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Richard Attias

Richard Attias

Posted: March 9, 2011 12:22 PM

A New China: Playing by the Global Rules of Engagement


In recent years, China has often been cast as an unstoppable force, determined to fuel growth on its own terms, at any cost. But based on my recent trip to China, were I met with a range of private and public sector leaders across 6 cities, it's clear that the reality inside is quite different than the view from outside. A new China is emerging -- one that is strikingly more responsive to what's happening outside its borders. Here are just a few trends I noticed along those lines:

Green Growth: As the number one carbon emitter in the world, China is often characterized as anti-environment, but I was surprised to note that green energy is far more mainstream there than in the U.S. This is a trend that manifests itself from the grassroots to the top levels of business and government. In cities like Chonq Qing, for example, 80 percent of the motorbikes in the street are electric. But on a larger, national scale, China is now the world's top investor in alternative energies, and nearly every new industrial project in the country integrates green technology.

While a key driver is a new focus on environmentalism, it's also about growth, cost and competition. As the New York Times recently reported, China plans to unveil a five-year national energy conservation plan in the coming weeks. From the initial sketch, the plan seems to be very much a response to external market forces -- China sees that rising oil prices could compromise their economic competitiveness and national security, and are adapting to that reality.

Innovation and Intellectual Property: While China is well known for its manufacturing prowess, it is less so for research and development -- until now. In November 2010, China launched their National Patent Development Strategy -- a plan that aims to double the number of patents to reach 2 million by 2015. As a result, China is expected to surpass the U.S. in patent filings this year. With this plan, the country is making strong moves to begin fostering innovation and entrepreneurship -- capabilities that are integral to sustainable, long-term success on a global scale.

This move has interesting implications: Building a patent culture is not just about growth, but also about sending a strong message to those who have doubted or even challenged China's commitment to intellectual property rights in years past. Based on my discussions with the National Copyright Administration, it's clear that the current leadership understands that improving China's track record -- particularly with major global players like Microsoft and Apple -- is critical to being viewed as a responsible business partner. The Copyright Administration is making moves to legally, economically and culturally align with the global "rules of engagement," demonstrating further bending to global trends.

Cultural Exchange: Throughout history, China has been a markedly closed society, but with the country's growing global influence, this too is starting to change in a major way. One of the first glaring signs came in 2008 with the opening ceremony of the Beijing Olympics. That four-hour performance was a demonstration of intense commitment to introducing Chinese culture to the rest of the world. More recently, when President Hu Jintao made his state visit to the U.S. last month, China launched an unprecedented ad campaign in Times Square and on global broadcast networks to show the face of the Chinese people.

While there is still a long way to go to break down the walls that have kept the outside world away, I think we are seeing the start of a new willingness from China to engage foreign audiences on a human scale and make the country more accessible. This trend is the foundation of the "China 360" project that I am developing in partnership with the China Center to promote Chinese cities that the West knows little about, from Tanjin to Chongzu in western China, that are becoming major centers of growth and influence in the country. These cities have the ambition to become "the new Shanghai" and have potential to go even farther because they're developing in a holistic way -- becoming centers of business, culture, education and talent.

Engaging Beyond Borders: Finally, because my trip coincided with the unraveling of political regimes across North Africa, it was hard not to notice a shift in China's geopolitical posture as well. While the Asian superpower has never been viewed as a major actor in international crises, its quick move to send a Navy warship to Libya in late February to evacuate 30,000+ of its expatriate citizens caught many by surprise. This was the first time in history that China has supported a civilian evacuation on this scale.

The government then followed with a somewhat surprising agreement to back UN sanctions in Libya on the grounds of human rights offenses. These moves point to the fact that China is now an intertwined political and economic player with immense commercial interests in the region and large volumes of citizens living abroad. China recognizes the stakes they have in the global economy, and their actions in the Middle East show a new willingness to get involved to protect them, even if that potentially exposes them to political risk for domestic policies. It will be interesting to see what long-term implications this has.


