Chapter 142 Learning from China on "Introduction of Foreign Investment" and "Decentralization of Powers"

When they hear the phrase "learn from China", many people will put on a disdainful expression, but if you are a reader of this book, you should know that it is wrong to do so. China does have a lot to learn from. From the perspective of the exchange rate, the GDP of China's economy may surpass that of Japan around 2010, ranking second in the world, and we will become the third in the world.Moreover, China has surpassed Japan in terms of purchasing power evaluation (PPP). We need to take a more dispassionate, more objective look at what they have that we don't.That is to say, we have to think carefully about why China can adapt to globalization and achieve astonishing economic growth.

The main reason for China's economic growth is the introduction of foreign capital.In other words, China is the third largest country to attract foreign investment after the United States and the United Kingdom.Since the reform and opening up, China has received investment from various countries and achieved development through these investments. China did not develop to this point independently.Over the past decade or so, although Chinese banks have held a lot of bad creditor's rights, the investment of foreign bank capital has enabled them to overcome the crisis.Now, among the top 20 banks in the world, there are four in China.

Moreover, the introduction of these foreign capitals does not only rely on banks. China is also boldly carrying out decentralization, which is very important to Japan. After a series of economic reforms, China's economy has developed rapidly, and these reforms are mainly manifested in "decentralization of power", that is, allowing localities to "do things freely". The person who proposed this reform is Zhu Rongji.He was originally the governor of the People's Bank of China and has served as Premier of the State Council since 1998.During his tenure, he undertook bold economic reforms.

Zhu Rongji's basic policy is decentralization.As a result of this reform, the number of civil servants in central ministries has been cut in half.At that time, what he mainly did was to "reform state-owned enterprises."He gave state-owned enterprises the freedom to close their doors, and also gave them the right to acquire and the freedom to be acquired. State-owned enterprises can choose any one of them.He let go of the state-owned enterprises, saying to them, "You think about your own survival." What happened?Local governments have started fierce competition.Because if a state-owned enterprise is transformed into a private enterprise, its operation will be closely related to important local leaders, and the performance of the enterprise will affect the economic growth of the city.For example, if a city’s economy has not grown by more than 7% for two consecutive years, the government will give a yellow card warning; if it has been below 7% for three consecutive years, it will give a red card warning, and the mayor will step down.

This is actually a pure resultantism, and due to the implementation of such reform measures, the competition between cities has intensified. In this way, if we want to increase the income of the city, we can only improve the performance of enterprises.However, state-owned enterprises can't improve their performance no matter what, because they have no operating ability and operating methods, so they can only open to foreign investment, introduce foreign investment, accept technical cooperation, and accept capital cooperation.That is to say, the reform and opening up started at the local level, and it is through this that China has achieved development.