Three observations on China

I have recently been in China. Indeed, I've been a few times now and I've seen a variety of places, and as a result I have many, many thoughts on the subject that I would be delighted to share. But you can relax! As with my reflections on Japan and Korea, I will spare you the benefit of any deep thoughts, at least for the moment, and instead give you just three observations about China that I have not seen from anyone else. These observations concern yogurt, high-speed trains and state-owned enterprise. I'll give you the yogurt one above the break, but the other points are a bit longer and so I'll put them below.

1. Chinese people are convinced that yogurt - you know, the white stuff that comes in pots with a little foil lid - is a drink. They even provide you with straws (proper ones, made of plastic) to consume it. To be fair, they have it without lumps and a little bit more runny than we do, but they must have thought I was very strange to be eating it with a spoon. That is especially the case as teaspoons are rare and so I used a dessert spoon. 

2. You already know that China has super-cool high-speed trains. I went on a few. Here's a picture of the highest speed I saw shown on the board (in First Class, of course).

Pretty cool eh? That's about 190 mph! Here in boring old Britain, our trains mostly have a maximum of 125 mph.

The Chinese trains are indeed very fast. 300 km/h is about the same speed as the Eurostar reaches. All of that said, what really matters is journey times and on this point I think the UK has less to be embarrassed about.

Let's start with times and distances. The high-speed train from Zhangjiajie to Chongqing travels about 240 miles in just over 2 hours, and the one from Hong Kong to Guilin travels about 360 miles in 3 to 3.5 hours. In the UK, you can go the 245 miles from Kings Cross to Newcastle in about 2.5 hours or the 100-odd miles from Paddington to Bristol Temple Meads in 1.5 hours. So there's actually not much in it.

Now, the train lines to Bristol and Newcastle are good ones - everyone knows that. But it is interesting that this super-fast, ultra-modern high-speed rail we hear so much about is functionally equivalent to what we call a good train line here. 

The point (I think) is stops: if the train stops (as trains tend to do) then it spends less time at very high speeds. Quite apart from the time spent at each station, there is all that time spent accelerating and decelerating, which trains are not very good at. That is one reason that train stops - of any kind - are further apart than bus stops or tram stops: trains take time to get up to speed and slow down again. (It is also one reason that throwing yourself under a train is more effective than throwing yourself under a bus.) There is a trade off between speed and usefulness with trains which seems (to me) to mean that a 125 mph train is OK, particularly in a country of our convenient size. (Planes would be low-speed travel if they had to stop every few hundred miles too.)

Obviously, the context for my thinking about this is HS2. At the moment, you can get from Euston to Birmingham New Street in 1h 17 (says National Train Enquiries). With HS2, you'll be able to go from Old Oak Common (wherever that is) to Birmingham Curzon (wherever that is) in 45 minutes: better, I suppose, but hardly earth-shattering. 

Note also that that link tells us that HS2 was originally planned to go at 360 km/h, but this has been reduced to 320 km/h. Shock horror! But the effect of this massive reduction in speed is to add just 3 minutes to the originally-planned 42 minutes for this journey. As we all know, 3 minutes in a long-ish train journey is nothing. Getting to and from the station, waiting on the platform, buying a ticket - these all have much bigger impacts on overall journey time than 3 minutes on the train. 

And this brings me to another area where Chinese high-speed trains are not a great example for us to follow.

I have given you the actual names of the stations - Paddington, New Street, Old Oak Common - because the locations of the stations really matter. The actually-existing high-speed trains that we are familiar with run to and from stations that are somewhere: St Pancras, Gare du Nord, Amsterdam Centraal - these may not be exactly where you want to get to or start from, but when you arrive at one of these stations, you start walking and you genuinely are in London, Paris or Amsterdam. The same is true of Temple Meads or Newcastle. And the same is true, so far as I can tell, of the Japanese shinkansen: Tokyo Central is, well, in the centre of Tokyo, Kanazawa Station is in Kanazawa, and so on.

The Chinese system is somewhat different. They have large, attractive, modern stations. But they are generally out of town: when you get to Chongqing high-speed station, for example, you are not in Chongqing. 

Of course, it's not unknown for European stations to be somewhat inconvenient: the places were often built before the railways were. And high-speed trains came even later and require nicer track, so perhaps their stations are likely to be inconvenient: one example that I know of is Aix-en-Provence TGV, which is not in Aix (or anywhere, really). But the Chinese system is not even like Aix TGV. Instead, the model is much more like an airport: there is airport style security, you need your passport (a common requirement for all kinds of thing in China), you need to get there in good time, you wait in a big hall rather than on the platform and so on. It's not quite as demanding of your time as an airport, but it's similar, and in any event the experience of catching a Chinese high-speed train is very different from running through King's Cross to catch the Edinburgh train just as the doors close.

