Chinese game our immigration system and one child policy

My wife reads lots of stories on China and I found one quite interesting in light of the current debate on immigration. It seems that as China's middle and upper class grows, these people have found a way around China's "one child" policy. Since entrepreneurship is way up in China, most successful Chinese start their own businesses. So, it is pretty easy to get a business visa to the US for most middle class citizens. Men are setting up their pregnant wives in business and they are coming to the US, giving birth and returning to China. Since the child was born in the USA it is an American citizen and not subject to Chinese laws. Of course, if the Chinese couple later decides they want to return to live in the US they have an instant loophole - their children are Americans!

Quite an ingenious use of our citizenship and immigration laws.

China or US - Which is a freer Nation?

At Church last Sunday, a member spoke about his recent trip to China to distribute wheelchairs and mentioned his intimidation at going into a "Communist" country. His implication was that he didn't feel very free while in China.

My wife and I have had many discussions about the relative freedoms that we experience in our respective countries. She has more experience in the US than I have in China, but I have a pretty good flavor of what it's like in China.

Now, there are some basic differences in our laws due to our "Bill of Rights" which the Chinese do not have, but many of our so called "rights" have been eroded and I believe we have moved much closer to a totalitarian country while China has moved to increase individual freedoms.

Here's a quote that summarizes my observations:

"But today's China is, in some respects, less socialistic than much of Western Europe, with a moth-eaten social safety net and a wild free-market economy. Students in almost any urban Chinese school can look out their classroom windows and see just about everything but socialism being constructed: high-rise office buildings, shopping malls, movie theaters, luxury apartment buildings, fast-food restaurants, hotels, factories — the whole capitalist panorama."

There are many aspects of Chinese life that seem more libertarian than our society:

• There is no guaranteed social security - no work - no retirement benefits
• Health care is cheap and fast. No weeks or months waiting to see a doctor. I dread the move to European health care here
• Although you cannot own land yet, you have much less interference from the government. My wife is still angry with a local Zoning Board denying our petition to build a house on our property and the eminent domain ruling from the Supreme Court take away a lot of our property rights
• Starting a business in China seems much less troublesome than putting up with Environmental impact statements and other regulations here
• I never have seen a traffic law enforced in China and they don't ban talking on your cell phone
• The Chinese are not banning me from eating trans-fats nor regulating where I can smoke (I don't smoke but dislike the regulations)
• Our tax code so mystified my accountant-trained wife as to be unimaginable. This code is truly one of the most suppressive regulations in the world

Now China does regulate speech more than us (my wife had not ever heard of Tiananmen Square). But our society is moving to take away our free speech as well. McCain-Feingold was an attempt to stop criticism of Congress, the debate over the Fairness Doctrine is an attempt to silence talk radio and the worst is the creeping culture of political correctness. I have a subordinate that was fired for posting an article from the newspaper that simple reported election results on gay marriage amendments. If it's not PC, you better not discuss it at work.

When I first met my wife I was quite critical of the Chinese government, but now I am convinced that we are in a glass house of our own as far as liberty goes.

China is No1 - So is the US still the evil one?

China just passed the US in CO2 emissions and is building coal plants at the rate of one per week. At the same time The US is the only country complying with the spirit of the Kyoto Treaty actually reducing emissions despite our growing economy. Meanwhile the great blowhards in Europe continue to increase their emissions while criticizing the US for not signing Kyoto.

Will this cause the environmental crowd to turn their attention to China? After all, China is only one-sixth of the worlds population but emits 25% of the CO2. Don't bet on it. To them the US is the Great Satan because we are a capitalist country.

Scott Adams has the Inconvenient Truth - the Greens need to make the sacrifice. The rest of us can let market forces change the world.

Working together in business - part 2

In another post I talking about the challenges of working with your spouse. I mentioned that we were unable to resolve an issue around QuickBooks. My wife has an accounting background but really is computer challenged. In China she did all her accounting manually - even using an abacus when she first started in the 90's (this was not unusual for Communist countries - when I went to Russia in 1997 there were no computers and the Court Reporter sowed our documents together because there were no staplers).

