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Mar 6, 2011

Following the Chinese Lead

Sean Hayes, the main contributor to this blog, wrote an interesting piece entitled Following the Chinese Lead in the Korea Times on March 2, 2011. The article can be found below.


Following the Chinese Lead
By Sean Hayes (Korea Times Weekly Column)

Most of the world has come to realize, including even the Chinese ruling elite, that central planning leads to inefficient utilization of capital, low growth and entrenched poverty.

This realization led the Chinese ruling elite to scrap most facets of its Mao-dictated centrally planned economy in favor of a decentralized one based on the freedom of contracts and other major basic tenets of capitalism.

However, the developed world seems to have mistaken the evils of centralized planning with the need for a centralized strategy and thus is often ignoring one of the most critical historical roles of effective central governments.

Throughout modern history, great leaders with great visions led their nations to great economic and social developments. Great leaders like Winston Churchill, Abraham Lincoln and Mohandas Gandhi immediately come to mind.

The Chinese government officials with prior experience and education in central planning are utilizing their Mao-era developed central planning skills to develop strategies and policies to meet the needs of the economy and, thus, the citizens in a fashion that is reminiscent of the success of our past great world leaders.

For example, Chinese listed-companies flush with Chinese government cash are investing an increasing portion of GDP on forwarding-thinking aggressive ventures including the purchase of natural resource exploration rights, R&D in high-tech industries and M&As with the purpose of acquiring technology.

These efficient investments are in contrast to the stimulus in the U.S. that was used, in large part, to pad the pockets of political loyalists.

My team at my law firm witnesses, on a daily basis, the great ventures that these Chinese companies are engaged in throughout Asia and wish that we would see more U.S., European and Korean companies with the economic resources and courage to follow the lead of the entrepreneurial goal-centered Chinese.

Additionally, I witnessed as part of a Korean government delegation to Anyang City in China ― domestically, the Chinese government is investing significant resources in forward-thinking infrastructure development programs countrywide, an admirable education renaissance and an environment protection scheme, while encouraging foreign investment through tax holidays, low cost leases and grants.

This is in contrast to the Western world with its aging and often embarrassing infrastructure (i.e., JFK airport), high corporate tax rates and children that lack basic math and science skills.

Internationally, the Chinese are coyly engaging the less developed and recently developed world through the building of long-term economic bonds that is tying nations solidly into the cash flush hands of the Chinese government. The Chinese are also encouraging the developed world to accept Chinese political and social realities through the funding of nations’ debt and the promise of increased Chinese foreign direct investment.

While nations like Korea and the U.S. are blundering through diplomacy by keystone cop-type intelligence agents and policies.

The developed and recently developed world must wake up. We are plagued with incompetent politicians hell-bent on engaging in decade-long battles over manure and an increasing portion of the population and bureaucracy that happily lackadaisically ekes out an existence through government generosity and political spoils.

Let us learn a little from the Chinese and support and foster great forward-thinking leaders.

These leaders must be allowed to return to the days when Churchill, Ronald Reagan, Margaret Thatcher, FDR, Gandhi, Nelson Mandela, George Washington and Oscar Arias Sanchez were able to gain enough support in their democracies to lead their nations through their travails into a better place for their respective nations and the world.

If we do not, the present developed world will be relegated, in the not so distant future, to a simple tributary relationship with China. A tributary relationship that may provide less benefit than the tributary relationships that China is presently developing in the developing world.

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SeanHayes@ipglegal.com