Health Minister Chua Jui Meng the other day in opening a Karaoke Competition in Mandarin made a call to take up Mandarin, as "China will be a very important economic model in 20 years."

Keen China watchers will want to correct this impression; China has already eclipsed South east Asia in economic leadership. Malaysians will ignore this trend to its own disadvantage. The current squabble over mother tongue education, especially Chinese education in Malaysia reflects a big gap in grasping reality; Malaysian public policy must adjust quickly to the present fast changing regional environment to maintain the country's relevance in the region. 

Numbers speak louder and paint better pictures.
Take a look at these strategic statistics:

1.  GDP: China's total GDP is US$1 trillion, ranks fourth in the world, after the US, Japan and Germany. At purchasing power parity, it could rank higher. One survey estimates 25 million of China’s coastal population to have reached GDP per capita of  USD8,000 (Malaysia's 23 million has per per capita GDP of USD3,248). Income has doubled every ten years for the last two decades. The middle class at PPP measures is reaching critical mass; Urban Chinese spends only 20% of total income on food today.

2.  Asean's share of exports to the US dropped from 23% in 1997 to 20% in 1999, China's export rose from 22% in 1997 to 24%, in spite of the currency devaluation in Asean. The Reminbi held its ground during and after the financial crisis, and we have reason to believe that it won't become fully convertible in another 5-10 years. China took up 52% of net FDI inflow into Asia in 1999, taking US$ 40.4 billion of US$ 78.7 billion.

3.  China now has the 3rd largest stock market in Asia, and best performing in 2000, with 1049 companies listed, market capitalization is 80% of its 1999 GDP, some 4.8 trillion yuan (US$ 578.3 billion). If ranked by the number of listed companies, it is No 2 after Tokyo. The Chinese saving pool is huge, in 2000, Chinese saved 6.4 trillion yuan (US$774 billion), 80% in the banks, against foreign reserves of US$ 162 billion. Some 58 million Chinese have stock broking accounts. Why is the Chinese stock market shooting through the roof? Simple answer; a basic demand overwhelm supply situation. In 2000 alone, more than 13 million new investors started accounts in the stock market. 

4.  Mortgage and consumer lending tripled from $11 billion in 1999 to $31 billion in 2000. For example in 2000, one third of the Industrial and Commerical Bank's (ICBC) loans went to consumers, mostly for mortgages, reflecting the government's epiphany that consumers can be a source of growth. In 2001, it is shooting for 40%. The estimated $250-400 billion in bad debts problem (25-40% of GDP), up to 2/3rd has been moved to an asset management company, the plan is complete restructuring in 10 years. Chinese banks will be very powerful players; for example, Industrial and Commercial Bank of China (ICBC) with 420 million individual accounts, 8 million corporate clients, it went from no credit cards 10 years ago to 76 million today, it has $500 billion in assets, it is the No 10 bank in the world, with 25% of China's market. 

5.  The Chinese economy has shifted to being domestically led, achieving greater self-reliance. While the rest of Asia frets about a US slowdown, exports are no longer the main driver of growth (the sector only makes up 30% of GDP in 2000). China also has a healthy national debt level, at less than 15% of GDP (compared to well over 130% in Japan). When the reforms deepen and spreads afar to the vast western region, China's dependence on exports, and to the outside global economy will further reduce. With infrastructure spending, upgrading of the coastal industrial sector and modernization of the farm sector, reform of the banking and capital markets, domestic demand will be further strengthened. China's middle class is reaching critical mass. 

Size MATTERS

Lowest labor cost in Asia, outside Indonesia. But if you put in the unemployment and the surplus productive human resources from the West and the under performing state sector (the state owned enterprises SOEs), China will pose tremendous competition to labor-intensive Southeast Asian operators. Out of the 800-m rural peasants, if 300 m is taken out of the farm sector, farm production will not drop. Tremendous productivity can be further obtained from the urban 300-m population; better process reengineering and management can release easily another 50-m people. To add to these, there is the estimated 20 million people from restructured SOEs and the floating population of 50 million. In labor intensive operations, perhaps only India can compete with China on this front! 

As a result of reform and response to WTO entry, many State Owned Enterprises (SOEs) have become profitable. The entrepreneur class is also fast rising in China, the 40-something entrepreneurs' benefit from the transition to the market economy; maintaining Old World guanxi to taping new opportunities in the market. These "rational, forward thinking" leaders have no baggage from the past. They leverage on the latest technology and business knowledge to leapfrog, already Chinese brands like Haier, Konka and Huawei are making their mark in global markets. The government has also promised more support for the private sector; the private sector accounted for 33% of GDP in 1998 compared with 37% from the SOEs. The size of China's domestic market allows its producer to be efficient; the production runs are huge; and if they also export these products, they can easily squeeze out other producers of lesser scale in Asean. Ask the furniture industry operators in Malaysia, they will tell you how the factories in Dongguan, the Southern town near to Guangzhou is taking away their lunch! 

SERIOUS Learners

The growth momentum is strong, what is even more amazing is the passion for learning. Talk about the knowledge economy; the Chinese have put in place massive infrastructure for the transmission of knowledge. Every big city boasts huge book malls, the publishing industry in China is simply having a field day, the quality is catching up at lightning speed. Out of its 1.2 billion people, 630 million are under the age of 24! China's advantage lies in the size of its population, in absolute numbers it has a higher number of knowledge experts and think tanks, and so it can afford to have people working on various streams of learning; doing research in every conceivable field of knowledge. One expression of this is the number of specialized newspapers and books published. There are 3,000 television channels, and each develops its own unique programs. Imagine a nation thinking and developing its own solution for development! 

The government, people, businesses are learning very fast, among themselves and from the world. For every issue or challenge they faced, they scan the world for best practices. Building the market economy with Chinese characteristics is not done in a vacuum, and their advisors do not speak English only. The opening of China has attracted interest from the whole world; or rather the world has descended onto China. Competent administrators and strong competitive spirit among the provinces. 

China has in placed and is improving its telecommunication infrastructure; there are 80 million mobile users and some 10 million Internet users. Television reach is even more impressive; Chinese aged 15-24 watch TV each day 162 minutes on average. 

Going green and cleaning up; many experts are working on China's sustainable issues; and results are showing. In Shanghai for example, ten years ago per capita green space equal to a foot size. 5 years later it went up to a side table area, now it is about a bed size. China is working hard building competence and accumulating in tackling environment issue. Tough cleaning up also in the corruption front, death penalty is used for serious offences, and China has carried out such sentences. 

Talk and Do

While some talk about the future, the Chinese is quietly and steadily building one for themselves. The difference here is between TALKING and DOING, and who the winner is is obvious. 

Continued denial only accelerate the path to regression, time for Malaysian public policy to return to pragmatism, outward and forward looking. 

Political bickering and pettiness conscript the nation's vision and diminish Malaysia presence in the world. I Chinese from other provinces find it so hard to do business in Shanghai when they don't speak Shanghainese, even though all of them speak Putonghua, imagine how hard it would be for some Bahasa-fluent only Malaysians to find their way in China's vast markets or deal with Chinese speaking tourists visiting Malaysia.

• Hello! Look What's Happening Today
• Take up Mandarin, Chua urges MCA members

Bottomline: Politicians are used to making off-the-cuff uninformed statements but government officials cannot. It affects EVERYONE and puts the nation at risk. Think about it.
- Pat Lu

Feedback Welcomed!

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