I made several veiled threats to hire an accountant if she would not enter the data - that really made her mad and it had become a big source of conflict in our marriage. Finally this weekend I just decided to do it myself, even though I am clueless about accounting. Fortunately, my wife could not bear to see me screwing up the accounts and she decided to sit in front of the computer and start entering the data. Even though she had taken a QuickBooks course, she struggled trying to understand the software. I was able to help her in this respect and over the course of the weekend we were able to make substantial progress. She gained some confidence in her ability to use the software which was really the hangup in not entering the data.

Sometimes when working with a spouse it is not immediately obvious why the other is not doing something or doing it differently than you desire. The solution might not be obvious but fortunately, if you are committed to each other and the business, you can find a way to resolve the issue.

Chinese and Hugs

One of the culture shocks my wife had to undergo when she arrived in the US was our compulsion to hug each other as a form of greeting. I'm not sure if her experience is pervasive throughout China, but she has never seen people hug each other like they do here. In fact, she has never hugged either of her parents nor her brother. She remembers that there was a strong taboo against men touching their daughters when she was young to the point that she never remembers even touching her fathers hand!

We've all read numerous articles about how human contact is necessary but it certainly does not seem to be part of Chinese culture, so I wonder how true it really is. I've seen young Chinese girls hold hands when I've been in China and people in the city often spend a lot of time "touching" each other when trying to get onto mass transit systems. In the Chinese countryside, the likelihood of accidental touching is remote due to less crowded conditions.

So are Chinese mentally unhealthy because they do not hug? My wife is continually shocked (and scared for her daughter) when we get the annual update of sexual predators that live in our town. We have erased a lot of things that are taboo in China but from her standpoint we are the unhealthy society.

As I've learned since meeting my wife, there are many preconceived ideas that we have that we believe are true and right, but an opposite view seems to work just as well in China.

Virtual Chinese Currency - QQ coins

There's an interesting article in today's WSJ about the growth of a virtual currency in China - the QQ coin. The official Chinese currency, the yuan, is strictly regulated and you cannot take it out of the country. This makes it impossible for ordinary Chinese citizens to move their money. My wife has two homes in China but cannot really do much with them. If she sells them she cannot get the money here legally.

It's interesting how technology has allowed people to circumvent government regulation, giving them more freedom. Virtual money creation in Second Life seems to be a similar phenomenon.

My guess is that the Chinese government will try to crack down on this, but who knows. Maybe it will lead to the yuan floating more easily and people being allowed to move their money out of China. China is teetering on the edge of real market reforms. The people there are experiencing much more freedom than Russian people did during their "reform" period. Putin has put the clamps down on that and Russia has lapsed back into Soviet times again. I'm hopeful that China keeps going forward.

Living in Debt - All bad?

I've spent most of my lifetime, since I left college, with a lot of debt. I've never missed a payment on any of it but it has created a lot of stress at times in my life. For my wife, debt is an extremely worrisome aspect of our marriage. She had only one debt in her life - a mortgage on her first home that she paid off in 5 years. Typically she was used to having a wallet full of cash - typically equivalent to $5,000US. I typically have less than $30 cash in my wallet.

I read a story on CNNmoney today about being Grown-up about Debt. This article focuses on people that seem to spend compulsively on non-essentials using their credit cards. To be honest, that has never been my problem. I tend to invest compulsively in education, businesses, and kids.

Here's a list of things I don't pay for with credit:

• vacations
• furniture
• cars
• dining out
• Christmas gifts
• entertainment

But I do use credit extensively. Here's what I have borrowed for:

• purchasing property (well over $1,500,000 so far)
• education (college, business seminars, real estate courses - about $30k)
• legal fees (a $30K divorce bill)
• adoptions (close to $100k)
• property improvements (not day to day repairs - just major upgrades)
• Business start ups (over $50k)

So do I use credit stupidly? Or is the use of any type of debt a bad decision? (My wife thinks it may be.) My first inclination is to defend my debt as "good debt", but I want to step back and really think about this first.

