One World Insight Blog | Douglas "Las" Wengell

About

One World Insight is a multimedia meditation on the state of the world, by an American executive and entrepreneur, kicked off on a one year pilgrimage to emerging market nations. It’s an ongoing examination of business and culture through the prism of globalization at the dawn of the twenty first century. It’s a reflection on the implications of a flat, digitized world where someone’s problem is everyone’s problem, where outdated paradigms persist while new ones begin to emerge. More.

“Our Time has Come,” say the Chinese

What makes China so exciting is not so much its epic infrastructure in tangible projects (opposed to financial vaporware), its gigantean size or meteoric rise, but its singular attitude about the future, an attitude quintessentially at the heart of America’s DNA. There’s a confidence and patriotism, a manic energy, a cautious optimism, a sense that, after a “century of humiliation,” as is said here, China’s time has come.

 

Consider that eighty-six percent of the Chinese who believe their country is headed in the right direction, compared with 37 percent of Americans. The majority of the Chinese also believe that it will produce the next Google, while only a third of Americans believe the next big thing will happen on its soil. The reality may be different --  but you can’t deny the loss of American serotonin and testosterone.

 

Such yankee cowboy bravado is at the core of a nation’s vitality and at the heart of America’s economic engine. When anything is possible, the horizon is far and wide, and opportunities great, things happen. It’s intoxicating and self-fulfilling. How many American’s have been inspired by the hope that if you play by the rules and work really hard, anything can happen?

 

Across the political spectrum, Joe and Jane know that rules of the game are stacked against them. The rules have change.

An American Generation Deferred

There was a time, not long ago, when Americans were confident that the next generation would be wealthier, more skilled, better able, prettier, in a better position, happier than the prior one. That’s no longer true by almost every measure. My generation – Gen X – and those after will be the first in American history to witness a declining quality of living as measured by income, wealth and global competitiveness. And this before our engineers-turned-financial wizards single-handedly orchestrated the Great Recession and before Baby Boomers, who road the wing of postwar prosperity, begin their epic retirement, since they can’t afford to.

 

When I look at my life and those aspiring Americans around me – peers, friends, associates, fancy MBAs, interns, fellow travelers – there is a pattern suggesting a new reality. Few have worked at one job longer than a few years. Few have the time or resources to dig into other non-work aspects of their life – family, hobbies, travel. A huge number are freelancers of one sort or another, stitching together full-time work and taking it as it comes. Savings and retirement are worthy – but who can afford it? Legions of educated women have delayed family, whether because of a missing man or out of necessity (and what if things don’t work out?)  Many friends don’t think twice about receiving financial help from their family and more college graduates move home after graduation.

 

The future is too uncertain. It’s a generation deferred.

Testosterone Starved Americans

Every four years, the Pew Center and the Council on Foreign Relations conduct a survey called, simply, “America’s Place in the World,” which tracks the sentiment of the public and thought leaders. A new one was released this month and, while just a survey, the results tell a story of a nation short on testosterone.

 

· 53% say that China is a major threat and 44% of the public now think that China is the world’s leading economic power (never mind that the U.S. economy is three times as large.)

 

· For the first time in 40 years, about half of the general public agree that the U.S. should “mind its own business internationally and let other countries get along the best they can on their own” and only 10% think that America should make it a priority to promote democracy abroad, a far cry from September 2001’s 44 percent.

 

· Only 21% consider defending human rights a priority (down from 43%); and only 35% think America should strive to improve living standards in developing countries.

 

Viagra anyone? Or Prozac? Both of which are made in the U.S.A, if that’s any consolation.

Authoritarian vs. Democratic Capitalism – Say what?

The most striking thing about China to me, at a macro level, is how affective the central government has been in maintaining its power and embracing capitalism. Unlike in the West, the government is in fact highly competent.

The prevailing belief about democracy is that it’s inevitable. Autocracy would eventual give way to power-to-the-people, if only the guard’s grip on power waned. Russia was our Cold War enemy. And the line sold to American’s proved true. Russia imploded.  But China is different from Russia. It’s economy is capitalistic. It’s politics in the hands of the smartest people Beijing can recruit.

