Introduction

This is an exciting time to be alive. The world has finally become a small place-a "global village" indeed. New York and Beijing are only 16-odd hours apart. A man steps onto the airplane for breakfast and lands on the ground just in time for dinner. How could any na-tion avoid globalization?

China is moving, finally! Dramatic changes have swept over Chi-nese life. Today the average Chinese lives in an environment domi-nated by openness, competition, and challenge. Engagement with the outside world has become a national passion. China has finally landed on a right path.

All in a sudden, China has emerged to become a global theater. Its new growth has directly involved the entire world. Furthermore, its fast-expanding pie is becoming a "growth engine" for the world de-velopment. All this was unimaginable only a short time ago.

Three New Lessons

How could this myth-filled, isolated land have become open and dynamic within a short period? Why has the outside world taken huge interests in its new life? Up to now, China remains a myth not only to foreigners, but also to the Chinese. To me, three new lessons are relevant.

The first lesson is that true progress must rely upon individual private initiative and entrepreneurial work, not government official-dom at all. China's people suffered massively under government domination in the Mao era. Today, the nation has some 40 million en-trepreneurs. Their rise is one most dramatic event, which is directly behind the new growth.

The second lesson is that an open society is a necessity for any meaningful development. In an increasingly open environment, up-ward mobility has gradually become possible. In the Mao era, life was completely frozen: all lives were arranged by the government accord-ing to its own needs. Even travel was banned. Today, people have much more freedom. They are more productive, happier, and more forward-looking. Above all, they are eager to gain a better life quickly, relying on their own efforts. This new Chinese passion may surprise the world.

The third lesson is that no nation can truly develop without mak-ing itself open to the world. By now, more than 560,000 overseas busi-nesses are established. They have become part of a new China. Now China is integrated into the global development. Its quick growth can only happen in an increasingly globalized world.

China has paid a massive price to learn these lessons. Above all, an open and liberal environment fosters human flourishing. It is un-der this new environment that China has become a land of opportuni-ties for the entire world.

Much beyond, there is a new convergent movement of global civi-lizations. This new movement involves both developed and develop-ing nations, which happens for the very first time in man's history. Despite all the new worries and conflicts, this movement will con-tinue, for it brings benefits to all nations.

Growing Up in China

This fast developing China is deeply felt by the entire world. For too long, China lived in isolation, which produced vast problems. Es-pecially in between 1949 and 1978, the nation and people were deeply stuck in the mud. Getting out of the mud has been as difficult as mov-ing a mountain.

I was born into the era that is now remembered as the Era of Vege-tables. That time is still a painful memory. It involved the disastrous Great Leap Forward and the people's commune. From around 1959 to 1961, starvation occurred nationwide. Urban residents had insuffi-cient food. Vegetables became a major element of their diet. The rural people suffered from famine. Youth today have trouble believing such stories.

Man-made disasters did not stop there. When I entered elemen-tary school in 1968, the Cultural Revolution was already in its third year. It involved everyone, including 90-year-olds. My school had lots of damaged furniture and broken windows. Many of our teachers suf-fered both mentally and physically.

My age group could not have a normal growing environment. Looking back, I think what I missed the most was books. Great books can open many worlds. But those books that interested me often had torn or missing pages.

Luck was smiling on me nonetheless. I happened to belong to a fortunate age group. By the time of my graduation from high school, in 1978, the reform had started.

Since then, dramatic changes have swept over this ancient land-Chinese youth live in an increasingly creative environment. When I was growing up, life was so limited. I entered college in 1978. Before then, colleges had been closed for some 11 years. As if overnight, they reopened. Immediately schoolteachers became important again. Whereas only a few months earlier, urban high school graduates had been sent to rural regions to work, we could enter college.

In the first two classes that were enrolled, the students had huge gaps in age. Our oldest classmates had children who were just about the same age as our youngest classmates. We studied with an inten-sity that would surprise all students today. Our professors were im-pressed, naming us "the best group of students in a long time." At that time, applicants faced a cutthroat entrance exam. Much less than 1% of youth were admitted. Some kids who failed the entrance exam committed suicide. Today China has a much wider educational pro-gram than ever before with some 23 million students studying in col-lege.

It was an era of dreaming and hoping. We were terribly interested in the outside world, in anything and everything. Nothing could stop us from dreaming of a new life. We quickly developed a mentality that everything in the West was great and everything at home was bad. The mood was very intense. That was the very starting point of China's opening to the outside world. In our high-intensity mind-set, we vaguely felt that bigger things would emerge. Yet nobody knew exactly what they might be.

Going International

Over time, changes in China have gone wider and deeper. China has greatly expanded its sphere of activities as well as openness. As for me, I went to study in the United States.

