BEIJING — The van careens through busy streets, blurring the crowds, the neon and the oversized buildings of this capital city.
Allen Fan, a Hong Konger turned Beijing entrepreneur, sits in back and recalls the way things used to be. When Fan arrived nearly 30 years ago, cars were scarce. Visitors had to apply to a government ministry to use a public phone. The extended weather forecast was a state secret.
“Those days, all you saw was opportunity,” Fan recalls.
His businesses include data storage and a moving company, though today it’s his restaurants and an upcoming yacht race that fire his imagination.
The van veers into the vehicular and pedestrian knot of historic Tiananmen Square. A portrait of Mao Zedong towers above the chaos and clicking of digital cameras. Traffic thins and Mao’s image recedes as the van passes a strip of shops and high-rise offices. Fan points to a Häagen-Dazs ice cream shop.
“Now everything’s changed,” he says. “If you’re not doing business in China, you’re missing out on the biggest market in the world.”
Next month, the People’s Republic of China turns 60. Mao, resting in his tomb in Tiananmen, wouldn’t recognize it. The most rapid modernization in history has turned the “Weak Man of Asia” into an economic darling with the world’s largest auto market and the most Internet users.
Much has been written in recent years about China’s rapid transformation into an economic behemoth. But to the first-time visitor, it’s still astonishing.
“They went to school on the rest of the world, to learn how to do business,” said Craig McMonigle, vice president for global procurement at Hallmark Cards.
McMonigle once oversaw Chinese suppliers from the company’s Hong Kong office. “And they were very good students,” he adds.
With that growth, however, come challenges. An unslakable thirst for energy. The most polluted cities on Earth. Legal and political systems that lag behind economic reform. And more than 700 million who still wait for globalization in the nation’s rural expanse.
Still, who could have predicted that China could jump from the 19th century straight to the 21st in just 60 years?
“The country was devastated by civil war, by war with the Japanese,” said C.H. Tung, a former Hong Kong chief executive who led the former British colony after its handover to China. “From the ashes, China rebuilt. That was in 1949. Think about it. What China has done in 60 years. It’s like a miracle.”
How do they do it?
Beijing’s skyline pits pagodas against skyscrapers, and the skyscrapers are winning. There’s the “seven star” high-rise hotel shaped like a dragon. The CCTV building, bent like a steel pretzel. The sleek China World Trade Center tower.
The most radical may be one of the smallest — the year-old campus of the Guanghua School of Management at Beijing University. Once, a business degree in China approached heresy, and perhaps was pointless. After all, no capitalism, no businesses to manage.
Once, top students joined the Communist Party and took government jobs. Now they get MBAs. Guanghua accepts 20 percent of applicants.
The small campus is equipped with a high-tech videoconference facility donated by Cisco Systems. The school’s Oxford-educated dean, Weiying Zhang, filled the campus with modern art.
Zhang still has occasional disputes with skeptical communist officials who control university funding and curriculums. But he is not deterred.
"I want to create a new culture,” Zhang said. “Business isn’t just about money. I want people to think. … We make our own change.”
Yet China’s thriving economy isn’t immune to the worldwide economic crisis. Joblessness is up, exports down. Millions who migrated to gold rush cities such as Shenzhen and Guangzhou headed home when factory jobs dried up.
Still, in the midst of recession, China this year still expects to post 8 percent economic growth.
How do the Chinese do it? The simple answer: 1.3 billion people working for low wages to make goods for Western shelves. The money slowly trickled down, and a middle class emerged.
More and more products stay in China as a consumer economy takes shape. That untapped market has companies — Chinese and American — forecasting decades of growth.
Take life insurance, for example. Less than 1 percent in China has policies. It’s a safe bet that number will rise.
“New York Life cannot suddenly tomorrow say it has 20 percent more business,” said Archie Tsim, chief financial officer at the Hong Kong stock exchange. “But in China, that’s possible.”
Many China experts, expatriates and business leaders say, with some irony, that the central government played the key role in this capitalist revolution. Without the give and take of democracy, an authoritarian government can move faster and more decisively.
“The communist government says, ‘This is what we’re going to do. Do it,’ ” notes Hoe Wai Cheong, managing director for Kansas City-based Black & Veatch’s Asian energy office in Beijing. “Sure, sometimes they make a wrong decision, but at least they’re making decisions.”
