Astor tried to imagine a connection between them. What might an industrial engineering firm whose smallest division manufactured elevators have in common with a supermarket chain or a mining company or a maker of specialized microchips? He could think of nothing. Nor could he link them to the bigger question: How might products manufactured by any of these companies allow someone to take control of an automobile?
Astor dug out the sheet of blue stationery from his father’s home that he’d found at Penelope Evans’s. Cassandra99. Still the word meant nothing.
She was there with my father, thought Astor. In our home. A home I swore never to set foot in again.
The answer was in Oyster Bay.
“Boss, the China boys are ready.” Marv Shank stood in the doorway, coffee in one hand, daily breakfast burrito in the other. “You good?”
“Be right there,” said Astor.
Whether he was good or not was another question entirely.
42
There were four of them, and they sat at opposite sides of the table. Astor and Shank, and Longfellow and Goodchild. Longfellow was his China hand. Goodchild was his currency man. There was no chitchat. No mention of his father’s death. No banter about the Yankees or the Mets or who had screwed which pretty young thing over the weekend in the Hamptons. Goodchild and Longfellow had Bloombergs on their desks, too. They knew the score. If anything, the conference room was colder than the trading floor.
“So,” said Astor, when he’d stared at them long enough. “What the hell’s going on?”
Goodchild was blond and lanky and English, with a narrow, pockmarked face. He splayed his forearms on the table and leaned forward. “Posturing,” he said, eyes darting from face to face as if sharing a secret. “They’re afraid the cracks are beginning to show.”
Longfellow nodded in agreement. “Like a bully puffing up his chest. All show.”
“Really,” said Astor, a very pissed-off devil’s advocate. “What’s the flash PMI?”
“Forty-eight.” Shank responded without taking his eyes off the two traders.
The flash PMI, or purchasing managers’ index, measured economic activity as defined by demand for raw materials and industrial goods. Figures above fifty indicated an expansion of economic activity; below fifty signaled contraction.
A reading of forty-eight spelled catastrophe.
“And GDP is still forecast at nine percent?” said Astor.
“Nine point two, actually,” said Goodchild. “But it’s a sham. Things have only gotten worse since we made our evaluation three months ago.”
“So they put their deputy minister for trade on TV to confirm their policy of allowing the yuan to appreciate to fake us out?”
“No choice,” said Longfellow.
“Yeah, I know,” said Astor. “The cracks are beginning to show.”
“Precisely,” responded Goodchild, as if he were back debating at the Oxford Union.
“The only change,” said Longfellow, “is the increased pressure the Treasury Department is putting on the Chinese to revalue.”
Longfellow was a Scot, a graduate of Fettes and St. Paul’s before he took a PhD in astrophysics from Stanford. He was tall and fat, with messy red hair, beady eyes, and a constant sweat that dampened his cheeks and forehead. At some point in his career he’d spent two years in the Chinese hinterlands-Sichuan Province, to be exact-teaching English to schoolchildren (though with his nearly incomprehensible brogue, Astor wondered just what kind of English his students had ended up speaking).
“It appears to be working,” said Astor.
“Not for long,” retorted Longfellow. “It can’t. The Chinese have to devalue.”
“That means telling the U.S. government to go screw itself.”
“Indeed,” said Longfellow.
“We’re betting a boatload of money on that opinion.”
“It’s not an opinion,” blared the Scot. “It’s fact.”
Astor slammed an open palm on the table. The three other men snapped to attention. But when Astor spoke, his voice was a whisper. “We’re down four hundred million bucks,” he said. “That’s the only fact that concerns me.”
China. The Middle Kingdom. In just over thirty years, the country of 1.4 billion inhabitants had undergone the most titanic economic transformation the world had seen since the Japanese had welcomed Commodore Perry to Tokyo Harbor in 1854 and ushered in the Meiji Restoration.
The basis of the remarkable leap forward was the creation and development of an export-based economy. Cheap Chinese labor lured foreign corporations to manufacture products at an advantageous price. These corporations invested in factories and exported their products to the rest of the world. Housing, primarily in the form of towering apartment complexes, was built to provide lodging for the hundreds of thousands of peasants fleeing the countryside to earn a living wage. Roads were laid to transport raw materials to the factories and finished goods to market. Ports were expanded to enable more and larger ships to take on merchandise. New airports followed. Power plants were constructed to generate and distribute electricity to the rapidly expanding industrial base. Cities like Guangzhou, Shenzhen, and Chongqing exploded, moving from forgotten backwaters to industrial dynamos.
As the country prospered, its citizens enjoyed a rising level of income. In financial terms, per capita income skyrocketed from $300 per year in 1987 to $3,000 in 2012. Gross domestic product, a measure of the country’s economic might, increased 330 percent, at an annual rate of more than 12 percent. (In contrast, over the same period, America’s GDP increased a mere 60 percent.) The populations of Shanghai and Beijing doubled. By 2012 there were 160 cities boasting more than 1 million inhabitants, 35 cities with over 3 million, and 9 urban conglomerations counting more than 5 million people. Shanghai and its suburbs alone were home to 23 million souls.
But instead of spending freely and buying consumer goods-and as a consequence building domestic demand for their own products-the Chinese saved. The Chinese had always demonstrated a maniacal desire to own property and gold. These savings were held in the form of gold coins and bullion or invested in residential real estate. The government stopped being the principal builder of housing. The private sector took over.
The pace of construction accelerated. Banks flush with cash generated by the country’s burgeoning export industry could not make loans quickly enough. Regulation over lending practices was scant, and more often than not overlooked. Speculation was a national pastime. Apartments were purchased as soon as they were built. Investors, many of whom had been farmers or peasants a few years before, flipped properties at a dizzying rate. Values skyrocketed. Simple apartment complexes gave way to larger residential developments, and finally to entire spec cities. By 2012 these “ghost cities,” urban conglomerations complete with homes, parks, storefronts, roads, sewage, even fiber-optic cable to deliver phone, television, and Internet services, could be found all over the country. In short, they had everything but living, breathing human beings.
And still the Chinese built.
The scale of the country’s growth was so enormous as to be unimaginable.
Easier to admire were China’s engineering marvels. There was the free economic zone of Guangzhou and Shenzhen, where hundreds of thirty-story apartment buildings stood as close to one another as soldiers on a parade ground on land that until twenty years before had been rice paddies. There was the Three Gorges Dam, the creation of which had formed a 50-mile lake and which counted itself as the world’s largest hydroelectric power plant. (Little was said of the more than 5 million peasants forcibly relocated with little or no compensation.) There was the Bird’s Nest Stadium, built for the 2008 Olympic Games in Beijing to herald to one and all the arrival of a glittering, technologically advanced, and thoroughly modern China. And the strangely futuristic Pudong district of Shanghai, with its weird skyscrapers topped by gigantic globes.