The Coming Collapse of China by Gordon G. Chang

Author:Gordon G. Chang
Language: eng
Format: epub, mobi
ISBN: 9781588360212
Publisher: Random House Publishing Group
Published: 2001-09-14T16:00:00+00:00

RABBITS ON THE ROAD

We think of China as “the world’s biggest market,” but in reality it has been many small ones. In the past, each Chinese city was largely self-sufficient, with one car manufacturer, one steelmaker, one of everything. Each city’s requirements were relatively small, so efficiencies of scale were sacrificed to the god of self-sufficiency. Mao had one model of development, the commune. He transplanted that model to urban areas and created state-owned enterprises. Cities, in the Maoist state, were collections of industrial communes.

Because transportation of goods over long distances was not feasible, a steelmaker in Liaoning Province in the northeast could not compete with one in, say, Sichuan, in the southwest. So every city resembled a minicountry as far as economic production was concerned. By one means or another each locality protected its own industry and was largely economically isolated. That’s how, for instance, China ended up with about 8,000 of the world’s 9,500 cement producers.

Now China has good roads and railways and airports, so there is, for the first time, substantial intercity and interprovincial commerce, even for food and other perishables. Efficient producers in one city can compete against backward manufacturers in another. Consequently, we have recently witnessed the rise of national domestic brands. Guangdong Kelon sells its domestic appliances far from its southern base, and you can find televisions made by Sichuan Changhong across the length and breadth of the country. These forces affect the foreign investor, too. The brave, the first of them, built small-scale operations because of the difficulty of selling products far from the point of manufacture. Tomorrow’s foreigners will build big to dominate the emerging national market. The early foreign investors may therefore end up being too small to survive in China’s changing marketplace. So much for “first-mover advantage.”

Efficient producers are able to lower prices to consumers. China is moving forward as it restructures. Its industry is becoming more competitive and the nation more modern. Good transportation makes that possible. As highways grow from two lanes to four and then to eight, the prostitutes are consigned to the back roads. No matter how attractive, they can no longer block the nation’s vital traffic on the main arteries. The only ones who can do that today are rabbits. It is the Year of the Rabbit, and a horde of cute white bunnies is certainly taking advantage of its prominent position on the Chinese calendar. The bunnies have just escaped from a big tour bus, and the fugitives are now blocking the Suzhou-bound traffic on the Huning Expressway. Their bus is astride two, perhaps three, lanes that should be open to traffic but unfortunately are not. As the rabbits scamper around the pavement, the driver and onlookers from the toll plaza try to figure out how to put them back into their cages. China looks more modern these days, but those who make decisions are stuck in the old times. Like those who decided to allow the critters onto the bus in the first place—and those who let them out.

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