The pulse of the future of China's economic growth _ Ginkgo

Each person's life or career, rush has low tide. Low tide is easy too pessimistic, but often indulge at the peak. A country or community. Today's world economy, is relatively low, the global impact of the financial crisis has not been eliminated. China and the world economy's future? it is best to put it in a longer historical perspective. Populous will return to economic power in the human written history is five thousand years. According to the economic historian Angus �� McGrady's research in human history a long time, various countries (area) of the population and economy of scale height; or, the population size determines the economic scale. Population size and isolation between economic scale, is almost 200 years. Measured by GDP per capita, in the past between countries is not much difference between, for example, a.d. 1500 years, most countries per capita GDP is the poorest country of three times, and now, like the United States as well as a few developed countries, GDP per capita, is the backward countries dozens or even hundreds of times. Data based on t-Mac 's, you can calculate the size of population and economic size of the correlation coefficient, 1500 years 0.9972, 1700 years 0.964, 1820 still 0.9423, but after a sharp decline in: 1870 0.6393, 1913 0.3404, 1950 to 0.1554, 1973 0.148 �� that is, until 1973, population size and economic scale has no relationships, such as the world population 54.6% in Asia (excluding Japan), GDP only world 16.4%; while the world population of developed countries, 18.4% GDP in the world of 58.7%. This situation over the past 30 years began a reversal: population size and economic size of the correlation coefficient increases in 2003 and is expected to 0.5185 will further increase by 2030 to 0.733. Population and GDP of correlation coefficients (1000-2003) why the past 250 years in countries with per capita GDP gap, economies of scale and population size no longer have the approximate equivalence? simply, because different countries embarked on the different systems of some countries take the lead in the market economy, and some did not. Although there are also details of controversy, but modern economic theory and social practice shows that the market economy is developing its economy and improve the most effective means of livelihood. If the economic system is no longer a difference between the market economy or not, that is the world market economy, the differences in per capita GDP will gradually disappear. This is precisely what happened in the past 30 years. China and other countries market reform, start reversing the past 200 years of worldwide population size and deviation between the economic scale. So, I have a bold guess, in accordance with the current trends, the future 50 years, 100 years later, humans may also return to the State before the 19th century, that is, a country's economic size and population size is equivalent to a large population is a major economic power. In today's world, in addition to China, India, Asia's largest population in the world of close to 60%. The so-called 21st century is the century of Asia, population size and scale of the return of the relationship between the economy, or that is Adam �� Adam Smith in 1776 the germinal "prediction of the Western world and the Oriental world of equalization (equalization). Now you can see this trend. Major economies, the proportion of the GDP of the world GDP (click to enlarge) the figure was TMAC estimated the proportion of the forest. Broadly speaking, in accordance with the calculation of PPPs, 0 years a.d., the Western Han dynasty of China India's GDP in the world around specific gravity 1/3, 1820, China's GDP in the world of 1/3 or so, and then after the war, the United States in 1950 of the GDP of the world's top 1/4 (27.3%). The State of the future? he speculated that the year 2030, it is more than 20 years, China's GDP might reach the world total of 23%, India is 10%, the United States for 17% of the total Western Europe amounted to 13% of the world. From there, you can see China over the past 30 years of upheaval. A country's international weight and the right to speak, depends on its economic strength. In recent years, the world really has everything to do with China, whether good or bad, are they not take you play, the G7, G8, OECD and so on, are not China's sake; now is the time to do anything with you, all with you. This is the financial crisis is most evident after the show. "China's century" really come? the answer depends on China's future economic growth. Economic growth in China in the future? I think three changes most critical: first, the export from rely primarily on promoting growth, the domestic and foreign markets more balanced growth; the second is from low cost, low-cost resources and cheap labour support growth to higher based on innovation, added value-growth; the third is from the natural-growth enterprises, to industry consolidation pattern grow. And how these changes, and depend on the institutional reform in China, including the economic reform and