John and Doris Naisbitt, longtime China observers, provide an in-depth study of fundamental changes in China’s social, political and economic life in their book “China’s Megatrends: The 8 Pillars of a New Society.”
With extraordinary access, and using the same techniques behind John Naisbitt’s International bestseller “Megatrends,” the Naisbitts have traveled the country, interviewing journalists, entrepreneurs, academics, politicians, artists, dissidents and expatriates. With the help of 28 staff members of the Naisbitt China Institute in Tianjin, they monitored local newspapers in all of China’s provinces to identify the evolving perspectives and deep forces underlying China’s transformation.
Their research reveals that China is not only undergoing fundamental changes but also creating an entirely new social and economic model, what the Naisbitts call a vertical democracy that is changing the rules of global trade and challenging Western democracy as the only acceptable form of government.
The Naisbitts have identified eight pillars as the foundation and drivers of China’s new society. These are the freedom of thought, planning by trial and error, equal opportunity for everybody, creating a climate for entrepreneurship, organizing innovation, balancing top-down with bottom-up, supporting art, improving education and integration with the world economy.
After the Cultural Revolution in 1978, the Chinese administration tried to emancipate the mentality in China. Chinese people started to think for themselves and make their own decisions, and reawakened the Chinese entrepreneurial gene, opening the eyes of the people to all kinds of business opportunities. They decided to establish at the national level high-tech industrial parks with favorable policies to encourage the creation of new and innovative companies. Besides these, China revitalized state-owned enterprises through various strategies, such as “healthy enterprises would carry a sick one,” “privatization is a gradual process” and “‘invite’ global players to help handle non-performing assets.”
Balancing top-down and bottom-up
The most interesting pillar on which the sustainability of the new Chinese society rests is balancing its top-down and bottom-up forces. The evolving Chinese dynamic of top-down government directives and bottom-up citizen initiatives is shaping a new model the authors call “vertical democracy.” The top-down part of decision making is familiar; however, the Chinese type of bottom-up decision making is quite different. Indeed, there is no bottom-up decision making process in the West. We only vote for parties and they make decisions. In China, in spite of a one-party-based government, the government organizes surveys, learns the tendencies of the society and makes decisions based on survey results. The numbers of decisions based on these surveys are probably limited, but they may increase in the future. In my opinion, this practice is much better than in Western democracy-type decision making processes.
Another point that the Naisbitts emphasize is China’s “trial and error” culture. The Chinese government tried some new strategies and retained the successful ones. “Framing the forest and letting the trees grow” was the major strategy in developing innovative Chinese companies. The rules for entrepreneurial and innovative ventures provided for both Chinese and foreign investors. The Naisbitts give one interesting example from history and use it as a metaphor to explain the approach to foreign investments in China.
The Naisbitts retell a third-century Chinese legend. Gen. Zhuge Liang sat on the banks of the Yangtze River facing the enemy army of Cao Cao on the other side. Rather than attack directly, Zhuge sent over various boats packed with straw. Cao Cao’s archers, perceiving an attack, sent a hail of arrows down onto the boats, whereupon Zhuge retrieved the vessels — and stole his enemy’s ammunition. China employed the same “borrowing arrows” strategy when it invited foreign capital and industry into the country, starting with Volkswagen in 1978. Other large Western firms followed, including Boeing and IBM. In time the Chinese learned to produce cars, computers, planes and so on. It looks like China learns from global corporations while providing an advantageous production environment for them.