October 3, 2011
At 12 hours, the flight from San Francisco to Beijing is quite long enough. There’s time to work, sleep, and watch movies that are appealing only with less oxygen than usual nourishing the brain. And while I have made the trip dozens of times, it still amazes me to be deposited on the opposite side of the Pacific.
These days, though, the trip involves more than an accumulation of frequent flyer miles. It transports the traveler from the uber-pessimism that hangs heavily over the United States and Europe to the go-go optimism found across China.
At the recent World Economic Forum “Summer Davos” in Dalian, an even more optimistic China was on display.
Premier Wen Jiabao’s opening address to the more than 1,500 participants set the tone. He articulated a clear vision of China’s future, including a restatement of the country’s goals for reducing the carbon intensity of its economy as growth continues. Showing more assertiveness than he had at the prior four Summer Davos gatherings, he chided the United States for mismanaging its economy, and he conditioned any Chinese bailout of distressed Europe on an explicit quid pro quo from the European Union.
The response of Westerners to Wen’s address was striking: Most people I spoke to lamented the fact that their own political leaders could summon none of the clarity and certainty of the Chinese premier. Firm leadership inspires, no matter the content.
What lessons can be drawn from this?
Quite obviously, it’s easier to be confident when national GDP is growing at 10 percent annually than when it is stagnant. Direction matters more than absolute performance, because while its growth rates are very high, China’s GDP per head remains only one-tenth of what it is in the West and Japan. And growth rates matter because they enable investments in the future, something that many in the West are failing to pursue right now.
Optimism about China is also thriving because its model appeals to other parts of the world, like Africa, where economic tides are rising. Martyn Davies, whose firm Frontier Advisory works on Chinese investments in Africa, noted to me that it is absolutely false that Africans don’t want Chinese investment: Rather, he says, this is a myth propagated by Western media.
Third, the rising generation of educated Chinese has been raised with big and bold ambitions, far more than their peers in the West. This was on clear display when I visited with the BSR team in our Beijing office and spoke at the launch of the Chinese edition of Sustainable Excellence, the book I co-wrote with Zachary Karabell. Among this group, there is a sense that all things are possible, and there is a hunger to learn from Western experience without being at all threatened by it. I seldom encounter people who are so direct about their desire to change the world and seek their own destiny than I do in China.
Facing all this Chinese triumphalism and Western decline, it is easy for a Westerner to simply say “gan bei” and look to drown one’s sorrows in Tsingtao or something stronger. But my take is that there are reasons to think that Chinese optimism should be tempered, and that Western pessimism is overdone.
China faces several challenges. Some result from the country’s political and economic governance, which has brought a steady rise in public protests, concerns about the stability of the banking system, and an antiquated residency permit system that limits where people can live, marry, and go to school. Some result from the country’s development model itself, in which growth trumps all other concerns. The recent cover-up of the fatal high-speed train crash is but the latest sign of this syndrome. China’s growing water deficit, and intense urban pollution and congestion, are also indicators.
In some ways, China and the West are mirror images of each other. In the West, political dysfunction is undermining economic vitality. In China, economic vitality is masking structural political weaknesses.
But ultimately, China and the West suffer from the same problem: years of focus on growth at all costs. In the West, this has meant sloppy lending and borrowing practices, and a belief that securitizing could bring economic security. In China, the model has depended on output that has often overlooked human and financial costs that are now much more visible.
The model continues to pay dividends in China, but it won’t always. Achieving this growth is the easy part; making sure it is sustainable—in all ways—is harder. And that is reason enough for Chinoptimists to curb their enthusiasm.
This blog also appeared on Guardian Sustainable Business.
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