From building massive infrastructure projects ahead of schedule, to reconfiguring the nearby park overnight, I am awed at China’s ability to execute, knowing that it’s based on the very top-down approach vilified in the West.

America: Harder to Climb and Further to Fall

The future is catching up with the present. The American psyche is – or was – obsessed with consumption paid for by debt – in other words, live today at the cost of tomorrow.  It’s a me household and a me budget deficit. Production, savings and innovation are deferred for a nether future. We’ll pay for it after the party. Except what happens then and who takes the hit?

 

With a sordid history emblazed upon the memory of the older Chinese, the nation feels they can only move up. America has already achieved so much. It’s gotten rich and drunk with self-importance. It’s harder to climb and further to fall.

Welcome to the Global Economy Vietnam

Vietnam’s transition to a market-based economy, strong foreign capital investment, and net imports have led to inflation and trade and budget deficits. This in turn is putting pressure on its currency, the Dong. Vietnamese residents have responded by hoarding dollars and gold.

The State Bank of Vietnam has just done what Washington would like to see Beijing do: adjust its currency value, which is pegged to the U.S. dollar. Now, one U.S. dollar will buy me 18,544 dong, compared with 17,941 dong earlier in the week. In other words, exports are cheaper and as a visitor I am richer.

Don’t’ expect this to happen to neighboring China, Thailand or Indonesia. The enjoy strong foreign exchange reserve and trade surpluses. Their currencies are under pressured to rise, not weaken. And Beijing will do what it must to keep its economic engine growing.

Ayn Rand’s Shanghai on the Hill

Howard Roark, the protagonist in Ayn Rand’s Fountainhead, is a budding young architect. His challenge is to embrace bold, ambitious, future-oriented design from the self-generated well of creativity and ignore convention. This formed the basis of Rand’s libertarianism and influenced a generation of leader’s like Alan Greenspan, who put his faith not in central planning the marketplace. OK, at least he admitted before Congress that his worldview was not entirely correct.

The shimmering architecture of Shanghai got me thinking about Ayn Rand and Alan Greenspan. These buildings are not some Disneyland, or Las Vegas theme park. They are the psychic fabric of Shanghai, in perception and ethos, as well as the requisite urban infrastructure.  They are Shanghai. Here’s a city with attitude, like Beijing and Hong Kong. How unlike modern American urban architecture which, with some notable exception, has all but abandoned innovation for utility, banality over buttresses, functionality over form, mediocrity over majesty. Erase for a moment everything you know about the world and compare Shanghai architecture to America’s aging infrastructure, or JFK airport to Beijing International, and ask yourself who is aspiring and who is asphyxiating.

There’s bravado behind tarring down the old and creating something new. You’ll love Shanghai or hate it. But it’s something. It’s progress. It fosters innovation and creates new companies and new jobs. I laugh to myself when I think how long the new World Trade Center design took, or how the reconstruction of the San Francisco Bay Bridge is going on a decade. That just wouldn’t happen here.

America won World War II and has dominated the second part of the twentieth century. Good for us. But that was then and this is now. The world is changing; India and China are hungry and Americans overweight. “Only the paranoid survive,” said the founder of Intel. So if America is a company, what’s our new creation, our new product, our new skyline, our new marketing campaign, our employee training program, our new buildings, bridges, roads, trains and planes, our 2020?

If you don’t know where you are going, the saying goes, any road will take you there.

The Future of the Internet is in Mandarin

At least Eric Schmidt of Google thinks says so.

Half of all internet uses in the world use languages that have scripts other than Latin based. And so the tide turns to the emerging world. The regulatory body that governs domains said it would declare an end to the exclusive use of Latin characters.

Characters in Mandarin, Arabic, Korean and Japanese will be made available.

India verses China

These two countries account for one-third of humanity. Both of their economies are on fire. Both have a rising middle class. Both are witnessing massive foreign investment, as Western firms look outside of their home countries for profits (something Coke and tobacco companies have been doing for decades.) Millions of Indians and Chinese have been lifted out of poverty.

It’s amazing that a decade ago they were placed in the same sentence. China is racing ahead of India economical and militarily. “China is a brutal place to live if you are on the bottom rung but there is an exit,” said a man in Beijing. Not so in India. India has 10 million manufacturing jobs compared with 150 million in China. India has a sophisticated service sector, but that’s only useful if you are an educated, English speaking, urban Indian. What jobs are there for Indians?

