China First

January 25, 2014 — Leave a comment

China First China’s Megatrends: The 8 Pillars of a New Society by John and Doris Naisbitt. Harper Business. 242 pages. $27.

China is lending, spending, and growing like it was the new leader of the world. Is it?

Oh, to be China in 2010, object of the world’s envy, admiration, and fear. Since the economic reforms of the late premier Deng Xiaoping in the 1980s, the country has gone from a relatively isolated authoritarian state into a shining triumph of socialist- market economics. At present rates of growth, it will be the world’s largest economy by the middle of this century, overtaking the United States and achieving a GDP above $14 trillion per year – a significant first.

The question of how China became so successful, and what its leadership might do next, is a source of speculation and consternation, particularly in Washington, D.C. In China’s Megatrends: The 8 Pillars of a New Society, John and Doris Naisbitt dissect China’s achievement and provide what they call a “balance” to the “heavily weighted negative commentary” about China in the U.S. media.

Why has China grown so much so quickly? The Naisbitts present an exhaustive list of success stories, but their most novel insight comes from the retelling of a third-century Chinese legend. General Zhuge Liang sat on the banks of the Yangtze River facing the enemy army of Cao Cao on the other side. Rather than attack directly, Zhuge sent over various boats packed with straw. Cao Cao’s archers, perceiving an attack, sent a hail of arrows down onto the boats, whereupon Zhuge retrieved the vessels – and stole his enemy’s ammunition.

Deng employed the same “borrowing arrows” strategy when he invited foreign capital and industry into the country, starting with Volkswagen in 1978. Other large Western firms followed, including Boeing and IBM. The arrangement provided abundant cheap labor for U.S. companies. China secured capital and, more importantly, technological expertise – arrows that the West valued cheaply, it turns out. In 2005 Lenovo, which did subcontracting work for IBM under a different name, became the world’s third-largest computer manufacturer when it acquired IBM’s PC division. The Naisbitts forecast that China will eventually become the world’s largest supplier of electric cars, thanks in part to lessons learned building automobile parts for foreign companies.

In the century ahead, China will be first to reach a number of milestones as it seeks to leverage its growing technological sophistication to meet the needs of its one-billion-plus population. Faced with the challenge of educating an impoverished rural workforce, but free from the influence of teachers’ unions, China may be the first country to succeed in educating most of its population through the Internet. From 2003 to 2007, China spent about $1 billion to implement distance-learning projects in the rural countryside.

China’s leaders have invested heavily in the nation’s technological infrastructure through the establishment of various research and development centers such as the Zhangjiang High-Tech Park or the ZHTP (the park’s researchers received 2,205 patents in 2007 alone). It’s no wonder AI researcher Hugo de Garis, who has lived in China for years, has expressed certainty that China will be the first country to create an artificial general intelligence. The children of the researchers who work at ZHTP can elect to take SAT prep classes at the expense of the government (to secure placement in U.S. universities) or they can go along the Chinese track to continue their education in China. It’s a great education by American standards. It’s hardly typical of what most children in China experience.

How does China reconcile an explosion in private wealth with the tenets of communism? Easily, say the Naisbitts. Prosperity for all remains the Chinese government’s goal. But, in the words of Deng himself, China has “allowed some people and some regions to become prosperous first.” Trickle-down economics is apparently just another arrow to be employed expeditiously. The Chinese people don’t find the apparent contradiction nearly as troubling as do China’s critics.

Western concerns about the state of human rights behind the Great Wall aren’t shared by the Chinese people, according to the Naisbitts, and the authors are dismissive of Tibetan or Taiwanese sympathizers. From the 1970s to today, the human rights condition in China has been steadily, even remarkably, improving, the authors point out. Minority rights, worker rights, distribution of wealth, open elections, freedom of capital, freedom of speech, and rule of law: China is making “progress” in every one of these areas. But the Chinese people are happy to allow the government to determine the pace of that progress, rather than suffer the lectures of the West, they assert.

Too many in the West hold to a single, self-flattering image of China as an oppressed people in need of rescue, say the Naisbitts. This picture, born of that iconic moment in Tiananmen Square where an unarmed protester confronted a tank, isn’t representative of how the Chinese view themselves or their government today. China’s continued growth depends on access to U.S. consumer markets and technological expertise, for now. But the Chinese people do not see themselves as needing liberation by Washington. They perceive their future as bright. According to a China Daily poll that the authors cite, 76% of Chinese believe the world will be better in five years. Is China Daily a credible source? Don’t worry, journalistic independence is “improving,” too.

Unfortunately, in their pursuit of balance, the Naisbitts did not, it seems, include any personal interviews with any Chinese dissidents. If they sought any such interactions but were blocked by Chinese censors, they don’t remark on it. China’s Megatrends will likely strike American readers as adulatory in the tone it takes to the country’s leadership. For all of its merits, the book too often reads like a marketing pitch from the office of the Communist Party of China, intended to extol the country’s success and show the government’s sensitivity to the concerns of the people (note: the level of sensitivity is also improving).

China’s ascent is butting up against major obstacles. But the Naisbitts devote barely a sentence to the lack of transparency in Chinese financial institutions; to wit: “China’s banking system is more or less a monopoly. State-owned banks give loans to large [state-owned enterprises] that are operating at a loss; thus large amounts of nonperforming loans have accumulated.” You may recall, it was large, nonperforming loans sitting on bank balance sheets that nearly plunged the world into a second global depression just two years ago. The Naisbitts don’t explore the size of the Chinese finance bubble and don’t speculate when, if ever, it will pop.

The deteriorating freshwater situation is the larger problem, and the Naisbitts do pay more attention here. China hosts 20% of the world’s population, but the country holds only 7% of its resources. As covered in this magazine, the most water-intensive and highly polluting industries – paper, textiles, processed food production, and agriculture – have migrated to China’s relatively arid north, from which the more economically significant southern portion imports most of its food. The authors forecast that “water shortages in Beijing will become a crisis when its population, as expected, reaches 20 million in 2010, 3 million more than its current resources can support.” The Naisbitts offer examples of China attempting to deal proactively with the water situation. But it remains a daunting problem and an example of the most important first China is likely to achieve: limits to growth.

The obstacles are significant, but China seems poised to handle them dexterously. The country has made a habit of defying expectations. It’s done so for centuries. In 607 CE, the insolent Japanese prince Shotoku referred to the aging empire to Japan’s west as the “land of the setting sun.” China recently eclipsed Germany’s status as the third largest country in terms of GDP and will likely surpass Japan by the end of 2010. It seems the sun also rises.


About the Reviewer

Patrick Tucker is the senior editor of THE FUTURIST and director of communications of the World Future Society.

Originally published in THE FUTURIST, May-June 2010


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