When I first started going to China twenty plus years ago it was mysterious and even felt ancient. There were more bikes and horses than autos and trains. It was a nation becoming, emerging, and figuring out what role it wanted to take on the world stage and what kind of nation it wanted to be at home. This narrative is still in play.
I have to admit I have respect for the Chinese leadership given their embrace of the market economy. The market economy embraced by the Chinese government was a bold strategic step and their economy proved to be quite resilient and future-ready — ready to embrace the challenges of a complex and uncertain future.
I do not think anyone, including the Chinese leadership, that thinks managing the second largest economy is a sure thing or predictable. We shall see if their leadership works out the growing pains. I am betting they will.
I think China is a Startup Nation. In fact, it's the biggest startup the world has ever seen. This means the economic model, the management, the laws, the customers/citizens are all part of an exciting new economy, society, and culture that has never existed before. China is inventing China.
The sheer size of this Startup Nation and the challenges they face will mean many more ups and downs. China as a Startup Nation is what startup companies tend to be — disruptive, bold and unpredictable. Nations — like startup companies — face great risk as well, learn much on the job, embrace innovation and have to deal with large and drastic changes in the marketplace.
China is attempting to accomplish in a generation what the United States accomplished in five generations. They are still in startup mode. This is the stage of China's evolution. The complete transformation of China from a mostly agrarian society to embrace industrialism has in less than twenty years been remarkable. The budding of the Innovation Economy is now emerging next. But there are headwinds coming that we should all prepare for.
There are five key trends that if embraced by China or if led by China, could make the transformation into the near term quite spectacular for a prosperous future. China could be moving from the Startup Nation stage to something more innovative, mature, and stable.
Trend 1: Build Confidence in the Global Investment Community
China should increase its relationships with the global business community and cure outstanding issues that impede investment in China.
Trend 2: Resolving Peacefully Regional Security Future Risks
It does little to attract investment and increase growth and trade in the Asia region, when uncertainty and security disputes increase tensions between China and its neighbors.
Trend 3: Phase Out Cyber-Hacking
China has to decide if it actually makes any sense to continue the large-scale, programs. It needs to respect intellectual property.
Trend 4: Embrace the Clean Energy Cities of the Future
China will be building the next 100 megacities over the next decades. Essential to this task is for China to embrace a non-polluting future for China.
Trend 5: Create an Innovation Economy and an Entrepreneur Culture
Entirely new business creation can accelerate China's growth from investing in innovation.