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Five Things the U.S. Can Learn from China

November 17, 2009

By Bill Powell
TIME Magazine
November 12, 2009

Shanghai -- On the evening of Nov. 15, President
Barack Obama, the youthful leader of one of the
world's youngest countries, begins his first
visit to China, among the world's most ancient
societies. Obama and his Chinese counterpart, Hu
Jintao, have much to discuss. Nukes in Iran and
North Korea. China's surging military spending.
Trade imbalances. Climate change.

But the visit comes at an awkward moment for the
U.S. China, despite its 5,000-year burden of
history, has emerged as a dynamo of optimism,
experimentation and growth. It has defied the
global economic slump, and the sense that it's
the world's ascendant power has never been
stronger. The U.S., by contrast, seems suddenly
older and frailer. America's national mood is
still in a funk, its economy foundering, its
red-vs.-blue politics as rancorous as ever. The
U.S. may be one of the world's oldest capitalist
countries and China one of the youngest, but you
couldn't blame Obama if he leaned over to Hu at
some point and asked, "What are you guys doing
right?" (See pictures of people around the world
watching Obama's Inauguration.)

Could the world's lone but weary superpower
actually learn something from China? It's a
politically incorrect question, of course. China
is an authoritarian nation; its ruling Communist
Party deals ruthlessly with any challenge to its
hegemony. It remains, relatively speaking, a
poor, developing country with huge problems to
confront, massive corruption and environmental
degradation being Nos. 1 and 1a. Still, this is a
moment of humility for the U.S., and China is
doing some important things right. If the U.S.
were to ask the Chinese what it could learn from
their example, it might gain some insight into
what it's doing right and wrong. Here are five
lessons from China's success story:

1. Be Ambitious
One day this summer, Sean Maloney, an executive
vice president at Intel, was bouncing from one
appointment to another in northeastern China,
speeding along in a van traversing newly built
highways. He gazed out at one of the world's
biggest construction projects: a network of
high-speed train lines -- covering 10,000 miles
(16,000 km) nationwide -- that China is building.
As far as the eye could see, there sat vast
concrete support struts, one after another,
exactly 246 ft. (75 m) apart. Each was full of
steel cables and weighed about 800 tons. "We used
to build stuff too," Maloney mused, unprompted.
"But now it's NIMBY [not in my backyard] every
time you try to do something. Here," he joked,
"it's more like IMBY. There's stuff happening
here, everywhere and always." (See pictures of
the largest military parade in China's history.)

It's not just NIMBYism that constrains the U.S.
these days, of course. America is close to tapped
out financially, with budget deficits this year
and next exceeding $1 trillion and forecast to
remain above $500 billion through 2019. But
sometimes the country seems tapped out in terms
of vision and investment for the future.

Some economists believe that given its stage of
development, China spends too much on expensive
items like high-speed rail lines. But step back
from the individual infrastructure projects and
the debates about whether a given investment is
necessary, and what's palpable in China is the
sense of forward motion, of energy. No foreigner
-- at least not one I've met in five years of
living here — even bothers denying it. And the
Chinese take it for granted. When a brand-new
six-lane highway opened in suburban Shanghai in
October, Zhong Li Ping, who shuttles migrant
workers to the city and back to their hometowns,
said, "I don't know what took them so long." In
truth, it took about two years -- roughly the
time it would take to get the environmental and
other regulatory permits for a new highway in the
U.S. If, that is, you could get them at all. (See
TIME's photo-essay "The Making of Modern China.")

There's no direct translation into Chinese of the
phrase can-do spirit. But yong wang zhi qian
probably suffices. Literally, it means "march
forward courageously." China has — and has had
for years now -- a can-do spirit that's
unmistakable. Americans know the phrase well.
They invented it. It used to define them.

Critics of the authoritarian Chinese government
would say it's a system more accurately called
"can do -- or else." And they have a point. No
one in the U.S. would argue that it should adopt
China's dictatorial style of government. America
doesn't need to displace tens of thousands of
people in order to build a massive dam, as China
did in Hubei province from 1994 to 2006. (The
value of checks and balances is, in fact, among
the many things China could learn from the U.S.)
But you don't have to be a card-carrying
communist to wonder how effectively the U.S.
develops and executes ambitious projects. Ask
James McGregor. He's a former chairman of the
American Chamber of Commerce in China and now a
business consultant who divides his time between
the two countries. "One key thing we can learn
from China is setting goals, making plans and
focusing on moving the country ahead as a
nation," he says. "These guys have taken the old
five-year plans and stood them on their head.
Instead of deciding which factory gets which raw
materials, which products are made, how they are
priced and where they are sold, their planning
now consists of 'How do we build a world-class
silicon-chip industry in five years? How do we
become a global player in car-manufacturing?'"

