China in My Life and Memory
China's maturing industries are helping other countries as well. For example, China is currently busy helping many countries around the world to launch their own communications satellites and remote sensing equipment from the country's launch sites. I was lucky enough to witness the launching of one such satellite.
A fitting analogy for the speed of China's economic boom is the development of the country's system of railway transport. Its railway network is expanding at a pace that leaves all other countries behind, including Japan and Germany. Chinese trains themselves are also setting speed records. During a test run at the end of 2010, a high-speed passenger train traveling from Beijing to Shanghai reached 486.1 km/h, a new rail speed record. This incredible velocity beats the take-off speed of a jet plane.
China's nuclear energy industry is also developing rapidly. At present, 18-20 nuclear reactors are being built, each with a capacity of one million kW. And that's to say nothing of the country's rapidly growing hydropower and alternative energy (wind, solar, ground water heat and tidal power) prowess.
Chinese companies have risen to such dominance in the field of household appliances that many countries have simply stopped producing such goods.Chinese companies are rapidly advancing to the top of world ranking in biotechnology, telecommunications equipment and automobile production…
For the skeptics out there I offer this fact: 85 percent of Chinese exports to the EU (this equates to 292.1 billion Euros in 2011) are mechanical, electric and chemical products. According to Chinese analysts, by 2015, while there still be a significant gap between China and the U.S. in high-tech industries, Chinese technology will not only match, but even surpass the U.S. in conventional industries.
What are the basic components of the successful development of the Chinese economy? After years of working in China and on the basis of extensive reading, I relate my own understanding of the answer to this question:
First: faith in the ability of labor collectives, professionals, managers and local authorities to propose economic initiatives. The central government can take credit for creating the necessary environment in which bold initiatives could be adopted. And the very same central government took on itself the responsibilities of undertaking comprehensive analysis of proposed initiatives, deciding which ones were most suited to the interests of the state, test-running them in selected areas and finally implementing effective programs throughout the country.
Second: granting maximum autonomy to the heads of state-owned enterprises. Their work is evaluated yearly. During the course of a year, the operation of a corporation is left to the discretion of its own management. A parallel system of current and year-end incentives for managers and professionals provides an effective means to ensure their work is linked to tangible outcomes and specific targets.
Third: creating an atmosphere of excellent benefits and preferential policies in order to attract foreign investment and technology transfers. The country's young people have been encouraged en masse to study at foreign universities and pursue internships at well-known foreign companies and banks. Experienced foreign managers have been invited to work in Chinese companies with attractive remuneration packages. These packages can be more lucrative than those the companies' Chinese CEOs receive.
Fourth: Ensuring maximum freedom for corporations, particularly private small businesses, in their production and operation. Law enforcement and regulatory authorities have no right to intervene in lawful financial and economic activities. There is no institution of administrative penal sanctions for companies and their executives. Only the taxation office has the right to check up on enterprises' yearly financial and economic activities. In the event of underpayment of taxes the company is obligated to repay the debt. If the underpayment was intended, a criminal case is opened against the company;
Fifth: Strong scientific progress and innovation (especially in the last decade). The state has been directing ever-greater resources to the development of scientific research centers, while also providing all necessary conditions for their success. It has also given substantial financial assistance to universities, and encouraged scientific and engineering innovation in companies and corporations.
Of course, factors such as low domestic prices for raw resources and energy, cheap labor, and relatively small government outlays on labor and environmental protection have played a role in the country's development. But I don't believe these have been the key factor in the Chinese growth phenomenon. After all, such conditions were apparent – even more so – before the beginning of China's reforms and opening-up.
I do not want to give the impression that I idealize the socio-economic situation in China. But I do want our attitude toward the country to be informed and unbiased. It's true that alongside the enormous achievements of the last 30 years a host of unresolved issues remain. This is understandable. In such a short period of time it is impossible to create an ideal society. There are still 700 million rural residents in China today, and their standards of living are far behind those of their city-dwelling compatriots. The rural-urban divide is mirrored in the gap between provinces in China's east and those in its center and west.
The fact that much of the population, and especially its rural element, remain insufficiently protected by the pension scheme is another pressing issue. Other questions need to be addressed in the areas of health, education and housing. The Chinese leadership are frank about these problems, pointing out that they are unavoidable for a developing country. But at the same time, every year more and more attention and resources are being directed to providing real solutions to problems. I've no doubt they will be solved in time.
