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A leader leads by example not by force.

Opportunities multiply as they are seized.

- Sun Tzu

With Sun Tzu being one of the most famous, China has been blessed with numerous outstanding strategists in influential positions.

Sun Tzu, author of The Art of War, was an ancient Chinese philosopher and strategist who lived several centuries BC. Many of his quotes are well-known and his wisdom undoubted. Several times in Chinese history, brilliant minds in important positions within government helped the country thrive.

The unprecedented economic miracle that took place in China in the past two to three decades was not a miracle in the first place. The enormous rise China has been going through was the result of a thought-through step-by-step approach to bringing China back on the global stage of economic superpowers.

After the experiment of Maoism terribly failed, China’s leaders examined the recipes for success tested out by Hong Kong, Singapore and Taiwan. Determined to grow GDP, breaking with their ideology, special economic zones such as Shenzhen (just north of Hong Kong) were established to try if more or less authoritarian forms of capitalism could actually work in Red China.

As the capitalist experiment quickly showed favorable results, new special economic zones popped up all along China’s coastal areas and a rapid industrialization set in which attracted foreign capital inflows. Since that moment, when China’s leadership realized that it could make capitalism work for it, the rest of the story was mainly about finding the right balance between opening up and maintaining control and stability.

Even though China’s route to wealth was not smooth and had ugly side effects, it is hard to belie the country’s great achievements such as lifting hundreds of millions of poor farmers and peasants out of poverty which is unprecedented in history.

It took a lot of pragmatism, intelligence, patience and foresight for a number of leadership generations to accompany the transition. Attracting foreign investors to build manufacturing sites as well as R&D centers within a country whose government has absolute power and a strong national agenda was difficult. Nevertheless, the country became the biggest manufacturing hub of the world and is trying hard to attract foreign as well as to develop its own high tech production and research facilities.

Despite all achievements and progress, the challenges China is facing are huge: Lethal pollution, an unsustainable population size given the demographic development and the critical rights the government has to grant citizens and foreigners in order to move ahead and leave the low-cost manufacturing and export model behind.

At the moment China is implementing the third phase of its development strategy. As the coastal areas have almost caught up with the West in terms of education, infrastructure and GDP, dozens of cities further inland are in the process of becoming new industrial and commercial centers for Asia and the world.

Does the city of Chongqing sound familiar to you?

When you are thinking of some of the world’s biggest cities, places like Tokyo, Shanghai, Mumbai, New York and London might come to your mind. However, Chongqing beats all of these world cities in terms of population. It is in fact the largest metropolis on the planet - a boom-town by the Yangtze river. The Chinese sometimes refer to Chongqing as the Chicago on the Yangtze with the city’s recent face-lift in mind.  With an estimated population of more than 31 million and counting, Chongqing is already a success story where new riches are made every day and it has just started its way to global recognition and importance. The city’s mayor and regional Communist Party boss Bo Xilai is a political celebrity in China. His success in fighting corruption and organized crime seems to have put him on the path to a high-ranking position within the Communist Party’s inner circle. The Huffington Post recently named him “China’s Man of the Year” (http://www.huffingtonpost.com/2010/03/01/bo-xilai-chinas-man-of-th_n_480952.html).

Chongqing is only one example of the Chinese government’s “Go West” strategy aimed at developing regions in central China to maintain growth rates and provide employment for its growing work force as well as to stop the income gap between coastal China and central China to widen further.

In the coming years, we can expect to see some of the manufacturing move more inland while the coastal regions will see more high tech and research-centered endeavors as well as service industries move in.

One last aspect that needs to be mentioned when talking about China’s savvy strategists is the country’s efforts to move ahead in the field of alternative energy technologies. Electric cars and solar power are markets Chinese companies are targeting and might soon be ahead of Western competitors. Suntech Power, the world’s largest producer of photovoltaic modules and BYD Auto, a newcomer in the automobile business aiming to become one of the  world’s biggest car makers by leading the electric car revolution give us an idea what might be ahead.

If you are interested in learning more about the changing economic and political climate in China, I encourage you to take a look at the posts in my Category China page.

on China’s changing role in the world economy

China: A developed, green economy by 2050?

This entry was posted on Wednesday, December 22nd, 2010 at 7:28 PM and is filed under China, Economy, Electric Cars & Auto Industry, Energy, myVIEW. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.