political reform. Globalization is the background of these changes. Globalization to the world and China's economic impact of economic globalization is a long historical process. The first globalization climax in 1870 to 1913 between 40 years, the first world war began in 1950, on the other hand, is the "go to" era of globalization. To export proportion of the GDP, the world average in 1870 is 4.6%, 1913 to 7.9%. After the outbreak of the first world war, the major belligerents trade almost broken, although non-belligerent trade also increased. The great depression in 1929, the popular trade protectionism, coupled with the effects of World War II, to 1950, world exports to GDP ratio fell to 5.5% only in 1870 0.9 percentage points (figure below). The major economies in the world and exports value proportion of its GDP (click to enlarge) after 1950, globalization and the emergence of new wave, particularly after the 1980s, globalization has further accelerated. In 2007, the world's average export proportion of the GDP is 25.6%. Equally important, the globalization ofIt has undergone tremendous change, that is, from simple product trade to value chain Division of globalization. The original is your production of apples, peaches, you I produce apples sold me, I'll sell you peach, now is someone special nursery, someone special fertilization, harvesting, Division of specialized and more detailed. The focus is not a final product's trade, but on the value chain of trade between the different regions; value chain to make a link on the advantages that enterprises may succeed. This is a feature of globalization. Globalization has changed the world of economy and political structure. If the first globalization, China is the largest of the victims, so this time of globalization, China is the biggest beneficiaries �� although generally speaking, the States are the beneficiaries of globalization. Not this time of globalization, the Chinese economy is not possible to keep the 30 years of high growth, China will present international status. The globalization of production of each link separate to non-integrated production process, achieve economic growth around the world, China is to seize this opportunity to become the first big manufacturing industry. 100 years ago globalization and 100 years of globalization, for China's fate had the opposite effect. 2008 year of the financial crisis will not be repeating the 1929 crisis to go global? my personal judgment, exports in GDP growth stagnate or even decline, but not a massive step backwards. The last lesson has already told us that trade is not a solution to the problem. United States in 1931 published, Comte �� Hawley tariff Act, trying to protect the United States, which led to the reversal of global trade, the continuation of the crisis. The majority of trade protection policies are part of a country's flag for personal gain. This is the revelation of this financial crisis. If the world then practised trade protection policy, we stay in the depression in longer rather than shorter. Export-driven economic growth is not sustainable over the past 30 years in most years, China's international trade growth rates are higher than the growth rate of GDP. Broadly speaking, China's real GDP annual growth rate of around 10 per cent annual growth in exports actual at 15%. According to the nominal value, the 2008 export is a 1978 553 times, GDP is 83 times in 1978, the former is the latter 6.7 times. As a result, the proportion of trade to GDP rose sharply. In accordance with the National Bureau of statistics, China's exports and GDP ratio 4.6% in 1978, 1990 is 16.1% 2000 is 20.8%, 2007 was 37.5%. This year, China's trade surplus representing 8% of GDP, while the United States deficit is 8% of its GDP. By the end of 2008, China's foreign exchange reserves of more than 2 trillion. China's imports and exports to GDP ratio (click to enlarge) in 2001, China's export growth is a leap forward. There are a lot of reasons, including the WTO and the competitiveness of China, it is undeniable, and RMB exchange rate. Because the renminbi is underestimated, for enterprises, international trade than domestic trade more profitable. The 2008 financial crisis, the Government continued to export subsidies, but did not take into account how much the export subsidies is good, it seems only to exports and exports. The first half of this year, exports reached 8000 billion, equivalent to 5% of GDP. There's a number of export subsidies? pay these subsidies value does not need to study carefully the value of?. After this crisis, China's exports is hindered, I think it is not a short-term crisis a year or two, but is a long-term process of adjustment. Why?, generally speaking, the greater the economic scale, accounted for a smaller share of GDP (extreme, there is only one country in the world, this proportion is 0). We can see a set of data, the world's top economies, only Germany's exports in GDP (39.9%) is higher than China (37.5%). Other countries, the United States 8.4%, Japan 16.3%, United Kingdom 15.7%, France 21.6%, Italy 23.4%, Spain 7.4%, Canada 29.2%, Brazil 