Dealing with China summary

While these initiatives encouraged business in China, influential economic events around the world inspired Chinese business people too. One such event was the massive deregulation and privatization spearheaded by Margaret Thatcher in the United Kingdom between 1985 and 1990.

Privatization in China proved to be a godsend for slacking state-owned companies run by people with little knowledge of modern business practices and laden with debt by the mid-1990s. By selling shares of these companies to the public and international companies, capital was raised and SOEs were improved, because they had to adopt global accounting standards.

The privatization of China Telecom was wildly successful, so why stop there? The next step was oil, a sector also in desperate need of reform.

As the 1990s drew to a close, the Chinese oil sector was highly inefficient and begging to be restructured. Despite some previous attempts to improve matters, the China National Petroleum Company (CNPC) still lagged behind its Western competitors.

Amid all of the sweeping changes in China, there was one glaring problem that couldn’t be ignored. In terms of education and banking, China was totally incompatible with the global marketplace. So how was this addressed?

In the 1990s, Chinese universities had no problem producing fantastic engineers. But when it came to educating capable managers, they lagged far behind Western universities. Chinese Premier Zhu Rongji recognized this, and decided that business education at Tsinghua University needed to be reformed. He asked the author to evaluate the school, known as the “MIT of China,” and propose a new executive program.

We saw in the first blink that massive economic change in China had an equally massive impact on the nation. Today, as a leader in the global marketplace, China has the power to influence the rest of the world too – and to quite a frightening degree!

One alarming development that could potentially have massive reverberations worldwide is China’s debt. If rising debt is not reigned in, China might face an economic meltdown that would rock the world economy. The amount of debt in the Chinese economy rose from 130 percent of GDP in 2008 to 206 percent in 2014. What’s more, the debt is actually growing much faster than the GDP; in other words, it’s the perfect recipe for a crisis! In April 2014, the IMF made their concerns clear, urging China to take control of its ballooning credit levels.

In any good relationship, open communication is essential to solving complex problems. It’s even more important between global superpowers.

And yet, in the early 2000s, dialogue between the US and China was quite unstable. So how did they improve things?

Most people know that the US and China have had a strategic relationship for many years. Their strategic relationship goes back to the 1970s. The basis of the relationship is that the the US benefits from low-cost imports and China has profits from the American obsession with cheap consumer goods.

Now, as China has grown to be one of the world’s largest economies, many Americans wonder: Why help a competitor?