Overall, I believe China's actions signal an understanding that the only way to achieve strong, sustainable growth is to effectively operate on a global scale, which means adapting to the ways the outside world works. As recent events have demonstrated, no country can afford to isolate their markets or their people from the rest of the world. Rather than walls to keep ideas and investment out, successful markets need to build pathways in, and the winners will be the doers. China still has more to go in that direction, but it's clear that its strength and promise for the future is this ability to bend and respond to the directions in which the world at large is moving.

 
 
 
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07:55 PM on 03/16/2011
China's switch of emphasis for its companies from being fast imitators to frugal innovators through government-guided R&D development plans in the new five-year plan has profound implications for Western companies as their Chinese competitors will be going through a phase of process innovation, which plays to their strengths, before they become cutting edge technology driven innovators. That will make the country's emerging multinationals fierce competitors. We have written about this in more detail at http://wp.me/p5IOc-1kw.
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gc10ike
09:23 PM on 03/10/2011
I will making another trip to Chengdu, Guangzhou, and Hainan, the end of the month my 6th so far. I usually spend a couple of months each trip. I concur with all of your observations. I one thing I would like to emphasize the accelerated pace at which China is moving. Unfortunately, not many of our citizens have grasped this yet. While too many of our elected representatives are playing political power games, China is steadily moving into the 21st century with gusto and we will be sitting on the sidelines. Human rights will come too. In the meantime I suggest Americans start getting our own house in order. As Al Nava wrote below:" China should be the dominant Super-Powe­r nation by about 2025. I strongly recommend learning Mandarin Chinese. " And in my view we may have already lost the battle for the future as pplseans notes below. If anyone here has not yet visited China, please do so at your earliest opportunity.... you'll not be disappointed.
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dbrett480
12:04 PM on 03/10/2011
It's amazing how easy it is to gloss over insane human rights abuses.
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Al Nava
Working-Class & Progressive Revolutionary Leader
10:18 PM on 03/09/2011
China should be the dominant Super-Power nation by about 2025.
I strongly recommend learning Mandarin Chinese.
photo
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Shaun Hensley
The American Experiment has failed
03:01 AM on 03/10/2011
Pass.
05:53 PM on 03/10/2011
There are more folks learning English in China than there are English speaking people in America. By 2020, there will be more bilingual (Chinese/English) people than there are people in America, competing for the limited number of top positions around the globe. What are your (and your children's) chances if you do not know Chinese?

Those are facts.
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Shaun Hensley
The American Experiment has failed
06:24 PM on 03/10/2011
There have been more Chinese speaking people in this world than English speaking people for my entire existence on this planet. Still I pass.
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kamact
Market Observer
09:54 PM on 03/09/2011
You think you know what you saw and heard,...but,...
07:53 PM on 03/09/2011
In a way, china is doing something that america can't. it is evolving as fast as the market and political environment is. let's face it, as much as we all love america. china is beating us at our own game. they are using their 'no dialogue needed' decision making to win the economic landscape. mass information and partisan bickering will turn us into ever fighting, no decision making high scool clicks only interested in winning the moment and not long term results. I hope you love reminscinging your past, because outside of military power and entertainment, we have lost the battle for the future. you can look forward to a future like mexico has except we will have better homes.
05:15 PM on 03/09/2011
Cultural Exchange:
In most of the international operations carried out by Chinese state run firms Chinese employees are imported to complete even the most unskilled work. A small number of locals are typically only employed for security jobs and there is little to no contact between workers and locals.

http://chinabystander.wordpress.com/2009/08/07/backlash-against-chinese-workers-in-africa/

Engaging Beyond Borders:
After agreeing to sanctions on Iran China has become more actively engaged in the Iranian economy than ever. From their perspective supporting sanctions was an smart economic move as it forced competitors out of the country. This action in itself has undermined the entire international committment.

http://www.speroforum.com/a/49531/CHINA--IRAN---Sanctions-helping-China-do-business-with-Iran
04:57 PM on 03/09/2011
Green Growth:
No matter how you twist it China is the largest polluter on the Earth and also the fastest growing polluter. Behind the greenwashing shown to convince foreigners they care about CO2 emissions they are building a coal fired power plant every single week. True they may want to get away from oil because supply is limited and they don't have a lot on their territory, but they have enough coal to power themselves for over 100 years and show no sign of slowing down consumption.

