Tim Clissold - Chinese Rules: Maos Dog, Dengs Cat, and Five Timeless Lessons from the Front Lines in China

Mr. China

harmony

for Lorraine,
for my brothers Oliver and Max,
and for the memory of Lizzie Hicks

To fight and win a hundred battles is not supreme excellence; the greatest General avoids war and overcomes his adversary without fighting.

THIRD SECTION, SUN TZUS T HE A RT OF W AR ,
C. SIXTH CENTURY BC

A Chinese Chop

The events that I describe in the main narrative of this book actually happened, but this is a story of an adventure, rather than an expos of any particular individual or company, so I have changed the names of some of the companies and the characters that appear. The main events described in the story took place between 2005 and 2012.

Traditional peasant saying: Even the most capable must sometimes ask for help.

I almost didnt answer the call. I had been gazing absentmindedly out at the hills and the purple splash of heather as the train sped south toward York. But the car was almost empty so I took out the phone and clicked on the button. A voice confirmed my name and asked abruptly if I could go to China. Glancing around me, I whispered, I cant really take a call right now. Im in the quiet coach, you see.

Well, youd better call me back right away. Didnt you get my messages? said the voice with a snort. And then the line cut out.

London was still a couple of hours away, so I waited awhile as the stone towers on the minster receded into the distance. The landscape leveled out around York and, farther south, a network of canals stretched out in straight lines toward the horizon; lock gates and brick guardhouses passed by the window. Along the old toll paths, the willows tossed about in the wind, casting long, rolling shadows in the late summer sun. I wandered down to the end of the car and, leaning against the doorway, clicked on the number. The voice that answered immediately launched into a story.

Okay, so weve got this deal in China, she said, and we need your help urgently. Theres this big factory in Zhejiangyouve been to Zhejiang of course but maybe not to Quzhou.

Er, yeah, I think Ive been to Quzhou.

Another snort. I doubt it, this must be a different Quzhou. Its miles from anywhere, stuck right out in the middle of the outback, a couple of six-packs from Hangzhou.

Yeah, thats the one, I said, noticing an Australian accent.

Really? She paused for a moment, but quickly resumed the story. Anyway, she said, we signed up to buy truckloads of carbon from a chemical factory down there and now it looks like the whole things gone belly-up. We found some lawyers in Beijing who said that youd help us.

Lawyers? I asked.

Havent they briefed you yet? asked the voice. They promised theyd call you. Now the Chinese partner wants to change everything. The voice groaned, apparently addressing itself. This is the biggest deal thats ever been done by private investors, she said, shooting her attention back to me. Weve got fifteen million tons of carbon hanging by a thread, and now they want to change the whole deal!

Carbon? I said, glancing sideways through the window and deciding it was time to end the call. Look, Im really sorry, but I dont know anything about the chemical industry. You must have got the wrong lawyers.

Not that type of carbon.

Catalysts or something is it? Look, fifteen million tons of carbon sounds like a hell of a lot to be moving around in China.

What?

You got transport organized? I asked. The railways can be a nightmare, I said. You know theyve still got steam engines running out there?

Not that kind of carbon! said the voice again, shifting markedly upward in pitch. Credits! Not the black stuff! There was a sigh and a mumbled comment I didnt quite catch above the clatter of the tracks.

Oh, I said. Right.

Lets just back up here for a minute, she said. We have a deal to buy carbon credits from a chemical factory in Quzhou. They make stuff used in fridges and air conditioners, right?

Oh, yeah? So where does the carbon come in then? I continued skeptically. This really wasnt making much sense. The connection cut out and the car shook violently as the train roared through a tunnel. She called me back immediately.

Wait! The chemical plant is chucking out greenhouse gases big-time, so were helping them put in new equipment, incinerators thatll burn up the gas. That way, we get credits that we can sell on in Europe. Buyers are desperate for this stuff!

Uh-huh... , I said, concluding that I was dealing with a nut. Look, Im sure this is all really interesting, but Im quite tied up at the moment. Perhaps you could

No, listen, she interrupted. This is deadly serious.

She went on to explain that the project was the largest greenhouse gas reduction project ever attempted by private investors. We just have to make this work, she said. If we get it right, it could kick-start the whole market. The Chinese factory had agreed to put in equipment that burns up gases from the production line, which theyd been venting out into the air. Its really bad stuff, she said, millions of tons of gases just blowing up into the sky and all they have to do is put in incinerators to burn it up.

So why dont they just put them in anyway then? I asked.

Theres nowhere in China that makes the equipment; they have to import it from Japan and they dont have the cash. So we agree to buy the credits, and the factory shows the contract to the bank to get loans to buy the equipment. Thats the whole point of the CDM, right?

Er... maybe, I said vaguely.

CDM. Its part of the Kyoto Protocol for reducing greenhouse gasesKyoto, right?! she said doubtfully. The factory puts in the equipment, burns up the gas, and the UN gives them carbon credits that we can sell on in Europe. Both sides make money, we cut down on greenhouse gases, and everybodys happy.

Sounds a bit far-fetched to me. You been doing this long, have you? I added suspiciously.

Well, yes actually, she said. I did five years at the World Bank. We did deals all over the world... Indonesia, Nepal, India, China, Venezuela. Six months ago I moved to London and joined a carbon outfit here.

The phone cut out again.

Sorry, I didnt quite catch that, I said once we were reconnected.

Yeah, I was just saying that I joined a carbon outfit in London but at first no one else here wanted to do this dealcan you imagine it?! The biggest carbon deal on the planet and they got all nervy and started asking all sorts of questions. Another snort. Anyway, I went right out on a limb and got the Chinese to sign up to sell us the carbon. When I took the letter back to London, man, they were crazy as a snake. There wasnt enough money in the first fund so we went out and raised a syndicate. Wangs just called from China and wants to change the deal. The syndicate is wobbling and it looks like the whole lots about to go down the chute. Anyway I dont have time for all this. Cut to the point; when can you come out to China?

Er...

We need to get out there as quickly as possible. Ive got a flight booked for this evening.