China and the New World Order:

How Entrepreneurship, Globalization, and Borderless Business are Reshaping China and the World (Book Excerpts)

by George Zhibin Gu

Foreword by William Ratliff

Publisher: Fultus; 248 pages

Part III

China’s Fast-Changing Society, Politics, and Economy

SUMMARY

To some outsiders, China is already a global power. But most Chinese hardly feel that way. Instead they feel that their nation still faces huge problems. They daily confront just too many man-made barriers, despite all the changes.

China’s fundamental problem remains an overwhelming bureaucratic power. For at least 4,000 years, China’s political body has been a self-appointed government. As such, this government serves itself above all and stands against the society and people. This was the case especially in the Mao era. In fact, in the Communist era, it reached an extreme.

Up to now, the universal rights of the Chinese government have never been truly challenged. The society and people are still too weak to confront bureaucratic power directly. This untamed bureaucratic power has produced a hugely twisted society, economy and market. In short, it has created a perfect bureaucratic society.

Furthermore, in this bureaucratic society, all the modern things such as true property ownership and independent legal system, as well as modern organizations and professionalism, are difficult to get established. In fact, even simple things like consumer rights have taken huge struggles to emerge. How about rights of taxpayers? They have yet to come to life. In short, China is going through great struggles toward a modern, law-based society, economy and nation.

Yet, among the vast changes in China today, one of the most visible is that people have much more personal freedom, including freedom in travel, employment, and residency. This expansion in freedom has also given rise to a rapidly growing private sector, which is in turn changing the nation in no small way. As a result, Chinese society is become more open and forward-looking.

The ever-increasing foreign involvement is another powerful factor in promoting progress. The vast foreign presence helps to create a more open, positive environment in general, which naturally benefits all parties. As time passes, even more international involvement will occur, with concomitant greater benefits.

Despite all the changes, China still lacks a modern political-economic system. An overwhelming Bureaucratic power continues to cause severe problems. Containing this bureaucratic power remains the biggest and most formidable task for the Chinese civilization. Now, however, China is at a crossroads. Dealing with the bureaucratic ills from the root causes has become a top agenda item.

This part of the book consists of five chapters. Chapters 10 through 12 are case studies, while chapters 13 and 14 deal with general political and institutional changes from a historical perspective.

10. Lessons From Shenzhen: China’s New Powerhouse

The list of world cities with over 10 million residents isn't very long, and mostly contains familiar names like Tokyo, Lagos, Rio de Janeiro, and New York City. But of these megacities, which had a mere 20,000 residents only 26 years ago? The one and only answer would be Shenzhen, China.

Shenzhen, a SEZ located in south China's Guangdong province just north of Hong Kong, has become the economic locomotive of the region since it was founded 26 years ago as a kind of laboratory for market-oriented economic reforms. The city's annual growth rate, averaging about 27% since 1980, has no equal in the world.

The urban landscape left by the dizzying growth is awesome, with office towers, hotels, shopping centers, and apartments that can be compared only with what one sees in New York City or Tokyo. Yet all this has taken place within the last 26 years.

Observant visitors, after spending a bit of time in the city, might notice another odd fact: The average resident is in his or her twenties. By now, Shenzhen is the biggest migrant city in the nation. Vast new opportunities attract young Chinese from everywhere like a magnet. The dimensions are somewhat similar to those in the rush to the western United States in the 19th century, but larger.

But Shenzhen is not interesting just for itself: It reflects the fundamental changes China is going through and demonstrates how China's new participation in the global economy works. Because the boisterous SEZ suggests China's general direction, it offers tremendous lessons for Chinese and foreign observers alike. The most important is that an open society and private initiatives are most directly responsible for fast development.

The First Key to Success: Openness

On August 26, 1980, the central government granted Shenzhen privileges as a SEZ, placing it literally in a class of its own. The intention was to allow Shenzhen to become an experimental laboratory for dealing with the market economy and the outside world. SEZ status gave Shenzhen at least a decade's head start over Shanghai and other Chinese cities.

A key motive for this policy change was that, as absurd as it may seem from today's perspective, Guangdong province was considered somewhat backward: Shanghai had been the biggest income contributor to the central government for many decades; in 1980 its contribution was one sixth of the total. But Guangdong was a small contributor with less than 1% of share. In case anything went wrong with Guangdong, the political and economic risks for Beijing would be much smaller.

[...]

This book consists of 26 chapters, which are organized into eight parts:

I. China’s New Role in the World Development

Ch 1. China's social changes vs tourism

Ch 2. Whose 21st century?

Ch 3. Go east, young man!

Ch 4. Everyone in the same boat

ch 5. Power and limits of later developers

II. The Yuan, Trade, and Investment

ch 6. China's competitiveness vs rising yuan.

ch 7. Where to invest your money?

ch 8. Behind a rising yuan

ch 9. Beyond textile trade wars

III. China’s Fast-Changing Society, Politics, and Economy (in light of Chinese and global history)

ch 10. Lessons from Shenzhen, China's new powerhouse.

ch 11. Hunan province: from red state to supergirl and superrice.

ch 12. A revolution of Chinese professions

ch 13. What is the Chinese bureaucratic tradition?

ch 14. Why does Beijing want to reform?

IV. China’s Banking, Insurance, and Stock Market Reforms

ch 15. The explosive insurance market

ch 16. Chinese banks on the move, finally.

ch 17. lessons from China's stock market.

V. Chinese Multinationals vs. Global Giants

ch 18. The coming of age of Chinese multinationals.

ch 19. Behind Chinese multinationals' global efforts.

ch 20. China's technology development.

VI. The Taiwan Issue : Current Affairs and Trends (federation as an alternate way for unity)

ch 21. Federation: the best choice for Taiwan and mainland China.

ch 22. Taiwanese businesses in the mainland.

a vibrant Taiwanese force.

Hightech.

Other sectors.

What is the next?

Will Spring follow winter?

VII. India vs. China : Moving Ahead at the Same Time

ch. 23. China and India: can they do better together?

ch 24. Uneven development: India vs China.

VIII. The Japan-China Issue : Evolving Relations in Light of History

ch 25. Japanese business in China.

ch 26. Japan's past aggressions vs current affairs.

Author George Zhibin Gu is a journalist/consultant based in China. He has written three other books: 1. China’s Global Reach: Markets, Multinationals and Globalization (Fultus, 2006); 2. Made in China: National and Business Players and Challengers under Globalization and Capitalism (English edition forthcoming, 2007); and 3. China Beyond Deng: Reform in the PRC (McFarland, 1991)