blame, and is the problem already so severe that it cannot be fixed? I have heard bitter comments about the wealthy, who can afford to emigrate or send their child abroad, while those who cannot afford it will die younger.

WALL OF WORRY
At the same time, my Chinese friends do not understand why we always prefer to bike or walk whenever possible. Car ownership remains the big dream for most.

This wall of worry and discontent has the potential to grow bigger because it is spreading very quickly among the 590 million Chinese internet users and because the situation is likely to get worse before it gets better.

Paradoxically, social awareness and environmental activism might be exactly what is needed to affect change. The leaders of China also breathe this bad air, but, more importantly, they cannot afford to allow this air of dissatisfaction to become thicker.

Karine Hirn is a founding partner of East Capital. She recently relocated to Hong Kong as part of the company’s strategy to strengthen its presence in Asia by creating
a hub in Hong Kong

©2013 funds global asia

Industry comments

Investing in tomorrow’s world

investmentAt times like these, HSBC Asset Management easily pivots towards emerging markets.

The spotlight on growth markets and the need to be nimble and dynamic is ever-sharper, given the difficulty in predicting monetary policy in the world’s major nations.

Sponsored feature: Navigating the complexities of FX execution and currency risk

A comprehensive, cost-effective, and transparent currency overlay hedging solution is crucial to mitigate FX exposure risks in the complex landscapes of Japan and China's FX markets, explains Hans Jacob Feder, PhD, global head of FX services at MUFG Investor Services.

Opinion

Transitioning to an era of scarcity

The world is transitioning from an era of commodity abundance to one of undersupply. Ben Ross and Tyler Rosenlicht of Cohen & Steers believe this shift may result in significant returns for commodities and resource producers over the next decade.

Asia credit: An outsized winner in the region’s energy transition?

Ross Dilkes, fixed income portfolio manager at Wellington Management, examines the opportunities and risks for bond investors presented by the region’s decarbonisation agenda.

A quiet revolution in Japan’s corporate governance

revolution, Japan, corporate governance, Shareholders, corporate, governance, standards, improvement, Tetsuro Takase, SuMi TrustShareholders in Japan no longer accept below-par corporate governance standards. Changes are taking place, but there are still areas for improvement, says Tetsuro Takase at SuMi Trust.

Why rising demand for healthcare is creating investment opportunities in China

rising demand, healthcare, investment, opportunities, China, Robert St Clair, Investment Strategy, Fullerton Fund ManagementRobert St Clair, head of investment strategy at Fullerton Fund Management, explores the reasons investors should be paying attention to the rising demand for healthcare in China.

Executive Interviews

Executive interview: PGIM CEO on where the ESG flowers should bloom

Sep 27, 2021

David Hunt, president and chief executive of PGIM, tells Romil Patel about leading a top 10 global asset manager in times where “empowering and encouraging the kind of investment decisions as...

Executive interview: Nicolas Moreau’s orderly transition

Jul 12, 2021

Nicolas Moreau, CEO of HSBC Asset Management, is moving to Asia as the firm looks to connect more directly with the region’s growth story. ESG is also a key focus – including the ‘just’ carbon...

Roundtables

India: An “obvious choice for global investors”

Jun 22, 2023

Funds Europe, the sister publication of Funds Global Asia, hosted an India investment discussion with two seasoned experts and asked if India is the ‘last one standing’ from the Brics phenomenon. We also hear that for India, the inclusion of Indian bonds in a major index may not be the desired...

Roundtable: Singapore comes of age as an Asian ESG hub

Dec 01, 2021

Strong ESG credentials strengthen the case for Singapore as a leader in Asia of the post-Covid recovery. Our panel discusses the risks and opportunities.