Consider my wife's lifestyle in China. She had her own home completely paid for, she saved up enough cash to even purchase a home for her parents with no mortgage. She always had cash reserves of 6 years of a typical Chinese citizen's income. She did this working as an accountant and living well below her means for 20 years after college and she did it primarily without the resources of a spouse. Her life was completely stress-free from a financial standpoint. At the time I met her, she had a pretty nice lifestyle - eating out whenever she desired, buying whatever cloths she wanted, travelling to nice vacation destinations - a very upper middle class lifestyle.

My life, on the other hand, has always been filled with financial stress. Making sure the dozens of bills I have get paid every month, managing unexpected financial needs, moving money around to get a better interest rate or refinancing when a balloon payment is due. I need to look at my on-line checking nearly every day to manage all my accounts. I rarely dine out and take but one vacation a year. Yet my income is supposedly great (over $100k per year). Comparing the two lifestyles, my wife's wins hands down.

Most of us have been led to believe that we need to spend what ever it takes to get a good college education. Now, I probably got my money's worth from my Engineering degrees. But with the cost of a college education escalating so rapidly, I think that for a lot of people it is a poor investment. The WSJ had a good article today on this.

Now, I think education is indispensable. But some things that are not taught at school affect your finances much more than what is taught. For example, a course on choosing a mate and how to develop a lasting relationship would have been a big help to me! Education with an emphasis on savings, not using credit for luxury or non-essentials, investing, and money management would all be higher priority than English literature. But more importantly, getting an education from someone who has succeeded in the field you have chosen is a lot more important than getting an education from someone with just a degree.

Now I think that some debt can be very good. As I wrote previously, using leverage to purchase real estate can turn your small amount of money into large amounts. However, even for real estate this may be a bad decision if you purchase your property at market value in an area that is not growing well. I think that if you treat your real estate purchase first as an investment, not as a cocoon, then it's a good use of debt.

Debt to buy a business can also be good. I've watched two of my brothers buy accounting practices and turn them into very profitable companies. My sister-in-law has also used debt financing to turn her business idea into a multi-million dollar enterprise.

So today my list of what to use debt for is very small:

• education - but only for those fields where there is a good payback. Getting a degree for the sake of a degree is probably not worth it. Get a more specific education in a field where you can start a business.
• real estate - again only when you buy with the intent of making a profit. Buying a house you can barely afford to make your spouse comfortable doesn't fit my model
• business - with the caveat that you have a well developed business plan and are committed to making it work what ever it takes.

Today most people expect that they should live a good lifestyle what ever their financial situation. They want to live in a home nicer than their parents and drive the latest model cars and take expensive vacations. They want to have the reward before they have paid the price of success. So we use debt and pay the consequences all of our life. This is exactly backwards from what really successful people do. Pay the price first.

The Bible teaches this from Proverbs 24:27

27 Finish your outdoor work and get your fields ready; after that,
build your house.

My Chinese wife

My wife will be returning to the US next week after having spent a month in China helping her mother recover from a stroke. She is a gem of a woman and a perfect wife and I am counting the days until her return.

Some people ask me why I married a Chinese woman. There are tremendous barriers just between the sexes, much less between two very different cultures without a common language. My wife speaks good basic English, but we have much difficulty communicating complex ideas. And sometimes the cultural viewpoints are so divergent that we cannot make sense of each others view points at all.

There are 1.3 billion Chinese living in the same geographic area as the US and the way they have learned to deal with that abundance of people is sometimes unique and strange to us. In China, you focus on yourself and family first. For example, getting on a bus means pushing your way past the elderly or pregnant or children, otherwise you never will get on. I think the Chinese (I'm generalizing here and don't mean to offend the many kindhearted strangers that have helped me) find the degree to which we our are "brothers keeper" a strange concept (My wife doesn't understand American generosity towards strangers.). On the other hand, the Chinese are fierce defenders of their immediate family. Their loyalty to family is something that is quite rare in the US.

