Michael Melnick

China’s rapid rise as an economic power has given rise to a lot of mixed feelings about a country that should be a close ally.  One of the factors behind their extreme competitiveness is clearly a unique public-private partnership that for all its faults can turn on a dime and rapidly advance the country in strategic areas like alternative energy.  Another critical factor has been the unleashing of one of the most entrepreneurial cultures in the world.  

In the past in thinking about Asian competition, we in the US have often fallen back on the idea that while Asia has an advantage in terms of low cost manufacturing, the US still has the best scientific minds and a unique entrepreneurial culture.  That idea increasingly seems like a luxury we can no longer take for granted .  Clearly the Chinese are investing heavily in a first class R&D base, and have brilliant scientists, first rate engineers and an entrepreneurial culture second to none.  Fire in the belly doesn’t begin to describe them; the Chinese phrase “chi ku” or ability to “eat bitterness” comes closer in terms of how badly they want success and what they are willing to go through to achieve it.  And if they are willing to work that hard for it, they deserve it. 

A historical perspective is instructive in that the injustices the Chinese endured in the past at the hands of the UK, US and other colonial powers have bred an acute sensitivity to relationships of imbalanced power and an emphasis instead on relationships of “mutual benefit.”  Realpolitik aimed at keeping other world powers relatively weaker, which found only its most recent expression in the Bush administration’s foreign policy, runs counter to this idea. The Chinese have clearly earned a bigger piece of the world economic pie.  The Chinese leadership will have its hands full ensuring that economic benefits are spread equitably enough in their country not to threaten their long term stability.  But in the meantime, China’s leadership has made the most of China’s perhaps greatest asset, their entrepreneurs, our kindred spirits and even examples. 

After having extolled the virtues of the market for so long we should applaud the latest winners.  Recent examples include China’s prescient investments in the solar industry, where they recognized opportunity before it became fashionable here and took a longer term view than many in the west; and China’s leading role in transformation of the automobile industry, breathing life into old brands with new technology, not just cheaper manufacturing.