Some of this is the natural arc of a huge,
fast-growing country in the process of
modernization. The U.S. in the late 19th century
was nothing if not what Intel's Maloney would
call an IMBY country. America was ambitious.
There's no secret formula to help the nation get
back its zeal for what it used to
enthusiastically and sincerely call progress. But
even though the U.S. is a mature, developed
country, many economists believe it has
shortchanged infrastructure investment for
decades. It possibly did so again in this year's
stimulus package. Just $144 billion of the $787
billion stimulus bill Congress passed earlier
this year went to direct infrastructure spending.
According to IHS Global Insight, an
economic-consulting firm, U.S. spending on
transportation infrastructure will actually
decline overall in 2009 when state budgets are
factored in -- this at a time when the American
Society of Civil Engineers contends that the U.S.
should invest $1.6 trillion to upgrade its aging
infrastructure over the next five years.

When the economic crisis hit China late last
year, by contrast, almost half of the emergency
spending Beijing approved -- $585 billion spread
over two years — was directed at projects that
accelerated China's massive infrastructure
build-out. "That money went into the real economy
very quickly," says economist Albert Keidel of
the Carnegie Endowment for International Peace.

But it's not just emergency spending on bridges,
roads and high-speed rail networks that's helping
growth in China. Patrick Tam, general partner at
Tsing Capital, a venture-capital firm in Beijing,
says the government is aggressively helping seed
the development of new green-tech industries. An
example: 13 of China's biggest cities will have
all-electric bus fleets within five years. "China
is eventually going to dominate the industry for
electric vehicles," Tam says, "in part because
the central government has both the vision and
the financial wherewithal to make that happen."
Tam, a graduate of MIT and the University of
California, Berkeley, says he does deals in
Beijing rather than Silicon Valley these days
"because I believe this is where these new
industries will really take shape. China's got
the energy, the drive and the market to do it."
Isn't that the sort of thing venture capitalists
used to say about the U.S.? (See pictures of the global financial crisis.)

2. Education Matters
On a recent Saturday afternoon, at a nice
restaurant in central Shanghai, Liu Zhi-he sat
fidgeting at the table, knowing that it was about
time for him to leave. All around him sat
relatives from an extended family that had
gathered for a momentous occasion: the 90th
birthday of Liu's great-grandmother Ling Shu
Zhen, the still spry and elegant matriarch of a
sprawling clan. But Liu had to leave because it
was time for him to go to school. This Saturday,
as he does every Saturday, Liu was attending two
special classes. He takes a math tutorial, and he studies English.

Liu is 7 years old.

A lot of foreigners -- and, indeed, a fair number
of Chinese -- believe that the obsession (and
that's the right word) with education in China is
overdone. The system stresses rote memorization.
It drives kids crazy -- aren't 7-year-olds
supposed to have fun on Saturday afternoons? --
and doesn't necessarily prepare them,
economically speaking, for the job market or,
emotionally speaking, for adulthood. Add to that
the fact that the system, while incredibly competitive, has become corrupt.

All true -- and all, for the most part, beside
the point. After decades of investment in an
educational system that reaches the remotest
peasant villages, the literacy rate in China is
now over 90%. (The U.S.'s is 86%.) And in urban
China, in particular, students don't just learn
to read. They learn math. They learn science. As
William McCahill, a former deputy chief of
mission in the U.S. embassy in Beijing, says,
"Fundamentally, they are getting the basics
right, particularly in math and science. We need
to do the same. Their kids are often ahead of
ours." (See pictures of China on the wild side.)

What the Chinese can teach are verities, home
truths that have started to make a comeback in
the U.S. but that could still use a push. The
Chinese understand that there is no substitute
for putting in the hours and doing the work. And
more than anything else, the kids in China do
lots of work. In the U.S., according to a 2007
survey by the Department of Education, 37% of
10th-graders in 2002 spent more than 10 hours on
homework each week. That's not bad; in fact, it's
much better than it used to be (in 1980 a mere 7%
of kids did that much work at home each week).
But Chinese students, according to a 2006 report
by the Asia Society, spend twice as many hours
doing homework as do their U.S. peers.

Part of the reason is family involvement.
Consider Liu, the 7-year-old who had to leave the
birthday party to go to Saturday school. Both his
parents work, so when he goes home each day, his
grandparents are there to greet him and put him
through his after-school paces. His mother says
simply, "This is normal. All his classmates work like this after school."

