Beijing Village knows China's time has come

[FT_news]

Beijing Village may not have new buildings to admire or world leaders to greet but the small farming community is wrapped up in China's Olympic euphoria

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Beijing Village may not have new buildings to admire, world leaders to greet or lavish firework displays to marvel at, but the small farming community is completely wrapped up in China’s Olympics euphoria.

The village is 200 miles from the Chinese capital by road and an entire century away in terms of development. Yet even in a place as poor and isolated as this, the residents have a clear sense that holding the Olympics is a long-overdue recognition of China’s place in the world.

“We are all excited because this is a very important event for China – it is part of our national project,” said Zhang Mingfu, a tomato farmer with teeth blackened from a lifetime of smoking roll-up cigarettes.

For all the many controversies that have surrounded the Games, from the grey skies thick with smog to the unrest in Tibet to the local activists placed under house arrest, the intense expectation in Beijing village helps explain why the Olympics have come to China: one fifth of humanity lives in the country and they want feel part of a wider world.

China has a large untapped source of further growth: its vast state-owned assets, including enterprises, resources and land. Privatising these assets would unleash the wealth effect and boost domestic consumption. This reform would transform China’s growth model from being investment and export-driven to being led by domestic consumption. It would reduce its over-dependence on industry and stimulate its service sector. At a time of a global slowdown, such reform is timely.

When reform started in 1978, almost all productive assets were state-owned in China. But reforms since then have not included privatisation. Today the government owns more than 70 per cent of China’s productive wealth. During the first 20 years of reform, concentrating the country’s assets in government hands served a good development purpose, allowing the creation of infrastructure and expansion of industrial capacity. If state assets had been privatised, it might have been difficult for China to mobilise resources during the rapid industrialisation of the 1980s and 1990s. To the government’s credit, the initial marketisation-without-privatisation approach has paid off. A robust infrastructure has emerged and China is an industrialised economy.


Jan Sing

[wld_team]

WORLDLawDirect - Trade with China online