The Chinese government has delivered on basic services and provisions—social mobility, jobs, education and health care. This is what you care about from the bottom rung. India’s chaotic democracy is chaotic and deadlocked, whereas China’s top down, autocracy works at lightning speed, which explains why China’s infrastructure is decades ahead of China and why India is painfully behind in its preparation for the 2010 Asian Games in New Delhi.

Per capita income is double in China, and its life expectancy is lower. Indians are twice as likely to lose a child before the age five. Ninety-three percent literacy in China, compared to sixty percent of Indians who can read (worse for women).

The U.S. is standing behind India and its messy democracy. It hopes it will balance China’s rise.

In the short-term, China is in the lead. Its autocratic system works well at this point in its economic development, when things need to get done. But it faces massive pressure from its people, to keep the machine going, to hold it all together. What if things fall apart, what about China’s long term prospects, can it be both prosperous and free? India’s people may be stifled materially right now, but they are not intellectually sheltered like the Chinese. There is a robust free press in India and deep bridges to the outside world and the support of Washington.  Media after all acts as a watchdog; there are no checks and balances on Beijing. One wrong step and there could be one hundred million peasants on Tiananmen Square.

“China, Inc.”

China is booming. You have to behold to believe. The economy has been on a tare for thirty years. Construction is everywhere, 24/7.

You can feel the hum.

A new KFC opens every other day, a new power plant every week. It holds the largest foreign reserves in the world ($1 trillion dollars) and is the number one destination for foreign investment. Yet it joined the World Trade Organization only in the late 1990s.
By 2013, its economy will be 1/3 of world output. By this century, its economy will pass the US. At least that’s what some are saying. When you look around it’s hard to deny that this could very well happen.

One thing is clear. China’s ascendance is lifting the world, and that’s never happened before. And with it, political aspirations and global influence…
http://www.nytimes.com/2009/08/24/business/global/24global.html?emc=eta1

China’s Adam Smith, Dèng Xiǎopíng

“Poverty is not socialism: to get rich is glorious,” said Deng Xiaping, the leader behind China’s lurch toward a more decentralized market economy. “Socialist market economy with Chinese characteristics,” is the saying but the Chinese business people I talk to laugh and just call it Chinese capitalism.

 

He was the architect of a socialist-capitalist system and unlike Mao, he embraced modernity and copied what he thought was working in the West. 

He made it ok for the Chinese to look outward, to join the world. Under Mao, life was hard and often tragic. Ever since the doors openned, the Chinese have bolted forward and not looked back.

As the Chinese celebrate National Day, I think Xiaoping is seen as the hero.

China Superpower Conundrum

On one hand, China identifies itself as a poor, emerging nation. This line of thinking implies special assistance. On the other, China wants to be a self-sufficient global citizen and leader.

 

The Chinese have been along on a free ride so far. We have been the bad guy. America does the  heavy lifting in foreign policy and make the tough decisions—and protects shipping lanes.  China keep its currency undervalued and benefits from emerging market status. Eventually China needs to become a responsible, engaged stakeholder in the international system and help solve international problems.

The conundrum is historically China has been an insular nation. “We build walls to keep people out, not invade foreign lands,” was how a businessman put it to me on an overnight train.

 

But the only way China will become a leader is if it takes the lead economically. And that will require innovation. And that require an informed, creative, question-asking citizenry. Qian Xuesen, the man who is credited with developing China’s atomic bomb, nearing death, was reported to have told China’s prime minister that what China most needed was innovation. “We’re not producing any creative people. We are making only technicians.”

 

The government wants advanced education without encouraging people to think.

 

In today’s globalize world, can you become a great power if you don’t allow your people to think? The Party wants to create a modern society. But it doesn’t want to allow too strong a civil society of churches, unions, associations, and other social organization needed to build a modern nation. It does not want citizens using the Internet to access sensitive information, but it needs technology to become the modern country it wants to be. The government needs to promote knowledge in order to compete, but knowledge is dangerous. It needs empowered people in order to become strong, but it can’t let the people be too empowered.

