I’ve just returned from my 8th trip to China in the last 7 years and I am always amazed at how a city’s skyline can change in less than 12 months. This year we started in Tianjin a city of 14 million and Greenville, SC sister city, and on to Tokyo for SEUS Japan, Hong Kong, Guangzhou, Xiaoshan and Dalian in 11 days.
As I traveled this amazing country it crossed my mind that China is one of the greatest case studies of economic development on a rapid scale. I sought to learn how and why development could grow so quickly. What I learned was the growth is focused and intentional as the very land that is being developed is so precious it is sold by the square meter, but always planned in not only what it will look like, but how it will affect the value of what is around it.
Yes China has a communist government; however the reality is that there are only 51 million people in China registered to the communist party. This means that there is 1.295 Billion Chinese that are 100% capitalist! The communist rule is very unlike our old view of communism typically thought of China’s neighbor to the north – Russia. In China the communist party rules in a peaceful manner for the greater good of harmonic growth for the majority of its citizens. In addition, for the last 60 years China’s central government has lead their growth through a series of 12 – 5 year social and economic development plans. Each plan builds on the success of the other and at times makes very difficult decisions to develop specific areas of the country over the other.
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The 5 year plans have guided Cities and Provinces for economic growth and development mainly focused on producing significant infrastructure development which in turn supports both publically supported and private investment. Industrial Parks are 48 to 60,000 acres and typically measured in square kilometers instead of a couple hundred acres. These massive developments all sport intricate 3 dimensional master plans, which include utility corridors and multiuse property development strategies and financing packages which turn each of these parks into full fledge, self-supporting cities.
So, you may be asking yourself is this place an economic developers dream? Yes, yes it is!!!!! However, there are challenges and it is these challenges that make it a great place for us to fish! First, the middle class is growing at an incredible rate and wages have risen from .25 per day to almost $5 per hour and showing no signs of slowing. Second, electricity, as power rates is 3 to 4 times more expensive than rates in the SEDC region and more importantly they are unreliable as power can be shut down without notice due to significant demand and the need for additional power production plants. Third, the cost of fuel is influencing the cost of shipping, therefore causing companies to look at alternatives closer to the final market. Each of the aforementioned is the drivers for the terminology reshoring.
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Upon my return and writing this entry I ponder the 5 year plan. How many of us have created a 5 year plan? How many of us have implemented that plan? How many of us have to pull it off the shelf and dust it off? How many of us look at the 5 year plan and plan the next? I truly have to say what impresses me most about China is not necessarily the grandeur of all the spectacular buildings and the massive ports, interstate highways, rail and airport facilities, but the clarity of the 5 year plans and the follow through to implementation of each.
Hal Johnson, SCCED
CEO
Upstate SC Alliance
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