China in a bull shop
Nothing can really prepare you for the dramatic change in the Beijing skyline, symbolizing the pulsating beat of China’s sustained economic uplift for the last decade. To hear that growth has “dropped” to just above 8% may seem like a sick joke to Third World countries (and even the four Asian tigers) who would not be averse to standing on their heads to reach that figure. Seeing China for the first time after 1990, at the start of the present economic drive, the six-lane expressway that whisks you into the city from the airport in less than 20 minutes, the double lane road of yesteryear running alongside — and also full of traffic, prepares you only partly for the Chinese miracle. In the centre of the city and as far as the eye can see in a 360 degree circle, there are high rises of not less than 20 storeys going up, maybe a score and even more. There is a dynamism in the air that envelopes you as soon as you are in the city. Where once there were thousands and thousands of bicycles among a few thousand vehicles, there are now thousands and thousands of vehicles but the bicycle has not been forgotten as a primary means of transport. Where vehicles used to comprise of standard-issue trucks, buses and a few cars, they now comprise Mercedes and Audi, Toyota and Volkswagen, Jeep Cherokees, etc and trucks and buses of various origin. Despite the two fast ring roads, elevated for most of the way, there were hints of possible traffic jams, an efficient system keeps the traffic going slowly.
For the last decade, China had been maintaining a growth rate of 10% plus and it shows in the brand new five-star hotels, new shopping centres, good telecommunications facilities, designer shops, excellent public transportation system, etc. Yet China is a vast country and very much like in the Chinese hinterland, there are vast poverty patches in Beijing where development is still far away. In the new found affluence there are vast stretches of slums, yet one gets staggered by the statistic that 35 million Chinese can spend upto US$ 20000 on consumer goods every year — and that figure is growing very rapidly, not steadily. One thing is clear there is a great method in the planning by Chinese leaders and while Beijing is still a developing city, the south east coastal areas are far ahead.
In Beijing for the two-day China Business Summit of the World Economic Forum (WEF), one was privileged to attend also the one day meeting of the Global Growth Companies (GGC) held one day earlier. Most striking was the eloquent talk given by top Chinese leaders like the Vice-Premier Li Lanqinq, Zhu Guangya, Vice Chairman of the People’s Political Consultative Conference, Dai Xianglong the Governor of the Peoples Bank of China (the Central Bank), Zhu Min, Senior Advisor, Peoples Bank of China and others on various issues. This was a special occasion because the new Government of Premier Zhu Rhongi had just taken office after the election and deliberations of the National Peoples Congress and we had a chance to hear and observe at first hand the summaries of the past policies of the Chinese Government as well as their vision of the shape of the things to come as they enter the 21st century. Despite having prepared texts almost all the leaders and senior government functionaries spoke extempore without once referring to it, underscoring a confidence in their convictions and grasp of facts that by itself was extraordinary. No questions were evaded, they were all handled with wit, aplomb and ease. To me personally there is no doubt that China’s miracle bull run is happening because China had (and has) magnificent leaders who have the capacity to take tough but pragmatic decisions and then have the courage and will to implement them. No faint hearts here, no special interest groups at play to frustrate government policies!
For the present and the future, the challenges that face China still require deft handling. The way they approached the Asian crisis is a signature role model in sovereign maturity. Despite enormous pressures to devalue in the wake of the falling currencies, exports slowed as Chinese products became more expensive and growth rate dropped from 10.8% to about 8.1%, China kept shoring up the Hong Kong currency and keeping the RMB stable. The intervention has cost the Chinese dearly in foreign exchange reserves but kept their currency stable. This went a long way in stabilizing the Asian countries hit really hard, South Korea, Thailand, Indonesia, Malaysia, etc, a Chinese devaluation would have sent their respective economies into a free fall. This responsible attitude is symbolic of China’s policy towards its neighbours. On the domestic side, the new government has launched a massive dismantling of the state bureaucracy and the State enterprises. This will put millions and millions of people in their middle ages out of work and commensurately out of the housing, transport, medical and other facilities that they took to be virtually sinecures being card-carrying members of the Communist Party. A solution for this potential massive unemployment occupies much of the concern and attention of Chinese leaders. They are not sitting idle either, they have a plan to re-educate and re-adjust millions in the private sector. The same practical application of common sense and logic brought about a “soft landing” for the booming economy, high growth rate and low inflation. The employment plan is centred around more direct foreign investment but with an equal emphasis on domestic investment. The Chinese see their own markets as a tremendous opportunity for manufacturing and services, giving as much relevance on the domestic markets as to exports. Direct foreign investment is very much in evidence, however it was quite apparent that while they were most welcome and were being given a number of incentives, unlike in Pakistan (and other Third World countries) they dare not dictate policy to their hosts — stepping out of line of their status as “honoured guests”. The foreign investors were certainly not happy with the situation, which they felt needed considerable improvement in many areas, yet most of the Multi-nationals (MNCs) represented at the Forum Meeting spoke about at least a US$ 1 billion plus investment by the turn of the century to improve of their present investment averaging US$ 500-600 million. More importantly their grumbling was in private and muted, they were clearly loath to give up this vast market.
The Pakistan Ambassador probably had a prior commitment because there was no official Pakistani participation in the Forum Meeting, almost every other country in the region was represented. It was depressing to hear a constant stream of dialogue about possible business participation between various countries and China, about Pakistan there was no mention, even though geo-economically we make a natural partner for the Chinese. It is clear that Pakistan does not enjoy the same pre-eminent position it once had with the average man-in-the-street, a far change from 1990, we have also missed the economic boat. While China has remained a staunch friend of Pakistan, particularly in times of need, there is a great danger inherent here, a whole set of Chinese leaders who had inter-action with Pakistan are now gone. While the Chinese have shown no inclination to give up on Pakistan as yet we must not remain complacent about the status quo, China does not need Pakistan as it once did. By turning exclusively to the west for commerce in the 70s and 80s, instead of tying up long-term arrangements with the Chinese, Pakistan lost a golden opportunity to be closely associated with the Chinese economic miracle. Everyone seems to make a bee-line for London and New York at the drop of a hat, how many go to Beijing and Shanghai, capitals of the new economic frontiers? Where once late Chou-en Lai turned to Kissinger during his historic (and secret) 1971 visit and said (about Pakistan),” do not forget the bridge you have crossed, you may have to use it again”, maybe it is time we politely reminded the fresh crop of Chinese leaders that Pakistan is that “bridge” that views a relationship with China as vital to its national security. While the Chinese still support us stoutly, we need an unambiguous economic initiative to cement that relationship.
We should send several public and private sector teams to learn from the Chinese in various disciplines, importantly also their on-going modernization of the Armed Forces. While we continue to have strong links with them as regards the defence industry, by studying and emulating their quantum leap in their Revolution in Military Affairs (RMA), we can save time and money while making the transition easier. “Go to China even to seek knowledge” so says a Hadith, to that end we should assiduously study the Chinese, to learn and emulate them wherever possible. We needed them geo-politically (and still do), we need them now geo-economically more!
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