http://canadafreepress.com/index.php/article/28051

Innovation and Intellectual Property:

China is and has been for a long time the largest source of counterfeit goods in the world accounting for as much as 80% of all counterfeit goods by some studies. It also has been identified as the source of many recent hacking attacks primarily targeting major American companies to gain intellectual property. Finally, they are introducing rules to effectively force foreign companies to develop and hand over intellectual property to China to sell in their market.

http://www.eubusiness.com/news-eu/customs-counterfeit.5nk
http://www.businessweek.com/news/2011-03-08/hacking-of-dupont-j-j-ge-were-undisclosed-google-type-attacks.html

There may have been very small steps in the right direction but the problems are so large that what's been done so far has had very little real effect.
06:00 PM on 03/10/2011
If China is the biggest generator of CO2, at least it is spent on PRODUCING things that the rest of the world can use. Moreover, on a per capita basis, China is about 1/4 that of America in terms of emissions. WHAT is your lame excuse again?

China is and has been for a long time the largest source of ALL goods to the world, if you have not notices.

If you have PROOF of hacking, note that China actually SHOOTS hackers. You are welcome to bring action in China to enforce your rights, if you have any. That is the rule in all countries. Laws do not enforce themselves. Those who are allegedly aggrieved have to take action.

Ingrate Schizophrenic rant is what this sounds like, you know. You badmouth the Chinese all day long, yet it does not stop you from enjoying the higher living standard brought by a quarter century of well priced Made in China goods (which, experientially, had been the ONLY effective poverty alleviation program in America for a whole generation), or from enjoying the low interest rates (and thus rising asset prices) from China's recycling of the trade dollar.
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gc10ike
09:44 PM on 03/10/2011
Well put Zhuubaajie. the ignorance of Americans concerning the world outside its borders is embarrassing, and never so much as concerns China:
harlie Rose had John Mack, Chairman of Morgan Stanley on his show (1/21/11) talking about China:
Charlie Rose had John Mack, Chairman of Morgan Stanley on his show (1/21/11) talking about China:

Mack:" What the Chinese want, I think, is a better understanding, having the U.S.
really understand what they’re trying to do. I was there in December,...and I had a discussion with one of the vice premiers, and he talked about our congressmen, our senators coming to visit him and talking you know, you should be doing this, you should be doing that. And after a while, he said "excuse me" -- this was a senator --
"excuse me, Senator, how many books have you read about my country?" And he said none. Of course I start saying how many have I read? At least I have
got five.

He said, "I’ve read over 100 books about your country. I know something
about your culture, but I’m not an expert. To come and preach to me what our country should do when you really don’t have an understanding I find very resentful."

I think what they’re looking for, clearly, is a better understanding, and
you cannot take, you know, that society, that culture and make one or two
visits. We need to spend time learning"
12:58 AM on 03/11/2011
It doesn't matter how the energy is being used, the Chinese government makes the rules in China, they choose a path of excessive carbon use, it wasn't forced upon them. I never said America was doing a great job at curbing emissions, I said China is the world largest polluter which is a fact and it is adding CO2 intensive energy generation, via one coal fired power plant per 10 days, faster than any other major country in the world. At this rate China will be producing more CO2 than the entire world is currently producing in just 20 years from now.

Personally I would prefer a total ban on Chinese imports and I think many Americans would agree, our trade arrangement with China has been overwhelmingly negative for the health of our job market and intellectual property.

I have criticized America plenty of times for our poor banking practices, tax structure, political misinformation, anti-American corporations, and health care environment and our country takes more criticism than anywhere else in the world. You may love China but not everyone believes China is having a positive influence in the world, so live with it rather than dishing out personal attacks against those who don't follow the party line.

