Op-eds

In the city of Shanghai, a few churches conduct daily services for the faithful, just as churches all over the world do. However, China’s Patriotic Catholic Association doesn’t operate under the auspices of the Roman Catholic Church, which the Chinese government has banned. It is controlled by a state agency, the Religious Affairs Bureau. That’s how the Chinese government deals with foreign organizations, be they churches or companies. They are tolerated in China but can operate only under the state’s supervision. They can bring in their ideas if they deliver value to the country, but their operations will be circumscribed by China’s goals. If the value—or danger—from them is high, the government will create hybrid organizations that it can better control. This approach, which never ceases to shock foreigners, guides those who are boldly fashioning a new China.

At 61, the People’s Republic of China displays all the confidence of a nation that has overcome a midlife economic crisis. Nearly unscathed by the worst global recession in recent history, it is poised to reclaim its place as one of the world’s preeminent economies. The days of double-digit growth may be over, but the Chinese economy still expanded by 9% a year from 2008 to 2010. In August 2010 China passed Japan to become the second-largest economy in the world, and next year it is projected to become its biggest manufacturer, pushing the U.S. into second place. That will mark the return to the top spot for a nation that, according to economic historians, was the world’s leading manufacturer for 1,500 years, until around 1850, when Britain overtook it during the second industrial revolution...

Even as China moves up the ranks of economic superpowers, many discount these recent milestones. They don’t believe that China will become richer than the U.S.—in 2010 America’s GDP was three times China’s, and its per capita GDP was about 10 times greater, at the official exchange rate—or replace the U.S. as the wellspring of new technologies and other innovations any time soon. But almost unnoticed by the outside world, over the past four years China has been moving toward a new stage of development. It is quietly and deliberately shifting from a successful low- and middle-tech manufacturing economy to a sophisticated high-tech one, by cajoling, co-opting, and often coercing Western and Japanese businesses.