A Vision of One World

Global change will require international cooperation in ways unprecedented. A unilateral model of democracy and capitalism may need to coexist with something else not yet realized.  National self-interest will have to live with collective, global needs. The twentieth century saw the rise of global organizations such as the UN, NATO, WTO – but their power is limited relative to the sovereign state.

The Copenhagen summit was a painful reminder of the daunting challenge of world-wide norms and initiatives. The power of the American president is limited, as is the UN Security Council. Yet the problems facing this One World are global in scope. Someone’s problem is everyone’s problem, as U.S. West coast pollution is traced to Chinese factories. There’s no precedent. It’s a bold new era with far more questions and conundrums than answers and pathways forward.

Interesting times? Most certainly.

“Bet Against the American Dream” – aka, The Middle Class Short

This American Life, a U.S. public radio weekly, concluded a recent radio show with a Broadway parody distilling today’s robber barren era to its essence. Have a listen and  laugh (or cry):

Bet Against the American Dream from Alexander Hotz on Vimeo.

The top of the economic food chain has in effect shorted the middle class, and won. The losers in those bets weren’t Goldman Sachs investors -- they were millions of hard working Americans who bought into the American Dream, only to find it had been replaced by what looks more like House-takes-all ponzy scheme.

With the urgency of the financial crisis passing, the grim results surface: the largest transfer of wealth ever witnessed. Those at the top are intact and richer, those in the middle a few notches lower.  The American middle has been shrinking for at least 30 years and real wages stagnant when adjusted for inflation. Thirty years ago, top executives at S&P 500 companies made an average of 30 times what their workers did –  now they make 300 times. Between 2000 and 2008, the poverty rate in the suburbs of the largest metro areas in the U.S. grew by 25 percent – making these suburbs home to the country's largest and fastest-growing segment of the poor.

The American Dream used to be about hark work, perseverance, education, but the system appears rigged. Even the likes of establishment thinking is admitting this. In a new paper by The Hamilton Project, an economic think tank founded by Treasure-Citibank titan Robert Rubin, it argues that “the American tradition of expanding opportunity from one generation to the next is at risk because we are failing to make the necessary investments in human, physical, and environmental capital.”

The need to reorganize our financial system goes beyond the updating financial regulations. It goes to the heart of who we are as a nation, and whether we are going to stop sliding toward a Third World paradigm of two classes: those at the bottom and those at the top. “At least in an actual casino, the damage is contained to gamblers,” wrote financial journalist Roger Lowenstein.

 

One World Global Air Traffic Video

The Iceland volcano halted flights across Europe and the Atlantic, a humble reminder that  our lives are still at the pleasure of nature. Whether it’s people, cargo or digital bits, our planet gets smaller by the day. Check out this stunning video of global air traffic patterns, and note the seemingly lost continent of Africa.

Mandarin becoming the new French and German

A telling sign of American education is the instruction of foreign language. The world is fast becoming global and, while English will continue to be the dominant language into the twenty-first century, the precipitous rise of China has not much impacted pedagogy.   The big three foreign languages – Spanish, German and French – remain the primary options on the curriculum menu – provided they can be offered at all. Mandarin is on offer at a mere 4 percent of future-oriented American schools.

We would be wise to do away with German and French altogether and begin a massive campaign to teach our young Mandarin – giving them and America the advantage it will reap well into the future. Yet it’s the Chinese taking the initiative.

Excerpts from a New York Times piece, January 21, 2010, written by Sam Dillon.

Foreign Languages Fade in Class — Except Chinese

WASHINGTON — Thousands of public schools stopped teaching foreign languages in the last decade, according to a government-financed survey — dismal news for a nation that needs more linguists to conduct its global business and diplomacy.

But another contrary trend has educators and policy makers abuzz: a rush by schools in all parts of America to offer instruction in Chinese.

Some schools are paying for Chinese classes on their own, but hundreds are getting some help. The Chinese government is sending teachers from China to schools all over the world — and paying part of their salaries.

No one keeps an exact count, but rough calculations based on the government’s survey suggest that perhaps 1,600 American public and private schools are teaching Chinese, up from 300 or so a decade ago. And the numbers are growing exponentially.

Among America’s approximately 27,500 middle and high schools offering at least one foreign language, the proportion offering Chinese rose to 4 percent, from 1 percent, from 1997 to 2008.