Today, all Chinese are eager to discover the world. Every Chinese student desires to study abroad. In 1981, the U.S. universities, among others, were eager to get Chinese students. That year I joined the first group of students to head for the outside.

When I landed in the United States, it was engulfed in its own problems. That era belonged to a rising Japan. Japan Inc. rolled over the entire globe, like thunder. Many U.S. businesses failed. This turn of fortune hit the United States hard.

The people of the United States had a moment of despair. They were forced into a painful restructuring. Self-determination paved the way. Very significantly, high-tech has suddenly emerged. High-tech has created a new turn of fortune in the United States, among other things.

I was there to witness all the changes. Since then, the waves of globalization have been wider and deeper. Globalization has swept over more and more nations. Willingly and proudly, China has be-come a new participant.

Returning Home

In 1994, I returned to my homeland for business, representing an international investment bank. Since then, I have focused on business dealings between international multinationals and China Inc. I have gained firsthand experience with this new era.

Especially since the mid-1990s, China's development has been picking up speed. More foreign multinationals and more Chinese en-trepreneurs have emerged. They have promoted a high-speed growth.

Interestingly, this fast-developing land has become a magnet to the entire world. Countless foreign businesses want to share in its progress. They have added new fuel to the growth.

On various occasions, my international media friends and I went together to visit Chinese businesses. Such visits surprised many Chi-nese executives. Some said, "We thought that only international busi-nessmen were interested in our work. Are people in general inter-ested?"

As it seems to foreign reporters, outside observers are certainly in-terested in a rising China. In a way, watching China now is like read-ing the paths they themselves once traveled.

China has become a global theater-a theater of international ideas, dreams, and activities. A grand lesson from China is that no nation can truly develop without making itself open to the world. This massive international involvement is turning China into a nation called Global China. A new world history is being written.

This Small Book

This small book aims to examine China's participation in the global economy today and possibly tomorrow. It focuses on those fac-tors that are shaping the future course of global development. Inte-grating China into the global development has required huge efforts. Nevertheless, its progress is so impressive and it has taken place in a short time. All this must be a marvel in the world history.

In particular, we will examine the foreign business involvement: the motivations and expectations, successes and failures, and possible future courses. This foreign group has hugely impacted on China. In particular, it has played a key role in connecting China's economy to the global market.

A Great Paradox

So far, China has experienced quick growth-a mystery to all people. A great paradox is this: Despite vast changes, China does not have a new political-economic system in place. That is, the old bu-reaucratic power remains troublesome, which continues to cause enormous pains. In many ways, it is like an old man who is still wear-ing baby clothes. But walking out the old trap is still easier said than done.

Despite all the imperfections, China's economy has achieved rapid growth. The nation has produced some 40 million entrepreneurs as now. They cover all sorts of business sectors unless banned for en-trance. They have become the most significant group in promoting changes. So far, this entrepreneurial work has China transformed in countless ways.

The next driving force comes from the foreign investors and mul-tinationals. Foreign businesspeople are widening the channels for China's global engagement in particular. All such foreign involve-ment has greatly affected global development, not just China.

Interestingly enough, the private sector and foreign businesses have coexisted with the state sector. This state sector is also moving forward, though slowly and painstakingly. Together these entities have created vast business chains, thus a booming economy. For now, these three groups each take about one third of market share inside. In particular, the foreign share grows the fastest today.

Behind the economic surge is an exploding consumption. Shock-ing to the outside world perhaps, all Chinese are in a hurry to im-prove lives. People want to get ahead with their own initiatives. This popular desire for a fast-improving life is the biggest driving force for all the positive changes. Without it, little foreign capital would have come, to say the least.

True, today's China remains a poor nation and its GDP per person is only around $1,700 as of 2005, but as incomes grow further, more opportunities will emerge. Indeed, China of the Mao era had a pov-erty-stricken life. For long, most people did not have any personal savings. Even getting enough to eat took huge struggles. But in this era, living standards have been going up steadily. For example, total personal savings had reached over $2 trillion by mid-2006. This rising consumption has changed the nation in big ways.

What could become the next level of development? China's ulti-mate goal is a modern nation based on law. There are still enormous obstacles in the way. The old political-economic framework is already broken, but a new one has yet to be created. China is going through a very painful transition. It turns out that building a new society goes beyond constructing factories, roads, and towers. It demands a com-plete package.

The West took the modern path a few hundred years ahead of China. The various Western nations have resolved such issues as modern property ownership and a modern market order. But China remains to adopt all such modern things. .

Having that said, the pace of change is extremely fast. True, China's development is only just beginning, but huge progress has been made already. It took thousands of years for the West to land on the modern path that it is traveling now. Why should anyone expect China to do so overnight? Even so, China is fast reinventing itself.

