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second homes; yet in these homes, on the outskirts of cities, they hardly dare to turn on the fancy chandeliers, for fear that the poor neighbors will be attracted and would come over the gate. Their wives tolerate the fact that their husbands take numerous lovers. The wives comfort themselves with buying luxury items, burning incense at temples, and having more babies to pass the time.” The article went on to describe an impoverished sort of mindless indulgence. This article was translated and soon made its way to the Internet in China, where it was passed around, causing considerable trouble to the interviewees.

PART 5

Responsibility

and Reason

2003 –2008

SARS, Housing Bubbles, and Electricity Panic

Z

hu Rong-ji delivered his final government work report on March 5, 2003, together with a formal notice of his retirement. Sixty-one-yearoldWenJia-baosucceededhimaspremier.Ontheverynextday,news brokeoutinBeijingthatan“uncommon”oracuteepidemiccalledSARShad

invaded China, with journalists reporting it as a kind of “avenging spirit.” SARS is a highly contagious inflammation of the lungs that can lead to sudden death. A person suspected of having it must be quarantined

A third-year middle school student, mask over her mouth, sits in a classroom in Beijing on May 22, 2003.

A street scene during the SARS period.

immediately. While scientists were still trying to identify its cause, SARS was spreading rapidly through China. From Guangdong Province it spread to Hong Kong, Shanghai, and Beijing, and soon, deaths were being reported almost daily. By April 28, the confirmed cases in Beijing alone totaled 1,199 people, while the suspected cases added up to 1,275. There were fiftynine deaths in Beijing already. In short order, SARS became the number one issue facing the country. For the next six months, daily life and business operations in China were totally disrupted. Enterprises faced each day with a kind of terror.

In Chinese, SARS is called fei-dian, which means “atypical.” The abbreviation seems apt given the sudden appearance and ominous nature of the disease. The panic lasted until June 24, when the World Health Organization announced its decision to lift its Travel Advisory on Beijing.

China’s economic growth for the year 2003 was actually not seriously affected by the SARS outbreak. The first two quarters were affected, with growth slipping down to 6.7%, but by the third quarter, the rate had quickly picked up and, by the end of the year, GDP growth rate reached 9.1%. Not only was this higher than the year before, but it was also the highest since 1997.Thehardesthitbusinessesweretourism,airtransport,restaurants,and entertainment. Unexpectedbusinessopportunitieslandedinthe lapofsome sectors, including pharmaceuticals, food, textiles, and telecommunications. In fact, China’s resilience in the wake of SARS was bittersweet. On the one hand, it reflected the internal strength of China’s economy; on the other, it showed the beginnings of an overheated economy.

The goods label “Made in China” continued to march out into the world. According to an American consulting company, A. T. Kearney, “Made in China” dominated in more than one hundred fields worldwide. These included containers, electronics, and electronic toys: China produced 90% of the world’s containers, 80% of DVD players, 75% of toys, 70% of gifts, 65% of athletic equipment, 60% of bicycles, 50% of microwave ovens, 30% of color televisions and refrigerators—the list was endless.

An explosive real estate market kept pace with foreign trade. “Buying consortiums” helped stoke the fever. People would see the “Wenzhou Gang of Property Speculators” near newly built buildings in cities all along China’s coast. They went around with little wooden placards announcing their presence, wanting to buy apartments or entire buildings, as casually as buying vegetables. In fact, they wanted to buy all real estate in sight. An article in the Shanghai Oriental Morning Post explored this phenomenon. It noted that hundreds of billions of renminbi had been pooled from