The Most Important Event of the Last 35 Years

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Since 2011 I travel every year to China. Not for tourism but because I wanted to understand better a country that in 35 years became the largest economy in the world. Never in the history of humanity a large country has been able to sustain exceptionally high GDP growth rates for such a long period.

I wanted to learn by myself  because there is not much information about the country and it is most often biased. China is one of the most important driving forces of the world transformation. I believe that whomever does not understand China you does not understand the world.

Although China became the largest economy in the world, many people lack basic information about the country. For example:

  • The History of the country in the 19th and early 20th century;
  • Its political organization both at the central and provincial level;
  • The extraordinary large number of cities with more than 8 million habitants;
  • That China has a world class secondary education system and that every year 10 million students pass an extremely competitive Higher education entrance examination, the Gaokao;
  • The impact of the single child policy on the social fabric;
  • That China´s surplus in the current account of the balance of payments is much lower, as a percent of GDP, than in Germany and Japan.

 

China is full of contrasts. Between and older generation who does not know a single word of english and a younger generation educated in the best universities in the world. The “hutongs” and the modern avenues. The bureaucrats and the business people. The modern cities and the remote provincial areas. China respects and admires the US, the political superpower where every Chinese family would like their kids to graduate.

However, China is very pragmatic. It buys German cars, French subway equipment, wine and cheese, Italian luxury clothes, Swiss watches and chocolate, other than Apple products you will not find many American brands. China is famous for its export capacity, however it is also the 2nd largest importer in the world.

I always start my class in Beijing by asking the students if their parents owned a car when they were born and the answer has always been the same: no, they had a bicycle to go to work.

In 1980, China represented less than 3% of world GDP. In that same year, Deng Xiao Ping, a 5’00’’ tall chain smoker Chinese politician who never held the job of Premier or President launched a reform, the contours of which remain to be fully explained. In 2015, 35years later, China overtook the US as the largest economy in the world, as measured by GDP in PPP.

And in 2030 the size of China´s GDP may be around 60% larger than in the US. A change of this magnitude in such a short period of time never happened before.

Of course China is confronted with important challenges, it needs to transform itself into a services economy and improve air quality. Reduce inequality and eliminate corruption. That is difficult, although not impossible. China has 15 cities with a population of more than 8 million, compared to 2 in the US and 2 in Europe. They all have world class airports and are connected by a unique high speed train network. We Chat has 700 million users. Alibaba received 280 million orders in its peak-shopping day. It is the largest investor in renewable energies. Education is a top priority and I met several kids that scored 740 on the GMAT without one single day of preparation.

Understanding the rise of China is one of the keys to understand the future of the world.

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