Friday, February 1, 2008

Home at last

I've been back in the US now for about 3 weeks. That has given me enough time to reflect on the past year. It has been quite an experience, so I apologize if my comments are not as coherent as they could be. There are simply too many things to say for me to be able to organize them very well.

First a few thoughts of my last night in Shanghai. I spent it having dinner with students from Harvard Business School who were spending their holiday vacation visiting China. It helped me realize that China is on everyone’s minds. When I was at school, China was the domain of Asian Americans who wanted to get in on the “action.” At dinner that night, 90% of the students who were visiting were not of Asian decent. Now there is also a popular elective course at HBS called “Doing Business in China”.

China is growing faster than ever. GDP growth for 2007 surpassed 11%. It represents a huge market for consumer goods as 1.3 billion Chinese citizens learn to brush their teeth and drink Starbucks. Thanks to its cheap labor and good infrastructure, it is also an increasingly important source of goods for the worldwide market. China is expected to surpass the US soon as the world’s second largest exporting country (behind Germany). However, this ignores the true strength of the country economically and politically.

China is being managed reasonably well. The problem with the strong single party government is that there are no checks on power - no legislature to define the laws independently of the president and no court system to declare laws unconstitutional. However, run well, like in Singapore, a strong central government can be very effective in bringing the country out of poverty. It’s interesting to talk to the local population. They see nothing wrong with the strong hand of the government cracking down on unrest; it's usually not the urban population that is affected.

The Chinese population seem to believe in a manifest destiny that China will undoubtedly become the next world superpower. Furthermore, everyone is willing to work hard and invest whatever it takes to get there. This reminds me of the United States in the early 1900's. Scary stories of Chinese food contamination and abused laborers are similar to Upton Sinclair's The Jungle (1904) and post-Civil War industry that gave rise to the American Federation of Labor. For those that believe we need to keep jobs at home and prevent the flow of goods from China (and the rest of the world), I say this: "It's inevitable." Even though cities like Shenzhen, Shanghai and Tianjin have been growing like crazy over the past few years, over 800 million people still live in the countryside. Over 20 million of which still live in caves (yes, caves - Google: China, caves, loess plateau). Farmers here struggle to raise enough food for the rest of China. But with modern technology like tractors and chemical fertilizers, land and labor productivity should continue to increase. In the United States, every farmer supports 140 people. If this were to be true in China, the country would only need 10 million farmers. What do you do with the other 700+ million people? Make cell phones, study physics, become nurses, and even carry weapons.

There will be bumps in the road, e.g. Political unrest, stock and real estate market bubbles, bird flu, etc. However, I believe that the Chinese people are dedicated to making their country a success. For thousands of years, the Chinese people have done nothing but make sacrifices for what they believed was in the best interests of their country. Often such sacrifices were at the end of a sword, or gun barrel, and often they weren't actually the best thing for the Chinese people. However, the Chinese people know how to endure and persevere more than any other civilization. With the gradual opening up of the country to foreign influence thanks in part to the economy, but even more so due to greater communication via the internet, there will be an ever greater check on the government to insure it makes decisions in the best interests of the country and its people.

I'm back in the US now. Everywhere I turn I see areas where they could learn from the Chinese. It's interesting; when I first arrived in China, I could only see disadvantages to the US. Here in the US, I see billions of dollars spent on lobbying and elections (where the real distinctions between candidates are marginal compared to the worldwide political spectrum.) I see lazy people that don't see the value in additional education. There are millions of Americans who feel entitled and believe that they are below the poverty line because they can't afford a car. There is no wonder why factories move to China (or Vietnam or Korea or Taiwan).

That's not to say China has no major problems. The environmental issues and human rights abuses will pose a huge barrier to the country in becoming a major world power. But I believe things will improve over time.

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