My wife grew up during the Cultural Revolution. The stories she tells of her childhood are of extreme poverty that I can imagine as much worse than those in the US experienced even during the Depression era. She is also deeply affected by many events where outspoken critics of Mao were executed. Her parents lived their entire lives in a home with no indoor plumbing and no heat (at the same latitude as Buffalo, NY), until she purchased them a home 2 years ago.

After graduating from college she moved 1000 miles from home to the Northwest Tibetan plateau where she married, only to have her husband abandon her after her daughter was born. She sacrificed her own food to feed her baby, studied to earn an accounting certificate and eventually was able to find a job in the southern most Chinese province. For several years she was separated from her daughter who was raised by her mother in the northeast.

Like most Chinese, she is an ardent saver. She lived meagerly and saved her money. When her bank went bankrupt due to legal shenanigans, she found a job in the middle eastern part of the country at a large bank where she moved up the corporate ladder. At that time China started allowing people to buy "houses" (really what we call a condo), so she took her savings and a small mortgage (which she paid off in 5 years) to buy a nice home. Her parents came to live with her there for several years to help with childcare.

So what are the qualities that I have found so compelling in the woman?

• respect - she respects men and me in a way that I had not experienced from an American woman. Our culture so devalues men now that the weak, disrespected male is the norm on TV. It's refreshing to be with a woman that thinks highly of men.
• strength - her upbringing and life experience have made her one strong woman. Many people assume Chinese women are timid - this could not be further from the truth. Certainly those that are my wife's age have experienced too much to be intimidated by anyone or anything
• love - when she is with me I am pampered in a way that is unimaginable to most Americans. I don't think this is uncommon in Chinese-American marriages. The more she does this, the more I am motivated to find ways to love her back - its been an un-ending upward spiral

Now I could go on, but suffice it to say I am one lucky man. My wife never had to read The Proper Care and Feeding of Husbands because she lives it.

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Medical Catch-22

I started to take prednisone for a medical condition last week. The information sheet indicated that steroids lower your immunity. So I thought it would be a good idea to get a flu shot this year. I never have gotten one before, but it seemed like a good idea. Well, the doctor refused to give me one! Seems that since steroids lower your immunity the doctors and pharmacy companies don't want to get sued if you have a reaction. So they would rather you catch the flu naturally and suffer a long time than risk a lawsuit. This is most absurd.

My wife has been taking prednisone for 15 years and never had trouble getting a flu shot in China. Of course, China doesn't have the lawyers and lawsuits we have. Her parents are convinced our medical system is so bad here that they don't want to risk a visit.

We are worried about losing to the terrorists - I think we have already lost to the lawyers.

Chinese Real Estate

I've mentioned that my wife is from mainland China. She is typical of the growing middle class there. She managed to buy a "house" (what we would call a condo) in the beautiful, rapidly growing "small" (my wife calls it small - only 6 million people live there!) city of Ningbo. She is a typical frugal Chinese - made a large downpayment, took out a small mortgage and paid it off in a few years. Chinese tend to be thrifty savers and always have lots of cash - often US$. Its not unusual for a Chinese to be carrying 50, 000 yuan or $US5K. Her home has appreciated rapidly and worth over 1M yuan now. She was also able to save enough money to buy a condo for her parents in their home town and paid cash for it - not something most Americans ever can think of doing.

We took a vacation to a city called Sanya in the southern most province of Hainan Island a couple of years ago. It was absolutely beautiful and we thought about buying some property there. We found an oceanfront condo on the 10th floor overlooking the ocean for the meager sum of ~$US100K. I have family that owns oceanfront in the US and am aware of the large cost of this type of property. I really wish we had been able to purchase that property in China at that time but the agent wanted the cash in 7 days and we didn't really know how to get it. I can imagine in 10 years the property may be worth 10x what it sold for.