12.2%, including the world average of 25.6%, lower than China (see figure below). Does that mean? a possible is our GDP was underestimated, another possibility is that we export dependence is too high. All major economies, exports in GDP ((2007, sort by economic size) (click to see a clear picture) is also worth noting that, according to China's official statistics, the national population of 55% is agricultural population, in this case, exports in GDP should not be so high, at least not compared to other industrialized countries, because farmers have a lot of product is self-sufficient. Now, China's exports in GDP so high, and there are so many farmers, which exhibits the problem. If the financial crisis and trade imbalances, it means our export growth cannot be sustained. Regardless of whether other countries implement protectionist policies, future China to export to stimulate the growth of GDP is almost impossible. What to do next? need to balance the two markets, in particular the development of the domestic market. Here the development of the domestic market, not everyone often hear "enlargement", not engage in monetary expansion or Government investment to stimulate the economy, but rather to widening market freedom, stimulate entrepreneurship, more rational use of resources, to meet the real needs of ordinary people. This is the Chinese economy itself a larger, deeper degree of "reform and opening up". The problem is the potential of this market? China itself is a "global" first look at the economic scale. China 31 provincial economic zone, if we put each economic zone as an independent ranking of "State", and then put them and the world economy of scale to be a comparison, the results might surprise many people expected. �� �� Chinese economy top four provinces of Guangdong, Shandong, Jiangsu and Zhejiang. Guangdong if deemed independent economies, their economic size 2008 can rank in the world of the 18-bit (in accordance with the rates of conversion of GDP, the same below), in Turkey after (equivalent to Turkey's 67%), over Poland, Indonesia (World 4 largePopulation), Belgium, Switzerland, Sweden, Saudi Arabia; �� ranked No. 2 and no. 3 bits of Shandong and Jiangsu, economy of scale in excess of Norway, Austria, Denmark, Greece, Iran, Argentina; �� 4th of Zhejiang, economic size over Venezuela, Ireland, South Africa; �� ranked 5th in Henan, economy of scale more than Finland, Thailand, Portugal, Colombia; �� ranked No. 6 in Hebei, economy of scale over the Czech Republic, Hong Kong, Nigeria; �� ranked 7th bit's Shanghai and 8 bits of Liaoning, economies of scale are over Romania, Israel, Malaysia; �� ranked No. 9 in Sichuan, economy of scale more than Singapore, Ukraine, Algeria, Chile; �� ranked No. 10 in Hubei, economic size over Pakistan, the Philippines; �� ranked # 11 in Hunan, economy of scale more than U.A.E., Egypt; �� ranked 12th in Fujian and 13-bit of Beijing, economy of scale all over Hungary;-# 14 bit of Anhui, economies of scale beyond Kazakhstan, New Zealand, Peru;-# 15 of Heilongjiang and 16-bit of Inner Mongolia, economy of scale in excess of Kuwait; �� ranked # 17 in Guangxi, 18-bit of Shanxi, Shaanxi, paragraph 19, the economic scale all over Libya;-# 20-bit Jiangxi, economic size over Slovakia; �� ranked # 21 in Tianjin and 22 bit Jilin, economy of scale in excess of Viet Nam and Morocco; �� ranked No. 23 in Yunnan province, economic size over Angola and Bangladesh; �� ranked No. 24 bit of Chongqing, economic size over Croatia; �� ranked No. 25 in Xinjiang, economic size over Belarus, Sudan, Luxembourg, Qatar, Serbia, Bulgaria;-# 26-27 of Guizhou province and Gansu, economic size over Lithuania, Dominican Republic, Sri Lanka, Uruguay, Panama, etc;-# 28-bit Hainan, economy of scale more than Cyprus, Tanzania, Jordan, Bolivia, Iceland; �� ranked No. 29 of Ningxia, economy of scale more than Ghana, Jamaica, Uganda; �� ranked No. 30 of Qinghai, economic size over Zambia, Honduras, Nepal, Myanmar; �� at the back of the Tibet, economy of scale also over Mongolia etc.. Take a look at the population. Population size is the market size of important determining factor. China Mobile to become the world's largest telecommunications company, because of the large population of China. 200 years ago, the United Kingdom's rise, the world's population but 10 million, the United Kingdom accounted for 2% of the population, the United Kingdom make colonial reasons is the local population size is too small; the rise of 100 years ago in the United States, the world's population but 16 million, the United States accounted for 5% of the population. Today, China's population has more than 13 million, almost equivalent to 100 years ago the world's total population, more than the total population of today's developed countries still higher than 1/4. This is why the Chinese market was the world importance of reasons. Province, China many provincial population has exceeded many of the world's total population of the great powers. China's population, the largest of the three provinces are Guangdong, Shandong, Henan, population more than Philippines, Viet