Epicenter

SHENZEN, China – This has to be the epicenter of the Asian Century. Everywhere, the wide expressways are jammed with trucks bringing finished products to the ports for export to the rest of the world.

As we move from city to city in southern China, awe comes after awe. Everything seems large, bustling, frantic and hurried. There are miles and miles of factories lining really world-class roads and impressive bridges. There are restaurants larger than our most impressive malls, spilling out food from every corner of the earth. There are tens of thousands of new products coming out of the assembly lines – not just cheap rip-offs of western goods but truly novel technologies.

This is the genuine Chinese Revolution, not that millenarian long march led by Mao and his backward-looking cadre. Mao’s experiment produced only calamity for his people. The Revolution that Shenzen represents has lifted hundreds of millions of people from poverty in less than a generation.

Touring Shenzen and other manufacturing centers in southern China in spanking new Mercedes Benzes, I begin to understand why this nation has accumulated over a trillion dollars in international reserves. I begin to understand why China is quickly outpacing Japan as the biggest lender to the US government. I begin to understand why people expect China to emerge as the world’s largest economy within our lifetime.

Everywhere, new plants and edifices are being built, as if in great hurry. Nowhere is this most dramatic than in Macao.

Once the sleepy outpost of a minor imperial power, Macao is now quickly emerging as the major entertainment capital of Asia. When the territory was in Portuguese hands, the only way for Macao to pay for itself was to legalize gambling. Portugal was, after all, not a trading in financial power like Britain, which controlled Hong Kong until that territory was handed back to China.

Hong Kong evolved into the financial center of East Asia. Banks headquartered in this former British holding finance much of the dramatic investment growth happening in China. Through all these, Macao waded sleepily through the years under the grip of local gambling tycoons like Stanley Ho who enforced their will using little armies of thugs.

The irony is not to be missed. It was communist Beijing, after the handover, who broke the gambling monopoly and basically enforced competition policy. It was Beijing who opened the doors to foreign investments.

As a result, Macao will, over the next few years, become brighter, more garish and, for the Catholic Bishops Conference of the Philippines, more scandalous than Las Vegas. The hotel-casino complexes being built by the big boys from Las Vegas are larger in scale. The business is much larger than Las Vegas can ever imagine.

Straight-laced Singapore is trying to beat Macao to the punch by opening its doors to gambling investments. But they are a few steps behind. The huge gambling and entertainment complexes are nearing completion in Macao, changing the landscape and altering the face of the harbor.

Besides, Singapore is far-off. The big money coming into Macao arrive from the mainland by expensive car. This is big money from China's new rich as well as members of the communist party who have large sums to launder. The financial technicians in Hong Kong, where gambling is illegal, grumble that Macao is just one big money-laundering machine.

That might be beside the point. This once sleepy little piece of property jutting out to the sea has, over the past few years, attracted billions of dollars in investment flows to build a truly awesome adult version of Disneyland.

There will surely be more money flowing in. One major casino investment recovered its sunk cost in only 18 months. That is enough of a signal for the others to rush in – and cash in.

But set Macao aside. It is simply the most staggering sight exemplifying the all-rounded growth that has built a middle-class that is now estimated to be 80 million strong. That middle class is more than enough of a market for our tourism promotion efforts.

In a few years, this ballooning middle class will have the disposable income of American consumers. That middle class consumes nearly all the premium brandy Cognac produces. It represents a large market for us, as well, if we are able to understand it well and grasp the opportunities it brings for our own producers.

China is like the lead duck in a V-formation. While she compiles a staggering trade surplus with the aging industrial economies of Europe and North America, she also cultivates a trade deficit with her Asian neighbors.

The leadership is not shy in exercising her options as a rapidly emerging economic superpower. While I was in China, the leadership in Beijing hosted a meeting attended by all African heads of government. In that meeting, Beijing offered all of them $2 billion in non-interest bearing loans.

While Europe and North America were talking increasing aid to Africa, and celebrities were on a binge adopting African orphans, China has offered seed money to invest in infrastructure, develop manufacturing bases, supply China with raw materials and become a market for Chinese products.

When I began this quick tour of southern China, I kept looking out of the car window, wondering what China was doing right. That, I suspected, was the key to understanding what we are doing wrong.

China, when it built the Three Gorges dam, relocated 10 million people and allowed dozens of ancient cities to go under water. But when that is completed, China will have cheap and clean power – electricity at a fraction of what it costs here.

That is indicative of a state capable of looking long into the future and caring for its people by building the foundations of a competitive economy. It is a state capable of clearing the way for thousands of kilometers of expressways in just a decade, opening the land for industrial complexes.

There lies the difference. Our planning horizon is short. Our economic initiatives continue to be trapped in short political cycles.

Somewhere along the way, after we deposed the dictatorship, we somehow imagined democracy as synonymous with a weak state. One that can only dole out but not prepare the ground for an economy that is robust and therefore that offers sustainable prosperity for its people.