China Boom CMS

<p>Many of my friends, 20 years ago, were very ordinary officials working for the government, or just workers, or even just farmers. But, now, they [have] become the richest people in China. So, why can we see all these ordinary people getting rich very quickly? Sometimes, this also puzzles me. But, sometimes, we can see clearly, because, in China, to be rich is the only way you can achieve social status.&nbsp;Many people ask me how China has achieved its economic record of the past 30 years. I think the single [most] important reason is that the door open and reformation policy has given the opportunity for entrepreneurship. Any person, no matter what kind of job they had before, can start their own business. In China, the only way you can have your maximum development is business area. I think, today, when we look at the Chinese model and it basically is very successful business development. Because, for that reason, in this area, it's like achieving the limitation, the level, that is much farther beyond the other countries, even those that started at the same time. Because, in that country, you have many other way to develop yourself. But, here, the only way you can do it [is through entrepreneurship]. In that sense, I would say China's boom is single-dimensional.</p>

<p>My model of China in the late 20th and early 21st century, the boom years, is essentially a raft going down a category 5 white water stream where there&rsquo;s an infinite series of boulders and, at the last minute, they&rsquo;ve kept missing them. So far, the biggest boulder they hit, of course, was Tiananmen Square in 1989, and that one set them back quite a bit. But since then, whether it&rsquo;s been dealings with the United States, rural unrest, environmental disaster of the moment, they have dodged instant by instant, and at the last instant, the problems they&rsquo;ve been facing. That is impressive to me if you compare it, for example, with Japan, where there was, for a while, the virtue of quite rigid and coherent and nation-wide system. But, I think, in the 90s they saw some of the drawbacks in that rigidity. So, the relative adaptability of a communist regime has been impressive. Then, just moving back a second, what I view, just thinking about it at this moment, as the &quot;secret&quot; of the Chinese success, is combining a successful part of the preceding East Asian model, which is forced savings, you know, industrial concentration, export growth and all the rest, and combining that with a certain latitude and allowance for chaos, of letting lots of the country essentially be ungoverned, letting people come in and make deals from around the world. So, the combination of control and anarchy, I think, both characterizes China as one observes it now and explains something about its boom.</p>

<p>If it was a democratic or semi-democratic regime that was committed to Reform and Opening, there could still be economic development. Because one of the important conditions for economic development is not the stability of authoritarianism or totalitarianism but, rather, the country's ability to provide people with a long-term expectation for society. Then, people are willing to bind their property, wisdom, time, and energy to the nation. There might be a lot of instability or political change in the near term but, in the long run, they still believe China will move forward. So, they want to invest. It's like when you invest in options. If I already know what the price of a stock will be next year, no matter what fluctuation there may be in the meantime, I will definitely invest in it. The most important thing is not that the price is always rising during this time, but the belief that, in one year, the price will reach a certain level. During this period, the price can even drop below the current price, I don't care. The belief that the future price will be higher is the most important thing. Deng used his grand vision to give expectations to the social elites of that time. The success of those elites has given their children expectations. The open market, joining the WTO, globalization have given hope to the generation born after 1990. The hope is handed over generation by generation. But there is an unshakeable belief, no matter what kind of political instability occurs, that, in the future, China will maintain a relatively open attitude and will be tied to the whole world.</p>

<p>These newly resurgent Asian countries were able to develop because of their political autocracy and economic freedom. This undoubtedly applies to China. Because China was a very closed country prior to the reform, China's labor costs and environmental costs were the lowest. Also, compared with South Korea, Taiwan, Singapore and Hong Kong, its political centralization was the strongest. In past 30 years of globalization, China's opportunities and growth surpassed that of the Four Tigers because of this combination of low cost and high political centralization.</p>