- Over the coming decades, China will become a thoroughly
new form of political and economic entity. Brutally competitive in both
politics and world markets, innovative and resilient, China will be more
dominant than any nation save America.
- Such a shift in the global balance of power occurs only
about once every century and is comparable to the emergence of the U.S.
power a century ago. The magnitude of this change is due, in part, to a
radical and rapid shift in China's governance. Because of its suddenness,
it is tempting to write this shift off as a fluke. But China's restructuring
is permanent and will affect every aspect of its national life, as well
as its global standing.
- The People's Republic now embodies two systems: the centralized,
autocratic Communist administration, dominated by an outdated ideology
and military interests, and the decentralized free-market economic regime.
Whether deliberately or not, China is reorganizing itself to balance central
authority and common purpose with decentralized freedom, in the same way
that nimble companies balance home-office and divisional control. The result
is an entirely new geopolitical model - the country as corporation.
- Call the new China "Chung-hua, Inc." (Chunghua
translates as "China" and actually means "the prosperous
center of the universe.") Like many corporations, China is moving
most decision-making to the "business unit" level - semi-autonomous,
self-governing economic region-states that compete fiercely against each
other for capital, technology, and human resources (just as America's states
- This new, decentralized free-market regime currently
encompasses only a small part of China's vast territory, and many Chinese
officials still refuse to acknowledge its existence. Indeed, only seven
years ago, the word "federation" was banned from the Chinese
language; companies like Federal Transport or Federation Merchants were
required to change their names. Today, China has the most federal governance
structure of any large nation except the United States.
- Two broad categories of region-states exist. The first
are relatively small, composed of cities and their surrounding areas, generally
with a population of 5-7 million people. Some of these - Shenzhen, Shanghai,
Dalian, Tianjin, Shenyang, Xiamen, Qingdao, and Suzhou - are now growing
economically at a rate of 15-20 percent per year - faster than such Asian
"tigers" as Malaysia, Taiwan, Thailand and Korea ever did. These
smaller region-states, in turn, are propelling the growth of larger mega-regions,
with populations approaching 100 million each.
- The mega-regions, which tend to share common dialects,
ethnic identities, and histories, are becoming economic powerhouses in
their own right. If they were separate nations, five of them - the Yangtze
Delta, the Northeastern Tristates area (formerly known as Manchuria), the
Pearl River Delta, the Beijing-Tianjin corridor, and Shandong - would rank
among Asia's 10 largest economies.
- Regional governments have also been toughened up by the
Chung-hua, Inc. ethic. Most officials are appointed, not elected. Not only
are they held to targets of 7-percent annual economic growth or better
(like many corporate executives), they must also improve environmental
quality, build better infrastructure, and reduce local crime levels. In
October 2001, a half-dozen bureaucrats were expelled from one of China's
major cities for not meeting their economic growth and security targets.
- Local officials are often considered heroes, not oppressors.
In January 2001, Bo Xhi Lai, then mayor of Dalian, was promoted to governor
of Liaoning province. Thousands of women, many in tears, spontaneously
came to a park to bid him farewell. During his nine-year tenure, Dalian
evolved from a ramshackle port into one of the cleanest and most prosperous
cities in Asia. It now has a street life more vibrant than Singapore, a
layout reminiscent of Paris before the automobile, and a reputation among
Japanese tourists for high-quality hotels, transportation and restaurants.
- All of this is taking place in a nation where Communist
ideology remains strong and that remains in many respects a military dictatorship
which threatens to conquer Taiwan by force, as well as using North Korea,
Pakistan and Libya as stalking horses for weapons development. Introduction
of foreign companies, technologies, and unfettered mobility for corporations
and people would all be viewed as a threat to the Communist system "if"
it were publicly acknowledged.
- Instead, China's highest officials publicly insist that
they run the most centrally controlled government in the world, with full
authority to appoint or dismiss mayors, governments and bureaucrats. Strictly
speaking, they are right. But they dare not overrun the open, commercial
ethic of China's region-states - the source of their country's prosperity.
- So debates about China should not be cast as a simple
matter of right or wrong, but of when and how. Politically, China is comparable
to the United States in 1800: an emerging nation with high ideals but widespread
poverty and many practices that others find intolerable. A decade or two
of economic freedom and growth will give China's people an appetite for
self-determination and participation that may surprise the rest of us.
Already, some village leaders are elected; this may slowly spread to regional
officials, and then upward to the central government.
- Even top communists appear to acknowledge and embrace
change. Recently, China's head of state, Jiang Zemin, said that the Communist
Party "represents" every good aspect of China, including wealthy
capitalists, not just the poor, the exploited and the proletariat. We should
not be surprised if soon - perhaps at the Party's 2002 General Assembly
- China's leaders formally call for a new doctrine to match its new model.
- Kenichi Ohmae is one of the world's leading business
strategists. He is president of Ohmae & Associates and has advised
many of Japan's governments. - Ed.
- Copyright: Project Syndicate