China and the New World Order:
How Entrepreneurship, Globalization, and Borderless Business are Reshaping China and the World (Book Excerpts)
by George Zhibin Gu
Foreword by William Ratliff
Publisher: Fultus; October 2006; 248 pages
(TAKEN FROM WWW.FINANCIALSENSE.COM)
A New World Order in the Making？
Is a new world order in the making? The answer: yes. Up to now, only about 20% of the world's people have attained solid development, growth, and modernity. Now the rest are catching up at an unprecedented speed. This sudden surge in so many late developers suggests a brave new world in the making.
Several Key Changes
Huge changes are happening, within a vastly expanded sphere for all people and nations. We can identify four in particular.
First, wealth making through industrialization and commercialization has become a universal thing. For a long time, products made in the United Kingdom, the United States, and Germany dominated global markets. Today, products made in China, Mexico, Vietnam, and Indonesia, among other developing nations, are increasingly flooding the world, changing the global production map again.
Behind this changing map, interestingly, many poor nations have rapidly taken on active roles in the global economy. But their biggest weapon remains low-cost labor, which provides a working platform for cooperation and sharing between the rich and poor nations.
Today, most developing nations are extremely limited in resources and strengths. Hence, for them, this cost gap is a survival gap. In fact, other than cheap labor and hard work, they have few advantages. However, it turns out that low labor cost and hard work do make a difference.
For now, manufacturing activities, especially in the low end of the value chains, increasingly shift to the poor nations, while the developed nations focus more and more on a service and high-tech-oriented economy. This giant change, though only beginning, will impact the future world economy even more.
Second, all regional markets are connected to each other. Interdependence is opening up the old national boundaries dramatically. Most profoundly, the flows of capital, technology, goods, and people have reached a new level. Moving from survival of the fittest to rational collaboration and sharing, life on the earth will never be the same again.
Third, wealth making has gained a record-high status. Consequently, old ideology is lost to the new economic waves. This is a truly golden age for capitalists anywhere, who can reach all corners of the world for the first time in human history.
Multinationals are gaining unprecedented power in shaping global life. Their share of trade approaches 50% and is still on the rise. Actually, they are warmly courted by all nations, rich or poor. Courting them has become a high art for all governments. The new picture is this: Incentives move the world-not politics, not ideology, not empty words.
Fourth, hundreds of millions of ordinary people everywhere have joined the entrepreneurial army. Starting a business is no longer for the privileged few as in the past, especially in the developing nations. Furthermore, individual private initiatives are undermining state domination especially in many less developed nations. This is hugely significant especially given that traditional bureaucratic powers in many developing nations have been strong and abusive.
Above all, such changes have happened within a short time, which is possible only in an increasingly globalized world. Naturally, more consequences will follow.
Interdependence and Beyond
The sudden surge in late developers is bound to create ripple effects. Since well over 5 billion people are involved, development in these countries will be much more influential than ever before.
But this new growth for most late developers started from extremely low levels. As a result, achieving full development, growth, and modernity will take a long time. At present, China and many other late developers are still bogged down by countless mighty problems, which make transitions very painful to say the least.
Still, there is no way to overestimate the role of the developed world in what is happening. After all, the existing world order is centered on the developed nations. They collectively control most wealth and the biggest markets. As the pie expands, the few rich nations are the biggest beneficiaries. What is more, they continue to act as an engine of growth as well as a catalyst for change. Without doubt, the developed nations will continue to exert the biggest influences as time passes.
All things considered, the late developers should continue to learn from the developed countries, whose experiences and lessons are relevant in countless ways. After all, development is a human issue. In many ways, what is happening inside the developing nations simply follows the growth trails of the developed world.
For a long time, the idea of learning from the early developers did not get enough attention or even was rejected. Now, more people realize that development experiences are of universal value; this represents a basic change. It is this new spirit of learning that has directly promoted quick growth in many late developers. China is one example of making progress through learning.
Challenges are plentiful as well. The vast development gaps remain a key challenge. New conflicts emerge everywhere. As one example, trade friction has increased sharply even though record-breaking trade has brought unprecedented opportunities and prosperity. To handle trade disputes, nationalistic protectionist measures are still widely used, and there is still a strong Cold War mentality.
Furthermore, the vast economic gaps have produced more adverse consequences. In particular, some extremists wish to address their woes by employing violence. The terrorist acts in New York City and London took place largely in this environment, showing, among other things, the urgent need to close development gaps.
Only after the underdeveloped nations gain reasonable growth and prosperity will the world walk out of the old traps of poverty and conflict. As a Chinese saying goes, "The way to protect the rich to the fullest is to help the poor gain a better life." Indeed, with a more progressive mindset, the developed world would be able to make more contributions to global development in the next stage.
Despite all the imperfections, the convergent movement of global civilizations cannot be reversed. A new world power balance will have to replace the old one. Furthermore, this new world order will emerge gradually and most likely indirectly. This is so simply because military conflicts in the old style will no longer do nations any good. Indeed, as more developing nations achieve progress, life on this planet will be more peaceful and rational.
This Small Book
This book examines China's new lessons and their implications for the world. The aim is to identify the key factors that will promote more positive changes for China and for peoples everywhere.
Despite all the changes, China's fundamental weakness is still the overextended, self-appointed bureaucracy, which is inherently self-serving. Moreover, countless government officials employ the unchallenged state power to enrich themselves. In the past five years alone, some 200,000 corrupt officials have been arrested. Unlimited bureaucratic power is the mother of corruption.
To abolish this massive bureaucracy remains the number one task for the Chinese civilization. To move ahead, China must rebuild its government, society, and economy completely. So far, China has taken the very first step, the most significant one, in this brave new direction. Getting the job done remains a mighty task.
When I wrote this book, I had two convictions. The first was that studying China's new development in relation to global development might help one better understand our changing world as well as opportunities and challenges in the new century. The second conviction was that the lessons from China are universally meaningful, for they concern people's lives as well as development issues. Above all, development is a global issue that affects lives everywhere.
This book consists of 26 chapters, which are organized into eight parts:
I. China's New Role in the World
II. The Yuan, Trade, and Investment
III. China's Fast-Changing Society, Politics, and Economy
IV. China's Banking, Insurance, and Stock Market Reforms
V. Chinese Multinationals vs. Global Giants
VI. The Taiwan Issue: Current Affairs and Trends
VII. India vs. China: Moving Ahead at the Same Time; and
VIII. The Japan-China Issue: Evolving Relations in Light of History
Author George Zhibin Gu is a journalist/consultant based in China. He has written three other books: 1. China’s Global Reach: Markets, Multinationals and Globalization (Fultus, 2006); 2. Made in China: National and Business Players and Challengers under Globalization and Capitalism (English edition forthcoming, 2007); and 3. China Beyond Deng: Reform in the PRC (McFarland, 1991)