The Chinese attack on all forms of criticism shows we're still dealing with an insecure repressive regime:
http://www.bbc.co.uk/news/world-asia-pacific-12619957
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gc10ike
09:27 PM on 03/10/2011
Yes, like the man said, they have a ways to go. But the U.S. on the second highest emitter of CO2 behind China with only 310M vs. there 1.3-1.7B people. My observation is that China is evolving and doing so at light speed.
01:05 AM on 03/11/2011
The only thing that matters is absolute proportion or emissions per land area if you prefer, if you care about the environment impact. While American emissions have leveled off, Chinese emissions are going through the roof and in 20 years, at the current rate of emission, they will produce more than the entire world currently produces. America has a long way to go but all our emissions have slowed way down on a per land area measurement; even if we do make cuts they will be absolutely meaningless if China, a country that already produces much more CO2 than us, continues at the current or projected pace.
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04:23 PM on 03/09/2011
If you pay attention artictleof huffpost all the points around China are;
1)One of the principal reasons that China has been so successful economically over the past 20 years is that it has not picked a fight with the United States
2)It is also true that China does not have the military wherewithal to take on the US.
3)The HISTORY of great powers offers a straightforward answer;
and my answer is China will try to push Americans out of Asia and dominate the region , and if it succeeds, believe me it will be in an ideal situation to deal with Taiwan, on the other hand i doubt that china could push the United States out of Asia.,
The bottom line is clear .Do not think China's rapid growth is either extraordinary or flash in the pa.it's neither ,both the social ,political, obstacles to china's rapid growth are c o n s i d e r a b l e,now and the past(see west onthe coast,commerc)China economic boom could well be in its middle,no way black and white a little of grey,not its end.The only thing certain about china 's political risks is that they are on the rise, and that reality is hardly a thing of beauty (see hoffpost)
ps don't be upset i love NY than Michigan.
10:05 PM on 03/09/2011
[ 2) It is also true that China does not have the military wherewitha­l to take on the US. ]

Sun Tzu: The Art of War

Therefore, to gain a hundred victories in a hundred battles is not the highest excellence;

to subjugate the enemy's army without doing battle is the highest of excellence. ?

Therefore, the best warfare strategy is to attack the enemy's plans, next is to attack alliances, next is to attack the army, and the worst is to attack a walled city. ?

China needs only to have the capacity to deny the US military the ability to act against China in her home ground. This capacity is already in place.

--------------------------------------
The US and EU market is mature and unlikely to grow much further. China's phase of growth at any price is over. It is now time to consolidate past gains and to use the opportunity to improve the environment for the country. Rather than assuming that China is putting up Potemkin villages think of China just thirty years ago as a dark and gloomy place where everyone was poor and deprived. The glittering cities and infrastructures have been put in place only over the last twenty years. The rest of the country will have the opportunity to follow suit over the next thirty to fifty years.
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gc10ike
09:30 PM on 03/10/2011
Excellent points with which I concur.
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Anabelle Lee
03:01 PM on 03/09/2011
So you will profit from promoting Chinese ghost cities. I would wish you luck on that and their innovative (?????) liquid salt reactor, but they are an authoritarian regime that supports the rulers of the DPRK, Myanmar, and Iran, as well as constantly harassing neighboring nations with clear plans to steal those natural resources. :P
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Bishop999999999
01:57 PM on 03/09/2011
China's urban areas put on a good show for the tourists, but the reality of the situation establishes itself once you get out into the countryside amongst the peasants and factories. Take a look:

http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/
06:06 PM on 03/10/2011
It is a glass half full scenario. IF China is already all fully developed, where would be the opportunities for further growth?? It is exactly the challenge of bringing the rest of the nation (the other 60%) into the fold of modernization and urbanization, that really test the mettle of the leaders. China's leaders have shown themselves to be farsighted, capable, and dedicated. If the trend continues, it'd be yet another 50 years of almost double digit growth.

Have you ever experienced a DOUBLING of living standards ever 7-8 years? Try it some time.
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gc10ike
09:47 PM on 03/10/2011
Yes, and you see it in the faces of the people. they are excited about their future. they have a growing self-esteem, after feeling dissed for centuries. I am happy for them.