The devastating financial crisis that erupted in 2008 has divided the world into two distinct landscapes: on one side, mainly USA and Europe, suffers widespread debt mess and obstinate economic contraction, while on the other, primarily China, other members of BRICS and the Far East, enjoy continuous striking success in economic growth.
In a globalizing world where countries become increasingly interweaved with each other, what matters is how and with whom to bond. In other words, even if we are living in a real time connected world, each country has to live different situations.
An example in point is China, whose GDP variation rate in the last quarter of 2011 is once again better than expected. At a time when Western economies near stagnation. We can easily conclude that the problems to be solved as well as the opportunities to exploit are quite different.
After almost 30 years of extraordinary growth, China is exposed to a new chance. At the moment, it can be catalogued just like chance, but soon it could become a necessity. China’s glorious achievements is built on its industrial output, infrastructures investment and exports which are characterized by energy and labour intensive sectors at the expense of environment. Most recently, the Central Government of China determined to drive up its GDP with a grand new method. Besides stimulating the domestic consumption demand, Beijing revised the Catalogue for the Guidance of Foreign Investment Industries, encouraging foreign investment to involve in technology intensive and high added-value sectors as well as green industries, restricting some heavy pollution or labour intensive ones. Sticking to the regional coordinated development strategy, the Government means to channel more investments into western regions.
However, even if there will be some changes with the assistance of foreign investment, China will not give up any opportunities to become a superpower in the world and will continue to concentrate all the efforts on economic development and speed up (as more as it’s possible) the growth rate (our modern totem!).
Another interpretation key could be used. Currently China is the only country in the world that has sufficient capital to initiate a new economic model and usher in a new era of wellness: a shift from a quantitative growth model to a qualitative one. Considering China’s geographical dimension and huge population, it will be a disaster for the earth if China tries to achieve the same consumption model as the western countries after the Second World War. Just an example: if Chinese citizens want to catch up with the vehicle ownership of European, China will need another over one billion of cars. It’s impossible to build a traffic network that is able to keep that number of cars. So China needs to study a different model of mobility. This example can be easily applied in other situations.
China has the possibility (that is also a necessity in my opinion) to explore a new model of improvement (please note: not growth but improvement), which is to be compatible with environmental protection and efficient use of valuable resources with the goal to improve people’s welfare and wellness. China could achieve a Schumpeterian advantage to be the first to apply its new growth model. This, I guess, shall be “the challenge” for China during the coming new Dragon year.