None of this is to disparage the excellence of the Chinese system. So far as I can see, it is a high-quality, reliable and safe service. But it is just to say that if you are considering how useful high-speed rail is as a way of reducing overall journey times then you need to look beyond the maximum (or even average) speed of the trains. The best argument for HS2 always was capacity rather than speed - but it needs to be capacity to get to and from useful stations.

3. Finally, state-owned enterprises - and a bit of history.

Suzhou is a lovely little town (population: 12 million) not far from Shanghai. It is on the tourist trail because of some well-preserved streets and canals dating from its previous heyday as one of the centres of silk manufacturing. Indeed, Suzhou was to silk manufacturing what Hollywood is to cinema today: the site of a sophisticated industry, filled with skilled personnel and built on continuous improvement in every area of the relevant technology. The sericultural techniques that they developed were amazingly sophisticated: they had terribly clever ways of breeding the silkworms, looking after them and their cocoons, cultivating the mulberry trees, and spinning and weaving the cloth on various complicated devices that are well beyond my knowledge of sericulture. So far as I can tell, the technological innovations over the years showed the same kind of desire for progress that we see in the Industrial Revolution or modern tech companies. It was undoubtedly a centre of excellence. 

But all of this happened under state control. The state was both the regulator and the principal customer of the silk industry. I have set out some photos from the captions in the silk museum in Suzhou to give you the flavour of the Imperial control, administrative sophistication, complex licensing and so on.

Now, of course, my knowledge of sericulture is so rubbishy that I might be completely wrong about how good it was in Suzhou. It may be that comparing the state-directed silk industry of China to the free market of the Western wool or cotton industries would show inefficiencies galore. But I'd be happy to concede that - my point is a slightly different one. 

Here in the English-speaking world, the state running an enterprise is pretty much always a bit of a sign of failure. From the East India Company to British Leyland, it can be a sign of a failed private enterprise. Or, in the case of the NHS, a sign that people think the market has failed, or that they place a higher value on some social outcome, such as equity, than on efficiency. Even in the state-dominated fields of healthcare and education, "going private" is generally considered the way to the best things: think of the Portland Hospital or Eton. 

The US is perhaps a fortiori: the greatest and most successful private enterprises of all time, such as Harvard, the Mayo Clinic, Ford, Microsoft or the Gates Foundation, may be contrasted with ... the DMV?

Of course, we also have an intellectual underpinning from Adam Smith onwards to support the idea that free exchange in a free market is generally the way to go if you want things to succeed. But I think a bigger influence on empirical Anglos than abstruse theorising is the fact that we have numerous highly successful private enterprises readily to hand in our minds, while we do not have the equivalent of Chinese sericulture on our mental bookcases. Can you immediately think of a state-owned or state-run enterprise in the English-speaking world that was really, really successful? In the UK and the USA, even the railways were largely built by private companies.

Now if you were going to look for such an example in British history then you might look to our naval history. The Navy was a world-beating enterprise, and it was backed up an industrial infrastructure of shipyards, naval provisions and so on, from Napoleonic times to WWII (and perhaps beyond), that surely display ingenuity and technological prowess comparable to Chinese sericulture. But it's not an example that we have in our folk memory. Moreover, war-fighting is always regarded as a bit of a special case when it comes to the role of the state and private enterprise: it's not a model we tend to adopt for (say) property development or car manufacturing.

As I wrote this, it struck me that France, unlike Britain, might have some ready examples of historical excellence in state-run organisations that make them happier with the idea of trying it again. The first thought that came to my mind was Sèvres porcelain, and indeed it turns out that the business has been owned by the French state, in one form or another, since 1759. There's a fantastic comparison Anglo-French comparison here in the form of Wedgwood, which was itself founded in 1759, and also enjoyed massive success across the world - but as a private enterprise.

Really my point is this. What Tyler Cowen calls "state capacity", i.e. the ability of the state to get things done, has been very high in China for a long time, and at least some of the things that the state has got done using that capacity, in the economic/techological sphere, were really rather impressive. That surely must have some impact on how the Chinese state and people think (or feel) about state-owned or state-run enterprises today. At the very least, it must mean that when some Westerner points out that Chinese companies don't answer solely to their shareholders but do respond to the state's demands, it might not sound like a criticism at all.