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The Dragon Decoded

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When French president Nicolas Sarkozy spoke to Chinese premier Hu Jintao last week seeking support for the Eurozone rescue fund, it evoked two kinds of public responses. While one set of observers felt help from a stable economy such as China could boost the efforts, several others found the move "shocking". The feedback explains the world's Freudian relationship with the Red Kingdom. In <<China Inside Out>>, Bill Dodson, a China-based consultant, presents a realistic take on the country. Going beyond the typical growth and infrastructure story, he shows how certain issues impact China's growth and its relations with the world. Astutely written, it covers the human side of the China story.

India's citizens have a myriad of perceptions of China — dictator, aggressive competitor, belligerent and unpredictable, etc. Admittedly, a number of these have some credence; not all though. On that cue, Dodson's book is an eye opener. It tells you, among other things, some of the issues the country faces are quite the same as ours — corruption, absenteeism, an ‘America looking' middle class. But what is more interesting is how Dodson uses human stories to illustrate larger factors that impact China's development and its relationship with the world. He starts by showing how the Web has helped people (China has 400 million netizens) override an omnipotent state. Two prominent examples are Human Flesh Search, the method of identifying erring officials and forcing the government to take action, and Mud Grass Horse, a play on words that cocks a snook at censors. The government does react by turning the Web off, blanking out sites and arresting bloggers, but in several cases, the sentiment is such that it has to back off and listen to the people.

There are, of course, issues impacting China's growth: rampant and devastating pollution, which it "will take generations to recover from", a stressful medical system, under-development of a service economy, a restrictive permit (hu kou) that controls movement of property. It creates a large, migrant underclass that works illegally and in appalling conditions in urban areas, distinct differences between urban and rural China, and the enormous investments in infrastructure (82 per cent of the population will be within a 90-minute drive from an airport by 2020), which will result in greater mobility and possibly the breakdown of the current power structure along with the creation of a more affluent and homogeneous Han middle class.
The growth has also prompted China into buying world's mineral resources (in South Africa and Australia) and arable land (Africa, Indonesia, etc). China uses half the world's cement, a third of its steel, a quarter of its aluminium and just over half the supply of rare earth. The "world's factory" has a huge appetite, and water might be its most critical resource. Soon, we will see a stronger and more assertive China — in economic terms, in dealing with the West, the rest, and global institutions, and in our neighbourhood (possibly in military terms.)

Dodson says the new China will need to work out the internal power equation and issues for the large, emerging middle class. Already, smaller markets far from the coast are being developed, resulting in affluence reaching inner provinces and making labour expensive in the more developed coastal areas. Developing a non-polluting, sustainable model along with a service industry might well be the solution for a progressive and peaceful China. The resource need will only make China look outward.

(This story was published in Businessworld Issue Dated 14-11-2011)