China's next 5-year plan
Mariana van Zeller and I just returned from our first trip to China. We’ve covered a lot of ground since joining Vanguard, but somehow never made it there before. Not that China hasn’t been on our radar. Its been difficult to miss China’s growing power and influence across the globe, an issue we highlighted in "Chinatown, Africa". (In fact, we’ll be talking about China’s influence in Africa this weekend at an MIT/USC event, if you’re around).
In many year-end roundups, it was commented that in the last decade we witnessed China’s coming out party on the world stage. But just as many were giving the country its due for its explosive growth over the last several years, others began predicting dire days ahead for the emerging power.
On the way back from China, I was reading about how renowned Wall Street short-seller James Chanos, a man infamous for betting and winning large on the collapse of Enron, is now looking to put his chips on a China crash. “China is Dubai times 1,000,” he says in the New York Times article.
The piece on Chanos was followed up with a series of stories on the overheated real estate market in Beijing and other signs of bubbles in the Chinese economy.
So is China teetering on the brink of collapse?
After a little over a week in China, I feel the only thing I can say for sure is: I have no idea. But fortunately, I was in the region at the same time as some one who might and was thinking about the same things, but actually works on real deadlines.
In today’s Times, Tom Friedman takes on the Chanos story. But I would add just one thing that if I were looking to invest in China I’d be watching for this year.
While in China we met with several environmentalists who like many environmentalists around the world were deflated after the disappointment that was COP 15. So, we asked, what’s on the agenda for the year ahead?
The answer was more or less the same from everyone. Last year, with the anticipation of COP 15, Chinese environmentalists were thinking globally. This year, they're acting locally. And 2010 will be a critical time in China. This is the year that the central government begins to formulate its next 5-year plan. And many in China are seizing the opportunity to push for China’s 12th 5-year plan to include a transition to a low-carbon economy.
Anyone who’s been to Beijing -- and tried to breath there -- knows that what’s currently fueling China’s economic growth is unsustainable. Not unsustainable in the way crunchy granolas here speak of it, but in a gas-mask-is-the-new-Beijing-fashion sort of way.
So if China’s political class are as smart as Tom Friedman often gives them credit for, then China’s next 5-year plan could be a game changer, building the critical mass for cleaner fuels and greener technology. And then you can bet that’s where the smart money will be.
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