China Needs Chinese-Style Globalization

Author: [Site Administrator]
Source: [Fund Analysis]
Article type: Regular article
Published: 2008-1-25 22:07:49
Column: Expert Perspectives

Recently, the U.S. subprime crisis has greatly embarrassed and weakened those American financial institutions that were once worshipped as idols by China's financial investment community. In the field of financial investment, there have never been any idols. Risk is fair to everyone. What once made you shine may be the very trap that ultimately buries you — and that, presumably, admits of no national distinctions.

This brings to mind: if our own brokerages, funds, and financial institutions — raised in sugar water — were to face such a situation, how many could survive? Market economics is no Garden of Eden — who can guarantee that something similar would never happen?

Now everyone likes to rush headlong into globalization and internationalization. But do we really need to blindly pursue globalization and internationalization? Meat rotting in one's own pot is always better than rotting in someone else's. Behind globalization and internationalization, there has never been a shortage of interest allocation between nations. More importantly, globalization has always involved the question of which country leads it. Currently, let us not mince words: the globalization to date has been led by the United States. The so-called globalization trend we're caught up in is, frankly, an American-led global economic game with all the rules set by others. Do we really need to desperately join such a game?

China needs Chinese-style globalization. China's market will inevitably become the world's largest. With this source of attraction, we can fully integrate the markets of East Asia and even the whole of Asia — a great Asian economic body that could even include Russia. In such an enormous system, there is probably no need for globalization at all, because the entire globe will be drawn into the powerful gravitational pull of this great economic body.

Globalization is not about letting the globe dissolve us, but about using ourselves as the source of attraction, continuously integrating through oscillation into an ever-larger attractor, thereby drawing the entire globe into it. Such globalization is probably what the Chinese people should truly pursue. A great Asian economic body powered by a China-Russia-India-Japan quad-core engine, encompassing more than half the world's population and economic scale — wouldn't that be enough to change the world economic order and rules? Order and rules are never a priori — they are always the result of real-world interest dynamics. Everything is possible, and possibility is worked out in practice.

Honestly, the prospects for our enterprises — especially financial investment enterprises — participating in globalization under American rules are truly difficult to be optimistic about. It's like playing mahjong where the players on your left, right, and across are all in cahoots — your odds of winning are basically zero. Some may counter: then why has our manufacturing sector achieved such brilliant success? That's simply because the others' game focus has not been there.

Our sugar-water-raised brokerages are still making money by fattening themselves through vile tricks like creating additional warrants to fleece retail investors. Imagine — in today's American-style international, globalized markets, could such opportunities exist? Institutions grown on such tactics — once they go out and face those predatory sharks and wolves — can they expect any good outcome?

So the best strategy is still to stay home. Being a local bully is not something to be embarrassed about — the key is that your home is big enough. China's economic home is truly big enough. As long as we steadily become the world's largest market and the world's largest source of attraction, we can globalize our game rules. This way, our sugar-water-raised brokerages can at least occupy the best positions in their own home — at least they'll have the advantage of home turf and local knowledge. If they still lose to outsiders while playing mahjong in their own house, the best remedy would be to buy a block of tofu and bang their heads against it.

In this way, if a crisis similar to the subprime debacle were to occur, we'd be able to handle it well — at least the whole world could share the burden with us, like the U.S. does now. If our sugar-water-raised brokerages run into trouble, we could even get outside capital to buy stakes and fill the hole — just as several of America's big-name institutions did this time.

So the solution, ultimately, is to make our financial market the world's biggest, to make our economic scale the world's biggest. That way, no matter how the meat rots, it rots in our own pot. At that point, what would there be to worry about?

In this world, nobody is smarter than anybody else — especially in the highest-stakes market games. The key lies in who sets the rules and where the table is. People of equal skill — their wins and losses ultimately come down to the rules, home-turf advantage, and local knowledge. Our strategy cannot start by assuming we're supermen and everyone else is a fool.

Our greatest current advantage is the "momentum" of China's economic takeoff. This "momentum" is manifested by national fortune and the inevitable laws of economic development — something no one can take away. With this "momentum," even ordinary people can soar. We need only ride this "momentum" to achieve our global economic strategy. The greatest failure would be to self-strangle this "momentum."

We are fortunate to live in such an era, because we happen to be in the explosive main ascending wave of China's economy. Here, one need only go with the flow — no superhuman is required, because any superhuman merely rides the "momentum" to achievement. To ride this "momentum" and make globalization Chinese-style — that is probably the thing we most ought to do.