Yes, big corporate employers in China will tell
you the best students coming out of U.S.
universities are just as bright as and, generally
speaking, far more creative than their
counterparts from China's élite universities. But
the big hump in the bell curve — the majority of
the school-age population — matters a lot for the
economic health of countries. Simply put, the
more smart, well-educated people there are — of
the sort that hard work creates -- the more
economies (and companies) benefit. Remember what
venture capitalist Tam said about China and the
electric-vehicle industry. A single, relatively
new company working on developing an electric-car
battery — BYD Co. — employs an astounding 10,000 engineers.

China, critics will point out, doesn't produce
(at least not yet) many Nobel Prize winners. But
don't think the basic educational competence of
the workforce isn't a key factor in its having
become the manufacturing workshop of the world.
It isn't just about cheap labor; it's about smart
labor. "Whether it's line workers or engineers,
we're finding the candlepower of our employees
here as good as or better than anywhere in the
world," says Nick Reilly, a top executive at
General Motors in Shanghai. "It all starts with
the emphasis families put on the importance of
education. That puts pressure on the government
to deliver a decent system." (See pictures of the best-selling cars in China.)

And the Chinese government responds to that
pressure in some intriguing ways. It insists that
primary-school teachers in math and science have
degrees in those subjects. (Less than half of
eighth-grade math teachers in the U.S. majored in
math.) There is a "master teacher" program
nationwide that provides mentoring for younger
teachers. Zhang Dianzhou, a professor emeritus of
mathematics at East China Normal University in
Shanghai who co-chaired a committee charged with
redesigning high school mathematics programs
across the country, says recent changes have
begun to reflect more of a "real-world emphasis."
Computer-science courses, for example, have been
integrated into the math curriculum for high
school students. And China is placing even more
importance on teaching young students English and
other foreign languages. If you think China's
willingness to constantly fine-tune its
educational system is not going to have much of
an impact 20 years from now, there's a 7-year-old
boy in Shanghai who'd be happy to discuss the issue with you. In English.

3. Look After the Elderly
it's hard to imagine two societies that deal with
their elderly as differently as the U.S. and
China. And I can vouch for that firsthand. My
wife Junling is a Shanghai native, and last month
for the first time we visited my father at a
nursing home in the U.S. She was shaken by the
experience and later told me, "You know, in
China, it's a great shame to put a parent into a
nursing home." In China the social contract has
been straightforward for centuries: parents raise
children; then the children care for the parents
as they reach their dotage. When, for example,
real estate developer Jiang Xiao Li and his wife
recently bought a new, larger apartment in
Shanghai, they did so in part because they know
that in a few years, his parents will move in
with them. Jiang's parents will help take care of
Jiang's daughter, and as they age, Jiang and his
wife will help take care of them. As China slowly
develops a better-funded and more reliable
social-security system for retirees — which it
has begun — the economic necessity of generations
living together will diminish a bit. But no one
believes that as China gets richer, the cultural
norm will shift too significantly.

To a degree, of course, three generations living
under one roof has long happened in the U.S., but
in the 20th century, America became a
particularly mobile and rootless society. It is
hard to care for one's parents when they live three time zones away.

Home care for the elderly will most likely make a
comeback in the U.S. out of sheer economic
necessity, however. The number of elderly
Americans will soar from 38.6 million in 2007 to
71.5 million in 2030. But, says Arnold Eppel, who
recently retired as head of the department of
aging in Baltimore County, Maryland, "There won't
be enough spots for them" in the country's
overwhelmed nursing-home system. Appreciating the
magnitude of the coming crisis, the U.S.
government has begun to respond. Two new
initiatives -- Nursing Home Diversion and Money
Follows the Person -- expand subsidies for home
elder care, and the Veterans Health
Administration has just put in effect its own
similar initiative. "The whole trend will be into
home care, because nursing homes are too
expensive," Eppel says, noting that nursing-home
care in the U.S. costs about $85,000 annually per resident.

In China, senior-care costs are, for the most
part, borne by families. For millions of poor
Chinese, that's a burden as well as a
responsibility, and it unquestionably skews both
spending and saving patterns in ways that China
needs to change (see Save More, below). For
middle-class and rich Chinese, those costs are a
more manageable responsibility but one that
nonetheless ripples through their economic
decision-making. Still, there are benefits that
balance the financial hardship: grandparents
tutor young children while Mom and Dad work; they
acculturate the youngest generation to the values
of family and nation; they provide a sense of
cultural continuity that helps bind a society.
China needs to make obvious changes to its
elder-care system as it becomes a wealthier
society, but as millions of U.S. families make
the brutal decision about whether to send aging
parents into nursing homes, a bigger dose of the
Chinese ethos may well be returning to America.

