Letter From Asia's Co-Prosperity Sphere

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To visit banks in Hong Kong and Kuala Lumpur, I recently flew into Shanghai and out from Singapore. In two weeks, I rode a lot of trains and met a lot of bankers. When I got home to Europe, it felt like I had traversed a Greater Economic Co-Prosperity Sphere, although I was never sure if it was one that belonged to China, Japan, or the international banking system. Here's a highly personal, thumbnail report on the region's development and some of the local rail network:

China: The complexities of its currency are less significant than the feeling that the renmimbi certainly feels undervalued, when you can buy dinner for $3. Shanghai is an Asian cross between New York and Las Vegas, a port city of grandeur and skyscrapers that, at night, pulse like slot machines. Behind and facing the French colonial façades on the Bund, modern capitalism’s famous boardwalk, Shanghai is awash in modernistic, high-rise towers, as if the Chinese miracle is to produce office cubicles.

The underground metro lacks the efficiency of Moscow or the elegance of Paris, although the trains are clean and the signs are in English, and the ticket machines feel like off-track betting. Changing from one line to another was often a nightmare. Trips across the city frequently involved long subterranean walks through arcades, on Escher-like stairways, or what felt like the Great Patriotic Underground Long March. But I never tired of the metro signage, such as one billboard that implored: “No jumping off the platform and onto the track.”

Hong Kong Night Train: On the overnight train from Shanghai, I had a Pullman-like berth in a first-class compartment, where my easy chair looked like it was borrowed from Mao’s office. In the dining car, what I hoped might be blackened tuna was four small, boney fish, more bait than a main course. I went to sleep around what looked like the steel belt of Wheeling, West Virginia, and woke up to a misty, terraced, landscape painting.

Guangzhou: Housing for the Chinese revolution is a phalanx of high-rise apartment buildings, which can be seen in every village, town, and city, grimly marching their tenants into a brave new world that finds heaven in sixty stories. What will happen to China when the housing projects become slums? On the ride south, in the two hours between Guangzhou and Hong Kong I crossed territories with a population of more than one hundred million. Contemplated from the train, Mao looks less like a revolutionary and more like Robert Moses, New York’s superbuilder.

Hong Kong: Shanghai may well represent the future working, but, when compared to Hong Kong as a financial center, it remains a second city. In the Special Administrative Region (Hong Kong’s married Chinese name), I talked with bankers who are convinced that the former British colony, still splendid and affluent, is playing the same role for Beijing communists that it once did for the Jardine family: that is, to serve its masters as an entrepôt, money changer, front company, merchant bank, fiduciary, gold vault, and deep-water port for the goods of empire.

The pleasure of Hong Kong was to visit banks that are not at death’s door. In Europe and the United States, all I ever come across are banks that have lent $500 on the collateral of a toaster. In Hong Kong, not to mention Asia at large, I only encountered banks that had ample deposits, liquid collateral, and positive cash flow. The question I heard most often was what to do with excess deposits; the assumption all around was that the money markets in London and New York are variations on Macau dog tracks.

Malaysia: The state railway charges about $30 for a night in a compartment, and has fish tanks on the platform in Alor Setar. George Town, the colonial capital of Penang, is Asia’s Jerusalem, a warren of shops owned by Chinese, Malays, Indonesians, Armenians, Indians, Thais, and Englishmen. Penang is the place to go if you want to change your money, faith or identity.

Down Penang’s east coast, not far from a Chinese temple with ceremonial snakes, is an urban enterprise zone of out-sourced, offshore semiconductor companies, many American, which import chips parts and workers and export the internal combustion engines of the information super highway.

Kuala Lumpur's large banks straddle the disparate worlds of retail and Islamic finance. Much of the Asian economic miracle has been fueled with local currency bonds; in Malaysia, they are issued in ringget. But modern finance does not work for those Islamic clients for whom interest is not an article of faith. Hence, banks in Muslim countries like Malaysia and Indonesia often transmute deposits into assets that are veiled to look like interest-bearing bonds.

Singapore reminds me of a shopping mall with a national flag. To get home to Europe, I flew on Air France as opposed to continuing the journey by train. I knew from a meeting with the Malaysia state railways that there is a gap in the international connections between Singapore and Europe.

Before leaving, I met with a railroad man who is working to complete the network in Southeast Asia. With this finger on a map, he traced the missing track through the Thai jungle and Cambodian rice paddies, grimly pointing out that one way to tie in the overland service would be to complete the line that crosses the River Kwai.

One day, tracks will connect Singapore to Kunming, in southern China. And from there, perhaps someday, I will begin my journey home, using an ATM machine to buy my ticket and then to pay for it in renmimbi.

Matthew Stevenson was born in New York, but has lived in Switzerland since 1991. He is the author of, among other books, Letters of Transit: Essays on Travel, History, Politics, and Family Life Abroad. His most recent book is An April Across America. In addition to their availability on Amazon, they can be ordered at Odysseus Books, or located toll-free at 1-800-345-6665. He may be contacted at matthewstevenson@sunrise.ch.