“It’s really changing the language education landscape of this country,” said Nancy C. Rhodes, a director at the center and co-author of the survey.

“We’ve all been surprised that in such a short time Chinese would grow to surpass A.P. German,” Mr. Packer said.

A decade ago, most of the schools with Chinese programs were on the East and West Coasts. But in recent years, many schools have started Chinese programs in heartland states, including Ohio and Illinois in the Midwest, Texas and Georgia in the South, and Colorado and Utah in the Rocky Mountain West.

America has had the study of a foreign language grow before, only to see the bubble burst. Many schools began teaching Japanese in the 1980s, after Japan emerged as an economic rival. But thousands have dropped the language, the survey found.

Japanese is not the only language that has declined. Thousands of schools that offered French, German or Russian have stopped teaching those languages, too, the survey found.

Experts said several factors were fueling the surge in Chinese. Parents, students and educators recognize China’s emergence as an important country and believe that fluency in its language can open opportunities.

“Chinese is really taking root,” she said. Starting this fall, Jackson High will begin phasing out its German program, she said.

“We make nothing, we own everything” - The Rise of the Paper Entrepreneur

So said Gordon Gecko 25 years ago. Meanwhile, Geithner and Orszag recently testified to the Senate Appropriations Committee not long ago. There were echoes in the room:

“As great as the economy's immediate challenges are and have been, our country’s economic problems are also deeper and more long-standing.  For nearly a decade, typical American families had seen their incomes stagnate instead of rising steadily as they had for generations.  Much of the economic growth that we had experienced in the past decade was fueled by consumers and the Government running up large debts, aided by a financial system better at making short-term profits than managing long-term risks.  And as a country, we were failing to invest in education, new energy technologies, and basic research and development.”  http://www.ustreas.gov/press/releases/tg589.htm

Indeed, the financial sector that has been very entrepreneurial in the creation, sales and distribution of complex financial instruments in line with thirty years of “Washington Consensus” rhetoric and strong arming at the emerging markets – global monetization and open markets. There have been benefits and wealth creation. But on closer examination one must wonder where innovation ends and greed begins. Just take a look at corporate profits from the finance sector compared to all other parts of the American economy:

Treasure Secretary’s assessment of a “financial system better at making short-term profits than managing long-term risks” is unfortunately not a new insight.  

Every since the titans of Wall Street in the 1980s became rock stars, and the barriers between commercial and investment banking were lifted in the 1990s, and hoards of talented quants headed to banking rather than MIT and science careers, more than any other point in American history, the engine of American innovation has lionized the rise of what Robert Reich aptly calls “paper entrepreneurs,” intangible, financial products and services which are big on gimmicks and light on substance.

The most striking thing about former Labor Secretary Robert Reich’s prescient opinion piece below is that it was written in 1980 – yet its insights are just as relevant today thirty years on.

 

“The paper entrepreneurs are winning out over the product entrepreneurs.

Paper entrepreneurs — trained in law, finance, accountancy — manipulate complex systems of rules and numbers. They innovate by using the systems in novel ways: establishing joint ventures, consortiums, holding companies, mutual funds; finding companies to acquire, “white knights” to be acquired by, commodity futures to invest in, tax shelters to hide in; engaging in proxy fights, tender offers, antitrust suits, stock splits, spin-offs, divestitures; buying and selling notes, bonds, convertible debentures, sinking-fund debentures; obtaining government subsidies, loan guarantees, tax breaks, contracts, licenses, quotas, price supports, bailouts; going private, going public, going bankrupt.

Product entrepreneurs — engineers, inventors, production managers, marketers, owners of small businesses — produce goods and services people want. They innovate by creating better products at less cost.

Our economic system needs both. Paper entrepreneurs ensure that capital is allocated efficiently among product entrepreneurs. But paper entrepreneurs do not directly enlarge the economic pie. They only arrange and divide the slices. They provide nothing of tangible use. For an economy to maintain its health, entrepreneurial rewards should flow primarily to product, not paper.

Yet paper entrepreneurialism is on the rise. It dominates the leadership of our largest corporations. It guides government departments, legislatures, agencies, public utilities. It stimulates platoons of lawyers and financiers.

