As Russia unravels, China booms. I recently traced the arc of the Pearl River delta for several hundred miles -from Zhuhai to Guangzhou to Shenzhen-and it is one vast construction site, with factories and apartment complexes and shopping plazas sprouting everywhere; there may never have been so much construction in any one place before in history (the local economy grew by 18.5 percent last year). The headlong rush to profit can also be felt in the cities and towns, where all trace of communist repression has vanished in a flash of style, color and commerce. Four years after Tiananmen Square, the Statue of Liberty has returned to China-as the logo for a popular American brand of ginseng tea.
And so, an obvious question: what have the Chinese done right that the Russians have done wrong? The prevailing theory among Asian intellectuals and businessmen is that China simply has adopted the same model of authoritarian capitalism that worked for most other countries in the region (human-rights advocates say China is as selectively brutal as many of its neighbors, but no more so). While authoritarianism has pulled developing countries from Chile to Korea toward prosperity, Russia’s problems-clearly-are deeper than the messy distractions of democracy.
Indeed, it might be argued that there have been three major factors in China’s economic surge, two of which the Russians can’t replicate. Obviously, Deng Xiaoping’s transition model was more sophisticated than anything the Russians have tried. Deng gradually liberated the economy, and prices-first encouraging farmers to grow for profit, then inviting foreign investment in rudimentary light industries (toys, shoes, clothing), which created the explosive growth in provinces like Guangdong that is now spreading inland. It was a course of seduction rather than “shock therapy.”
But even if Boris Yeltsin had followed Deng’s model, there are two other factors he couldn’t have matched. For one thing, the Chinese seem to have an entrepreneurial edge. Their farmers welcomed the chance to make a profit. Their emerging middle class rushed to buy stocks when the Shenzhen exchange opened (they even rioted last year trying to gain access). Most Russians, by contrast, have reacted to liberalization with their distinctive mixture of skepticism and pessimism. “The Chinese are a nation of merchants,” says a Japanese diplomat, disdain mixed with fear that the no-holds-barred Chinese brand of commerce eventually could overwhelm the more controlled Japanese model.
In much of Southeast Asia, ethnic Chinese already run the show-and that is the third, and perhaps most significant, factor at work here: the power and pride of the Chinese diaspora. There are an estimated 55 million Chinese living outside the People’s Republic. They include a disproportionate number of successful businessmen who have now decided that it’s safe to invest on the mainland. They jump-started the boom; by one estimate, they represent 80 percent of the foreign investment coming to China. “Foreign investors ask me about the lack of a commercial-law system,” says one Hong Kong businessman, “but being Chinese, I can work on a handshake basis. In fact, I prefer that.” The emotional power of this reunion can’t be overestimated. The diasporans are not only investing, they’re contributing-to hospitals, universities and their native villages. They are returning home to sweep their ancestors’ graves. They are the entrepreneurial heart of a Greater China that seems destined to become an economic, cultural–and perhaps military-superpower in the next century.
There will be bumps along the way. No one knows what will happen when Deng dies; the Chinese, traditionally, have handled succession abysmally. Also, boom economies go bust periodically. A sharp contraction could give conservatives the upper hand in a power struggle. And without the rule of law, there is the probability of rampant corruption.
None of this can be much solace to the Russians. Still, there is one useful lesson in the Chinese model: success doesn’t come from grand schemes-500-day or five-year plans, or Great Leaps Forward, for that matter-but in gradual, Deng-style modulations. Prosperity isn’t decreed. It percolates from the bottom up, risk by risk, profit by profit, the steady, unspectacular triumph of life over theory.