Consider: It took Washington more than six weeks to pass and enact the $787 billion economic stimulus package. China’s economic stimulus package — $585 billion going to infrastructure, earthquake relief, energy and water projects — was approved in seven days.
Globalization seems a world away on the dusty dirt roads of Inner Mongolia, a semiautonomous area in China’s north.
Here peasants live in cavelike homes dug into hillsides and grow sunflowers, sorghum and corn. Some work in coal mines. Discarded beer bottles pile up by the thousands in front of homes. The glass is too valuable to throw away.
More than 700 million Chinese — more than twice the U.S. population — live in rural areas. Many are moving to cities to claim their piece of the China miracle.
In Inner Mongolia, that city is Hohhot, population 3 million. It is a center for agriculture and energy production, wind farms and a large dairy. Vice Mayor Liu Ju Ru said Hohhot has a hard time keeping up with the new arrivals.
“It’s moving very fast,” she said. “We are building schools, hospitals and a second highway ring road around the city.”
If growth continues, by 2025 China will have added 350 million to its urban population, according to a report by McKinsey Global Institute. It will build between 20,000 and 50,000 skyscrapers, the equivalent of four to 10 New York Citys. McKinsey’s forecast predicts that by 2025, China will have 230 cities of 1 million or more. Today it has 118.
But the Chinese government estimates that it must create 24 million jobs each year to avoid unemployment problems and continue growing.
“That’s the size of an entire new country, every year,” said Wang Shuai, a diplomat with the Ministry of Foreign Affairs’ U.S. office. “We realize we have a long way to go.”The cost of breakneck growth, however, is on display outside any Beijing window.
A yellow-gray fog dims the sun and obscures the skyline. A sour, rusty odor hangs over everything some days.
According to the World Bank, China has 20 of the 30 most polluted cities in the world. It is also the world’s top emitter of carbon.
Then there is the shortage of fresh water, soil erosion, polluted rivers and threatened wildlife.
“The environmental problem in China is very serious,” acknowledged Jia Feng, an official with the Ministry of Environmental Protection.
Like the U.S., China is reluctant to adopt tougher rules on carbon emissions for fear of hurting its economy. But China is taking steps to curb its use of fossil fuels. The government has poured money into research into solar power and electric cars. Old coal plants have been replaced with newer, cleaner ones.
Outside Hohhot, Zheng Jian Jun stands in the control room of a state-owned wind farm and proudly examines a schematic of various turbines — several built by U.S. companies. The first wind farm in this area opened in 1996, the newest one just the day before.
“I am bringing a clean world with a blue sky, white clouds and beautiful generators,” said Zheng, the plant’s manager.
Zheng noted that some private energy companies outside China are still skeptical about the economics of wind power. In China, he said, that is not a problem because the central government has made wind energy a priority. China hopes to be the world’s leading user of wind energy within 10 years.
Zheng’s wind farm also doubles as a tourist attraction — the grasslands under the turbines are protected; visitors hike or ride horses in their shadows.
But not far away lies China’s largest open coal pit, a gaping maw the size of a thousand football fields. It dwarfs the huge trucks carrying coal to the adjacent power plant. Most of the energy serves Beijing’s 17 million citizens.
China now uses more coal than the U.S. and European Union combined and emits more carbon than any other nation. It builds, on average, one large coal plant weekly.
‘We need each other’
Great powers often grow nervous when a new challenger appears in the ring. The U.S. is no different, said Denny Roy, a U.S.-China security expert at the East-West Center.
“We have this question of whether the U.S. can make room for China,” Roy said. “China’s not really a communist country. But that perception — Red China — as long as they call themselves the Communist Party, it’s hard to get past this.”
Notably, China has increased its defense spending by double-digit percentages every year for a decade. The U.S. still spends nearly 10 times more. China has no overseas bases and a limited nuclear arsenal. Only this year, China announced plans for its first aircraft carrier.
Officials in Beijing are quick to dismiss any speculation about potential conflicts.
“The multipolar world should be a world of multiple partnerships,” said Chinese diplomat Wang Shuai. “Our fate is not necessarily confrontation.”
McMonigle, the Hallmark executive, agrees, but for more pragmatic reasons.
“China and the U.S. are so important to each other, I don’t think we could allow a major issue to get in the way,” he said. “At the end of the day, we need each other too much.”