It preoccupies some of our best minds, attracts some of our most talented graduates, embodies some of our most creative and original thinking, spurs some of our most energetic wheeling and dealing. Paper entrepreneurialism also promises the best financial rewards, the highest social status.

The ratio of paper entrepreneurialism to product entrepreneurialism in our economy — measured by total earnings flowing to each, or by the among of news in business journals and newspapers typically devoted to each — is about 2 to 1.

Why? Our economic system has become so complex and interdependent that capital must be allocated according to symbols of productivity rather than according to productivity itself. These symbolic rules and numbers lend themselves to profitable manipulation far more readily than do the underlying processes of production.

It takes time and effort to improve product quality, exploit manufacturing efficiencies, develop distribution and sales networks. But through strategic use of accounting conventions, tax rules, stock and commodity exchanges, exchange rates, government largesse, and litigation, enormous profits are possible with relatively little effort.

When paper entrepreneurs look for solutions to America’s declining productivity and international competitiveness, they come up with paper remedies to stimulate large-scale capital investment: accelerated depreciation, tax credits, government subsidies, relaxation of antitrust laws. 

Product entrepreneurs focus on techniques for improving output: better quality controls, improved labor-management relations, more effective incentives for managers and employees, more aggressive marketing and sales.

If we are to increase the economic pie, we will need to redress the balance of entrepreneurial effort. Which strategies will stimulate more paper, and which more product?”

The United States Land of Opportunity? Think Again.

A 2010 report from the Organization for Economic Co-Operation and Development finds that social mobility between generations is dramatically lower in the U.S. than in many other developed countries.  The report finds the U.S. below Denmark, Australia, Norway, Finland, Canada, Sweden, Germany and Spain in terms of how freely citizens move up or down the social ladder. Only in Italy and Great Britain is the intensity of the relationship between individual and parental earnings greater.

The credible report is an ugly reality check for a nation that has historically seen itself as uniquely rewarding of talent; as a place free of the sorts of rigid social structures that led so many generations of immigrants to leave Old Europe.

Harvard Professor Elizabeth Warren argues that America’s middle class had been eroding for 30 years even before the massive blows caused by the financial crisis. And with unemployment currently at astronomical levels, if there are no jobs for young people leaving school, the result could be long-term underemployment and, effectively, a lost generation.

According to the report, the main cause of social immobility is educational opportunity. It turns out that America’s public school system, rather than lifting children up, appears to be holding them down.

Another big factor in social mobility is inequality, the report finds. The greater a nation’s inequality, the harder it is for its children to improve their lot. That confirms findings by other researchers. “The way I usually put this is that when the rungs of the ladder are far apart, it becomes more difficult to climb the ladder,” Brookings Institution says. ”Given that we have more inequality in the U.S. right now than at any time since the 1920s, we should be concerned that this may become a vicious cycle. Inequality in one generation may mean less opportunity for the next generation to get ahead and thus still more inequality in the future.”

Elected officials have a false sense of security that because we are the sole superpower that we must be number one in everything. The facts suggest otherwise. The U.S. is below average in public finance, education results, healthcare outcomes, the status of infrastructure, investments in basic research, to name a few. We need to stop looking in the rear view mirror, make tough choices and invest in our future.

The Emergence of the “Beijing Consensus”

From the formation of the United States, Americans have always been paranoid about falling behind. The rise of Japan in the 1980s was the last example. Now it’s China.

As recently as 2008, when China was still an emerging economy eager to put its best foot forward for Western consumers, it lifted censorship, at least temporarily, on several Web sites before the Beijing Olympics. At the same time, it responded to pleas from U.S. and European politicians to cooperate on several other fronts. When China was seeking to join the World Trade Organization a decade ago, it accepted compromises to U.S. and European demands. With China’s rising clout, the West has less leverage over Beijing. At climate talks in Copenhagen, however, China blocked a comprehensive deal and refused to go beyond its earlier promises. Western diplomats complain about the way Beijing is dragging its feet on sanctions on Iran’s nuclear program and is propping up unsavory regimes across the world in its hunt for the natural resources to power its growth.

