The FINANCIAL — Last week, China, the most populous nation on earth, elected a new man at the top.
The FINANCIAL — Last week, China, the most populous nation on earth, elected a new man at the top. Hu Jintao, after a decade of steering China to greater heights, steps down. Xi Jinping takes over as President and paramount leader of the Chinese Communist Party . He and his 7-man Politburo will direct China’s destiny through the next decade.
I first flew into China in May 1995, some 18 years ago, to meet with the officials of the Shanghai Pudong Productivity Centre. I flew into the old airport in Shanghai where the girl at the Foreign Exchange counter did not wish to exchange Australian dollars to the Yuan. The airport itself was small, somewhat weathered and lacked basic comforts. The taxi drivers, as anywhere in the world, were clamouring to get a passenger. The Crown Plaza Hotel where I stayed had a Pakistani manager, an executive lounge where the red wine surely gave one a stomach ache, but the buzz of activity in construction, road building, apartments building, shops and restaurants, the immense traffic in the metro where one could hardly stand and breathe were all signs of a China waking up, fast and furious.
At the lobby of the Hyatt hotel in Beijing, one young couple, whom I never met before, approached me to discuss my “investment” in a small web-design enterprise with a contribution of one desk top personal computer. I learned 2 years later that they had a thriving business with 40 professionals. And in the bars of Beijing, there were signs of big spending by young entrepreneurs, with bands from Brazil, wines from France and a cacophony of languages, English, French, German, Dutch, Arabic and a multitude of other languages.
Just 18 years ago, China did not have much idea of ISO and supply chains, was not a member of WTO, did not enforce stringent regulations on breaches of intellectual property, did not have an elite management force which spoke many languages and who had global perspectives. Most of their state-run enterprises were in fact massive production facilities operating at losses with financial support from the government. All that China did then was to produce acceptable quality products at the cheapest price and flood the global market, conserve its foreign exchange and continue to plan a” lead forward”.
Within the last 20 years, China has totally transformed itself into an economic giant with massive foreign investments, upgraded manufacturing facilities, better practices and an increasing domestic wealth which has fired up domestic consumption levels, raised standards of living and projects China’s per capital income to rise from the current $ 5,500 per annum to $10,000 by 2020.
President Hu Jintao, looking more like a monastic, disciplined, firm and focussed, grew China’s economy and its image, show-cased China’s abilities through the Olympics, and despite the recent global economic strife, hands over to his successor a nation which is robust, totally self-reliant and is rich in its human capital. New York-based Eurasia Group’s analysis shows that Hu “ grew China’s GDP of $1.5 trillion in 2002 to $7.3 trillion in 2011, while maintaining an average GDP growth rate of ten percent. As the economic pie expanded, overall income surged, with average annual earnings among urbanites increasing from $1,000 in 2002 to $3,500 in 2011. Rural residents saw their incomes rise even more sharply, but given that their earnings averaged a meager $300 in 2002, they had nowhere to go but up”.
“It is no coincidence that over the same period, China’s exports boomed as industrialization of a monumental scale took place and manufacturing provided income to hundreds of millions of workers who left the farm for higher earnings in the city. Although China’s decade of hyper-industrialization followed its entry into the World Trade Organization in 2001 — the year before the current regime came to power — the Hu administration played an important part in the story. By standing fully behind the broad political consensus on the “growth imperative” and championing a liberal trade regime, Hu and his associates consistently helped China achieve growth rates that were the envy of emerging markets”.
For long, the Western propaganda continued to ridicule China as a barbaric nation under Mao Tse Tung and his repressive regime which sent millions into the labour camps to starve and perish for the crime of dissent against a monolithic regime. Most China detractors continued to argue that the country would collapse and disintegrate into warring segments and feudal lords. Communism was not to deliver the goods. But the Chinese pulled a rabbit out of the hat with their new philosophy of communist capitalism where all people must be equally rich and must pursue the ultimate goal of seeking wealth. Within a short span of time since Deng Xiaoping, that chain-smoking giant leader of the Chinese Communist Party declared that communism and capitalism are not incompatible, China set the standards for growth and human capital mobilisation.
Questions are now asked as to what long road China would take in its pursuit of growth, social justice and well being of its people. China’s democracy is of a very different kind, for some long years. People are free as long as they obey the rule of law laid down by the state, and understand clearly that the state, in the communist philosophy is paramount. Individual freedoms are subjected to the over-arching tenet that the state is the embodiment of collective wisdom.. For me, this philosophy and control is what made China as a power bloc. In such a large country, any form of dissent and civil strife would have hurt the growth strategies deeply, especially when the nation was struggling to emerge from years of conflicts and poverty. But the winds of change will flow through China and the challenge for the new leadership in the next decade and beyond is to bring back more humanity and freedom without de-railing the delicate balance between individual freedom and national goals.
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