The history of this ancient civilization is one of immense achieve-ment. For ages, China was the most advanced society in technology, the arts of life, and social harmony. Its contributions to global devel-opment have been huge. When the Dark Age dominated old Europe for thousands of years, China enjoyed prosperity for long. Yet in the last few hundred years, especially in the Mao era, China has not been able to move ahead as before. In fact, the nation was struck in the mud deeply in a tightly closed society.

But the tide of fortunes is being turned around as now. The most crucial thing is that the nation is becoming increasingly open. Behind a fast-changing nation, China has a new lesson for the world: A bur-densome large population can become a powerful and productive force if a fair environment is present. Today, 40 millions of entrepre-neurs are charging ahead like bulls. This massive entrepreneurship is opening a completely new world for China and beyond.

A Comment

When I had a draft manuscript of this book done, I ran into the following situation. One Chinese professor, with the best of inten-tions, told me that I should not write too much about things like cor-ruption. I asked myself: Why not? The Chinese people are diligent and bright, and they deserve a much better life. What is holding them back from a more prosperous way of living?

But the real task for China is a mighty one. The old China was built around government. The government has always tried to ar-range all things in order to make the population and the society to serve its own needs. Now China is fast moving away from the old government domination. This new life is still full of difficulties, like those of an aquatic animal trying to resettle on the land. It just can't be that easy. Even so, China has taken one step, the most significant one, in this new direction.

Some people view China's new growth as the restoration of old wealth, but the truth goes much beyond that. Indeed, it is not for China to return to the past at all. China is on its way to becoming a modern nation. In particular, it will become an equal and full partner in the global community. China can only and deeply wish to share its progress with the world. The 21st century belongs to the world, not just Asia or China.

The Big Picture

What is happening inside China today opens a completely new history for the nation. The ever-increasing openness and vast entre-preneurial work is pushing China into a completely new direction, firmly departing from the old orbit. Above all, China's people desire to get rid of the bureaucratic obstructions completely and create a truly open society.

China's big picture spans more than two millennia. For at least 2,200 years, from the Qin dynasty to the Mao era, bureaucratic power only increased. This traditional government power has been nothing but a self-server and squeezer. Above all, this bureaucratic power has limited a healthy development of the Chinese civilization in all sorts of ways. The biggest destruction emerged in the Mao era.

By the 1950s, the entire private sector had been eliminated. Much beyond, for the very first time, bureaucratic power penetrated into the grassroots, which led to a perfect bureaucratic society. The key bu-reaucratic creations included the people's commune, the state sector, and an elaborate system against a free flow of goods, ideas, and hu-mans. No citizens were left independent, not even artists and monks. This bureaucratic crusade suffocated people completely.

In this bureaucratic environment, the people, the society, and the economy were made to serve the government completely and exclu-sively. But immediately, the economy was at a dead end. Vast bu-reaucratic abuses took place and the whole nation was helplessly drawn into man-made tragedies. They include the Great Leap For-ward, the nationwide famine, and the Cultural Revolution.

Only upon these great failures, the nation and people began to search urgently for ways to escape the deadly trap. Since 1978, this bureaucratic power has been on the decline, finally. This has led to a sharply rising creative private sector and hugely expanded personal freedom, which has produced a booming economy. In particular, China has become a global theater with countless foreign businesses.

To contain this untamed bureaucratic power is the continuing goal for the Chinese civilization, as well as the most formidable. In the past two centuries, China has not really had any opportunity to re-solve this issue with respect to its root causes. Instead, the tail has grown so big that it weighs down the body. Curtailing the bureau-cratic power means nothing short of a true revolution. That is what is beginning to happen inside China right now, though quietly.

Even bigger things are emerging around the globe. There is noth-ing less than a great convergence of civilizations. India, Brazil, Egypt, Russia, and China, among other developing nations, have reversed their historical paths. They have rushed to join in global development, bravely and whole-heartedly. At the same time, the rest of the world has had a direct involvement in these emerging nations.

Because of all this, we are entering a new era in spite of all the new worries and conflicts. Though still in its very infancy, the con-vergence can only increase. Achievement of this great convergence of global civilizations is another true revolution in the making. Further-more, if it is a true global revolution, it must resolve all the pressing issues that confront our world. The bombings of New York and Lon-don are powerful remainders of some of these problems.

This book has 24 chapters that are organized into five parts. Part I focuses especially on foreign involvement in this new theater and China's emergence as the world's biggest factory. Part II studies global human interactions, job transfers, and socioeconomic devel-opment. Part III examines China's new international experiences. Part IV explores many aspects of China's unfinished business of reform, focusing especially on key political-economic and institutional issues. Part V looks at future world prospects from the angle of history.

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