4. Save More
You've now heard it so many times, you can
probably repeat it in your sleep. President Obama
will no doubt make the point publicly when he
gets to Beijing: the Chinese need to spend more;
they need to consume more; they need -- believe
it or not -- to become more like Americans, for the sake of the global economy.

And it's all true. But the other side of that
equation is that the U.S. needs to save more. For
the moment, American households actually are
doing so. After the personal-savings rate dipped
to zero in 2005, the shock of the economic crisis
last year prompted people to snap shut their
wallets. Now that it's pouring, in other words,
American households have decided to save for a
rainy day. The savings rate is currently about 4%
and has gone as high as 6% this year. (See TIME's
photo-essay "A New Look at Old Shanghai.")

In China, the household-savings rate exceeds 20%.
It is partly for straightforward policy reasons.
As we've seen, wage earners are expected to care
for not only their children but also their aging
parents. And there is, to date, only the
flimsiest of publicly funded health care and
pension systems, which increases incentives for
individuals to save while they are working. But
China, like many other East Asian countries, is a
society that has esteemed personal financial
prudence for centuries. There is no chance that
will change anytime soon, even if the government
creates a better social safety net and
successfully encourages greater consumer spending.

Why does the U.S. need to learn a little
frugality? Because healthy savings rates,
including government and business savings, are
one of the surest indicators of a country's
long-term financial health. High savings lead,
over time, to increased investment, which in turn
generates productivity gains, innovation and job
growth. In short, savings are the seed corn of a good economic harvest.

The U.S. government thus needs to get in on the
act as well. By running perennial deficits, it is
dis-saving, even as households save more. Peter
Orszag, Obama's Budget Director, recently called
the U.S. budget deficits unsustainable -- this
year's is $1.4 trillion -- and he's right. To
date, the U.S. has seemed unable to have what
Indiana Governor Mitch Daniels has called an
"adult conversation" about the consequences of
spending so much more than is taken in. That
needs to change. And though Hu Jintao and the
rest of the Chinese leadership aren't inclined to
lecture visiting Presidents, he might gently hint
that Beijing is getting a little nervous about
the value of the dollar — which has fallen 15%
since March, in large part because of increasing
fears that America's debt load is becoming
unmanageable. (See TIME's special report "Obama
After a Year: What's Changed, and What Hasn't.")

That's what happens when you're the world's
biggest creditor: you get to drop hints like
that, which would be enough by themselves to
create international economic havoc if they were
ever leaked. (Every time any official in Beijing
muses publicly about seeking an alternative to
the U.S. dollar for the $2.1 trillion China holds
in reserve, currency traders have a heart
attack.) If Americans became a bit more like the
Chinese -- if they saved more and spent less,
consistently over time -- they wouldn't have to worry about all that.

5. Look over the Horizon
The energy that so many outsiders feel when they
are in China and that President Obama may see
when he is there comes not just from the frenetic
activity that is visible everywhere. It comes
also from a sense that it's harnessed to
something bigger. The government isn't
frantically building all this infrastructure just
to create make-work jobs. And kids aren't
studying themselves sleepless because it's a lot
of fun. A few years ago, I interviewed Zhang Xin,
a young man from a deeply poor agricultural
province in central China. His parents were wheat
farmers and lived in a tiny one-room house next
to the fields. He had graduated from Tsinghua
University — China's MIT — and gotten a job as a
software engineer at Huawei, the Cisco of China.
His success, Zhang told me one day, had changed
his family forever. None of his descendants would
"ever work in the wheat fields again. Not my
children. Not their children. That life is over."
(And neither would his parents. They moved to
prosperous Shenzhen, just north of Hong Kong,
soon after he started his new job.)

Multiply that young man's story by millions, and
you get a sense of what a forward-looking country
this once very backward society has become. A
smart American who lived in China for years and
who wants to avoid being identified publicly
(perhaps because he'd be labeled a "panda
hugger," the timeworn epithet tossed at anyone
who has anything good to say about China) puts it
this way: "China is striving to become what it
has not yet become. It is upwardly mobile,
consciously, avowedly and -- as its track record
continues to strengthen -- proudly so."

Proudly so, because as Zhang understood, hard
work today means a much better life decades from
now for those who will inherit what he helped
create. And if that sounds familiar to Americans
-- marooned, for the moment, in the deepest recession in 26 years -- it should.
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