Nam, Germany (World's 4th largest economy), Ningxia, Qinghai than Singapore, New Zealand; over Mongolia, Tibet also. Comparison of these two aspects is to describe the market potential in China itself. Vary between Chinese provinces, mutually beneficial trade and Division of great potential. If China trade between provinces, China itself will be able to create a world class market. About 200 years ago, the father of Economics, Adam Smith is amazed to ��: China domestic market size in all European countries together market size. Now to the real development of the enormous market! development of the domestic market, cannot be separated from the Midwest. Past coastal area-led economic growth and export-led growth phase. In the future, Western areas will become more important. Fortunately, China's economic growth area structure has begun to shift in favour of the Midwest. Since reform and opening up the first 10 years, the second 10 years, the growth rate of more than in the eastern part of Central and Western, but in the third decade, especially in the past 5 or 6 years, Western and Central growth faster than the East. The first 10-year growth rate in the top 4 places: Guangdong, Zhejiang, Fujian, Shandong, all Eastern provinces; the second 10 years ago 4 bits are the Fujian, Guangdong, Zhejiang, Shandong, still is a coastal province; but the third 10 years ago four are Inner Mongolia, Shanxi, Tianjin, Ningxia, Midwest account for 3 months. In the past 6 years 2003 to 2008, the first is the inner, the second is Henan, followed by Shaanxi, Shandong, Shanxi. This description of China's regional economic growth is being transferred, it shows the gap between China's regions began, so don't believe that the growing regional disparities in China. Domestic market development, will result in Eastern, Central and western part of per capita income equalization, East-West gap is expected in the next 30 years a substantial contraction, and gradually eliminated. What development in General, domestic market? support a country's economic growth in several major elements: the first is the protection of property; the second is a scientific and rational thinking; and third, development of capital markets; the fourth is the transport and communications. Over the past 30 years, the Chinese traffic situation has undergone tremendous change, 1988 was the first Highway (100 km), 1995, China was 2100 km of motorway, by 2008, is already a 6 000 km, and 4, each year to 5 thousand kilometers at a speed increase. A rough estimate , and 20 years compared to the time of transport between two points about reduced 50% to two-thirds (except of course the city inside). This is very important, such as 20 years ago that not cost-effective for both the business, is now effective. This time of economic crisis, China's road infrastructure (including road and iron (iron and civil war)) into the very large, the future economic development has a tremendous impact. Simply put, the transport costs will result in more developed Division and Exchange. If you do not have the steam engine, railway, steamship, the world economy could not be integrated. The rapid development of China's traffic, will have a good economic integrationFoundation. However, the development of the domestic market impediments, not the traffic and communication hardware infrastructure, institutional costs. International trade and the main difference between the domestic trade, is caused by a sovereign segmentation. transaction costs As a result of international trade in different between sovereign States, money exchange, customs inspection, tariff and non-tariff protection, and other services, makes international trade costs higher than the cost of domestic trade. Therefore, reducing the cost of international trade is the world's economic development trends, such as the establishment of the European Union is to make the different European countries between the "international trade" into "domestic trade". Now the discussion of the East Asian economic integration, which is how the ROK, trade becomes as easy as domestic trade. Unfortunately, the administrative division of China and the Government-led economy system, in many cases domestic trade transaction costs even higher than international trade. In this way, the various areas of comparative advantage is not to give full play to the serious impact on the development of the domestic market. This is excessive dependence on China's economic growth and an important reason for export. Future adjustment of the administrative region of China, Division, should respect the zone itself, weakening of market property, administrative functions, artificial administrative divisions will cut between reasonable market Division. In addition, various local protection policy must be repealed. When China to hold high the banner of free trade, not to forget the domestic market also requires free trade. Another obstacle to the domestic market development factor is commercial culture and faith. If you ask the Chinese export manufacturers, why is 70-80% of products are exported, not to do the domestic market? he probably