Everyone thinks China is about manufacturing. Outsourcing Nike sneaker production and well, just about everything else these days. But lets extend our thinking outwards, to the point where we are contemplating the whole development of civilizations in the last century. Lets zoom out to the point where you can look at the development of industrial nations in the twentieth century,the speed that they developed, and then overlay that with the quantities that China presents will bring to the table in the 21st century.
We start our short historical review with the reconstruction of Japan and Germany, after those countries were destroyed at the conclusion of the Second World War. Both countries benefited from heavy inflows of managed capital from the USA, which had the least rebuilding to do. Both subsequently underwent massive structural adjustment, experienced decades of growth, and successfully leveraged inate cultural resources to guide their success. In the case of the Germans, engineering expertise that is derived from a national culture that prides itself on precision, quality, durability and seriousness. In the case of the Japanese, the national trait was hard work, cooperative corporate structures, the application of familial ties of trust and honour to build business efficency to a new level.
China and Germany required nearly fourty years for this transition process. These fourty years were marked by steadily increasing standard of living and wealth levels.
Now look at South Korea. The race to industrialisation started later – sometime after the Korean war – and gathered speed much more rapidly. But it didn’t stop at industrialisation with the Chaebol, it leapfrogged into the silicon chip and the digital economy, as those things were developed when the capital accumulation of industry was at its greatest in the 90′s. Now south Korean cities are some of the most wired in the world, with broadband internet connection standard in new apartment complexes – unthinkable a decade earlier.
And then we come to China. Lets look at the cultural traits the Chinese can bring into play as they accelerate the development model of rural to industrial to information and beyond. The first and overwhelming factor is sheer potential size of the economy. With a population of 1.4 billion, based on just the ‘local’ economy, the potential Chinese economy size is twice that of the USA and the EU combined. Then there is the business savy, entreneurship, hardwork and risk aversity of the Chinese. Their cultural has withstood the rigours of communism, but is now adopting the benefits of capitalism.
After all, capitalism has proven itself in the twentieth century as the most effective social-economic model to increase overall wealth of civilizsations, and longer term, to increase individual freedoms while consolidating power even more effectively in the hands of the elite. Capitalism has serious flaws when for instance environment understanding is ignored. But the Chinese will find it impossible to ignore environmental issues when the numbers of people affected by those issues with be so great due to sheer population density. Also, the Chinese are developing industrially in the information age. The power of the internet to focus international attention on enviromentally damaging practice will mean that corporations that seek to polute their way to weath will simply find they are discovered before they have time to even their chemical dumps and political coverups. It will become easier to leverage the positive attention that deploying new evironmentally conscious technology will give them.
All of this points to the Chinese passing through the industrial development stage straight into the information age at a breakneck pace. The growth and confidence of Chinese information technology companies like www.alibaba.com are just the start.
The thousands of PHDs, engineering, biotechnology and computers graduates being churned out by Chinese universities will be combined with almost unlimited capital generated by their rapid industrial expansion. This capital will be used to build an entirely new type of 21st century infrastructure that will be tailored to the needs of the information and international thoughtsourcing economy rather than the industrial economy. The industrial development of the twentieth century industrial nations was built around the infrastructure constraints of the time.
To be continued…
