Post No. 39b: And So You Thought That America Only Had to Worry About China's Ability to Make Things

Article of Interest from the New York Times:

August 31, 2008

Op-Ed Columnist

Postcard From South China

By THOMAS L. FRIEDMAN
Guangzhou, China

I had the pleasure the other day of visiting the delightfully named Zhuhai Guohua Wonderful Wind Power Exploitation Co. in Zhuhai, on the southern coast of China. It’s a good news/bad news story.

The good news was that the Chinese engineers showed me their control room, which has a giant glass window that looks out onto their 21 wind turbines that crown the peaks of a nearby mountain. “How nice,” I thought. “China’s really starting to go green.”

But as my eye drifted just to the left of that mountain, I saw Macau, with its rising skyline of casino skyscrapers. The Venetian Hotel in Macau alone has some 870 gaming tables and 3,400 slot machines. So, I did a quick calculation and figured that those 21 wind turbines together might power the Venetian’s army of one-armed bandits for a few hours of green gambling.

That dichotomy runs through a lot of what is going on here in Guangdong Province, where 30 years ago China began its economic opening. You’re starting to see the emergence of Chinese clean-tech companies — I also visited a solar panel start-up — and real environmental awareness among officials and students. But the momentum of this region’s growth, the sheer land-of-the-giants scale of the buildings, makes the renewable energy here literally a drop in the bucket.

As a result, there is a dawning awareness that if China is to break its own addiction to oil, it will take a much more fundamental shift from the growth model that powered its first 30 years.

That model was based on two linked ideas: 1) energy was inexhaustible, inexpensive and benign; and 2) China could count on raising its living standards by forever being the world’s low-cost manufacturing workshop, based on cheap energy.

In recent years, though, fossil-fuel energy has become expensive, exhaustible and toxic, and rising wages — to some extent because of rising environmental considerations and social security requirements — have meant that the workshops of southern China are no longer the low-cost producers in Asia. Vietnam and Western China now beckon.

The only way forward, say officials, is for China to gradually develop a cleaner, knowledge-based, service/finance economy. It has to move from “made in China” to “designed in China” to “imagined in China.”

In short, the economy here has to become greener and smarter. (Sound familiar?)

In 1992, China’s coastal economic powerhouses hit a similar wall when they found they could not grow further without the government loosening travel restrictions to attract workers from all over China. So, more personal freedom to move around China was unleashed then. Now, these same provinces need to allow more “mind movement” to get to the next level.

The problem for the ruling Communist Party is this: China can’t have a greener society without empowering citizens to become watchdogs and allowing them to sue local businesses and governments that pollute, and it can’t have a more knowledge-intensive innovation society without a freer flow of information and experimentation.

What surprised me is how much the party is thinking about all this. I actually came here at the invitation of Wang Yang, the Communist Party secretary, i.e. the boss of Guangdong Province. He had read one of my books on globalization in Chinese.

Wang is also a member of the Politburo in Beijing and is considered one of the most innovative thinkers in China’s leadership today. He has been given room to experiment and has begun advocating something he calls “mind liberation” — primarily an effort to change the culture of his bureaucracy and open it up to new ways of thinking. Right now he is focused on trying to shift dirty, low-wage manufacturing out of Guangzhou to the countryside, where jobs are still scarce.

And he is trying to attract clean industries and services to the city. His goal, he said, was a more “low-carbon economy.”

“Please put it in your column that Party Secretary Wang Yang welcomes [Western] clean energy technology companies to come to Guangdong Province and use it as a laboratory to develop their products,” he told me. “We will be most willing to participate in the innovation and provide the services they need.”

So my postcard from Guangzhou would read like this: “Dear Mom and Dad, this place is so much more interesting than it looks from abroad. I met wind and solar companies eager for Western investment and Chinese college students who were organizing a boycott of an Indonesian paper company for despoiling their forest. An ‘Institute of Civil Society’ has quietly opened at the local Sun Yat-sen University. The Communist Party is trying to break the old mold without breaking its hold. It’s quite a drama. Can’t wait to come back next summer and see how they’re doing ...”