These days, China is no longer emerging. It has emerged — sooner and more assertively than had been expected before the wrenching global financial crisis, which badly damaged all the established industrial powers, from the United States to Europe and Japan. Its currency, the renminbi, is frozen at an undervalued level, and Internet controls are stricter than ever — even as Google threatens to leave.

The severe recession has fast-forwarded history, catapulting an unprepared world into a period of uneasy cohabitation between the United States, the No. 1 economy, and its likely successor.

“China is the West’s greatest hope and greatest fear.”  “No one was quite ready for how fast China has emerged.” “Everyone is trying to understand what sort of China they will be dealing with.” Politicians, pundits and academics.

For the first time, economists are pointing to Chinese spending — not the U.S. consumer — as the key to a global recovery. China’s GDP could overtake that of the United States within a decade; a PriceWaterhouseCoopers report predicts by 2020; and Goldman Sachs predicts by 2027; others are speculating about when the renminbi might begin to challenge the dollar as the world’s reserve currency.

Meanwhile, as developing countries look for a recipe for faster growth and greater stability than that offered by the now-tattered “Washington Consensus” of open markets, floating currencies and free elections, there is talk about a “Beijing Consensus.”

When the United States was snapping at the heels of the British empire, the global ruler of the early 20th century, the situation caused plenty of heat, even though both countries spoke the same language, shared similar values and were liberal democracies. China, in contrast, is a Confucian- Communist-capitalist hybrid under the umbrella of a one-party state that has so far resisted giving greater political freedom to a growing middle class.

What is the Beijing consensus? Some see it as a form of economic management with greater government involvement that is on the rise across the world. Others interpret it to mean more strictly controlled capital markets, which have made a re-appearance even in previously open countries like Brazil. Policy makers in Malaysia and Dubai focus on replicating China’s special economic zones, which afford generous terms to foreign investors in manageable geographic areas. Some suggest that China’s lack of democracy is an advantage in making unpopular but necessary changes. “It is more challenging for democratic systems because ever day they come under public pressure and every short period they have to go back to the polls,” said Victor Chu, chairman of First Eastern Investment Group in Hong Kong, the largest direct investment firm in China. “China is lucky to have the ability to make long-term strategic decisions and then execute them clinically.”

Some say Chinese officials are using their country’s $2.4 trillion in foreign currency reserves as a bargaining chip, knowing that any hint of reducing those reserves would rattle currency markets. “As China is emerging on the global stage with unprecedented power and influence, it is not proving to be the global partner the United States and E.U. seek,” said Professor David Shambaugh of George Washington.

The world will be asking more and more of China. So far, it appears to be getting less and less in return.

Market Access to China Treacherous - Multinationals Including

McDonald’s plans to double its presence in the world’s fastest-developing economy over the next few years. For those who know how ubiquitous it already is, it’s a huge increase. McDonald’s has about 1,100 outlets and it opened its first outlet in Shenzhen in only 1990. It expects informal eating out to grow by 10% a year, because of China’s growing middle class. China accounts for about 23% of McDonald’s revenue from the Asia-Pacific, Middle East and Africa regions. More uncoupling of American multinations and the S&P 500 from America, or any nation.

Starbucks recently announced similar plans. Same for Boeing, Intel, GM and the list goes on. If you want to know where the action will be in the coming years, multinationals are not counting on the West.  

China is the biggest recipient of foreign direct investment in the world: 450 of the Fortune 500 companies have a business presences there, and many of those reeling at home are doing brisk business in China. G.M. is hurting everywhere but for China.

Despite WTO agreements, Beijing is not making it easy for the largest, most powerful Western corporations, no less medium-sized American firms or non-Chinese entrepreneurs, citing national security concerns, which it defines broadly. “As a socialist country, China must put its own interests first when opening up and keep a firm hold on the right to lead core industries,” said a minister. Beijing is instating a formal review process, similar to the Committee on Foreign Investment in the United States. But a similar panel in China would be part of a government that has much greater direct influence on businesses than in the US.

Meanwhile, China’s new Nasdaq-style ChiNext board, which aims to boost start-ups and small and medium-sized companies, is a huge step forward for the formation of its capital markets.If you want in, you must play by Beijing’s rules. Except for maybe Google, most are willing to comply despite domestic repression. Don’t expect Walmart to let on to its American customers.