I found an interesting report at Instapundit on the Chinese real estate market. Its rather lengthy but informative. The main issue in China is the lack of laws governing anything (you should see how people drive - anyway they want and no real police enforcement!). You also can not own land in China, so when you buy a property you get a 70 year lease on the land. Since this is a relatively new law, no one has reached the end of their lease yet and so there is uncertainty about what will happen.

From our standpoint the main problem with real estate in China is moving funds out of the country if you sell your property. China does not allow citizens to take much money when they leave the country (I think the limit is $US3000) and you can't take Chinese currency. So my wife just rents her home out for now and gives the money to her parents. Hopefully, China will open up more in the coming years and we can transfer money out of the country.

Unfortunately, a foreign citizen cannot go to China and just buy property. I have come across a community of US citizens that are married to Chinese nationals and many of them are investing in China through their spouses. I'm not sure if we will go that route or not at this time. We are focused on building our US real estate business at the moment.

Healthcare China - US

My wife is in China taking care of her mother who had a stroke about 10 days ago. It has been difficult to communicate with her since there are no phones in the hospital and she doesn't have a cell phone. I last spoke with her Friday night (Sat 6am China time) and she was on her way to the hospital for the weekend and ended up staying 5 straight days. It seems that the family has to do all of the patient care in the Chinese hospital her mother is at. The nurses only administer medication. The family helps the patient use the bedpan (there are no bathrooms in the room with 7 other patients in it), change the sheets, and bathe the patients. Someone has to be with her mother 24 hours a day and her father is pretty frail, so it falls on my wife's shoulders. Cost is high for locals ~ 1000 yuan a week Vs her parents retirement income of a few hundred yuan a month. Since her mother never worked she has no health insurance.

When I first went to China I was convinced that US Healthcare was the best in the world but now I am not so sure. One time when I was visiting my wife she developed a UTI and woke up in the middle of the night took a cab to the hospital and within 30 minutes had an IV drip of anti-biotics going into her arm. In the US, you typically wait until morning, call your primary care physician who has you go to the lab and submit a urine sample. Several days later after much suffering you might get a result and some oral anti-biotics. My wife got 3 IV's within 36 hours and then 8 days of oral anti-biotics that time she was ill. The cure was 100% effective. My ex used to get UTI's and spend months fighting the infection because the doctors were so cautious about using effective doses of anti-biotics.

I went into the hospital with my wife to be with her for one of the IV's. We sat in a large room with about 30 other patients sitting in chairs all receiving IV drips. Seems the Chinese have an IV drip for just about everything. The cost is pretty cheap ( less than 100 yuan or $12US). While sitting in the IV room, I saw the nurses constantly breaking small glassware that was part of the medication. There was lots of broken glass on the floor and more than one nurse got cut. There was not nearly the concern about infectious blood transmission that we see here. The hospital was generally pretty dirty (the bathrooms were the typical filthy squaters)

During the last few months I have been struggling to receive health care here. I think was affected by that spinach tainted with e-coli. But my PCP ran one test and discounted that. The only advice I have gotten has been to avoid dairy and eat crackers. Meanwhile it has taken me 60 days to get into the GI specialist. When I saw him Friday he criticized me for taking so long to see him. I about smacked him since it was his office that kept refusing to let me see him.

So I have to go into the hospital Thursday for some tests. I know the hospital will be clean and the care will be pretty good. But was it worth the wait? China seems to have evolved a health care system that is able to treat its mass population quickly and cost effectively. We could learn some things from them. Unfortunately, we rarely look to the East for our solutions.

airline frustration

My wife is trying to fly to China. She flew out yesterday but the flight was 2 hours late, so she missed the connection to China. Neither US Air nor Air China were willing to help her. A United agent tried to help, but even she got frustrated with Air China. Air China cancelled their Friday flight, so my wife is spending two nights in NYC at $200 a night. We're just SOL as far as the cost goes per the airlines. Don't think I'll fly either of these airlines again. I had a run-in with Sears in 1981 and never shopped with them again. Poor customer service is one of my pet peeves that is unforgiveable.