answer: domestic market difficult. Difficult to contract in checked or hand over the goods, but for a long time and no money; and export, as long as signed the contract, will be able to receive payment during the term of the contract. Some companies prefer to low-priced exports, rather than sold to domestic customers, the uncertainty of the domestic market is too big. Visible, if not strengthening the rule of law, the contract is not effectively enforced, and rampant in local protectionism, Chinese entrepreneurs have no confidence in the opening up of domestic markets. Of course, do not think that the opening is not important. To export the province the proportion of GDP, the Chinese provincial differences is very large, 2007 of order: 91% of Guangdong, Shanghai 85.6%, Jiangsu 61.3%, Tianjin 57.4%, Zhejiang 55.4%, 40%, and then other provinces are not more than no noticeable improvement. Many provinces, the proportion of international trade is very low, only 4.7% in Inner Mongolia, Henan, China's fifth largest economy, but the proportion of exports to GDP is only 4.6%, description, and Western regions and the development of international trade of huge space. Future development of China's economy will also be accompanied by urbanization. China's existing city population of 45% of the total population, the beginning of reform and opening up this ratio is 18%, over the next 30 years might rise 75%. It's not impossible, should that be necessary. A majority of the agricultural population, is unlikely to be a real economy developed countries. Over the past 30 years, China's 100 million population of the city generally increased 200; the next 30 years, China has 4 billion people from rural to urban, if a city's population calculated at 100 million, China to increase 400 such a city. Enterprises as market forecasts, including real estate development, you should see this. National development strategies, including the new rural construction, it should also be considered. Since there are so many people want to come to the city, also spend so much money in the country, whether a reasonable and cost-effective? those facilities built, who used to spend a lot of resources?, is there value? if you help the rural population to town is not a better? is worth thinking about. Industrial innovation and integration in addition to developing the domestic market, the economic development of the second shift is from low cost advantages to high value-added industrial upgrading. Over the past 30 years, Chinese products can open international markets because of the price. The problem is that low cost also maintained? over the past three or four years, Beijing nanny salary almost doubled; in coastal regions, there have been a "shortage" phenomenon. This trend was in line with the law of economic development. But with rising labor costs, the competitiveness of Chinese enterprises to maintain? this requires innovation, production of higher value-added products. The innovation ability of Chinese enterprises? in China national patent offices in granting patents in all, roughly divided into three categories: invention patents, utility patents and design patents. Where the invention is the core competitiveness of enterprises, the two rigid patent somewhat "colleges embroidered legs". From all of the enterprise was awarded the patent for invention patent in the weighting of the view, in 2006, the proportion of the foreign enterprise is more than 74%, China's only 11% of enterprises; time series from the whole, the proportion of the foreign enterprise is far higher than that of China. China's many patents which are solely for the purpose of evaluation, awards, established by the technical content and commercial value. China's innovation capacity of enterprises is not optimistic. Historically, a national uprising, always accompanied by a revolutionary technology, industry, such as the United Kingdom's steam engine and textile industry, the chemical industry in Germany, the United States for automobiles, electronic communications, IT industry, the technology has changed the economic situation, which has changed the world. Not the creation of new industries in the country is unlikely to be a real world economic power. But the creation of new industry cannot rely on government investment. Grasp market trends is not a government official's strong point. There are local government expense to introduce video product line, the results of products haven't line, put the video recorder on the market has been eliminated. Let alone a government investment in hidden with a lot of corruption, waste, fraud opportunities. Industry upgrading is a marketing process that relies on entrepreneurs to find. The advantage of the market, always pick out to anticipate future trends of entrepreneurs so that they become the new industry leader. China entrepreneurs need to see what kind of technology can have a decisive impact on the future, what industry in the future lead to economic development. But unfortunately, Chinese entrepreneurs also need to spend too much energy in non-market, non-technological aspects, foreign entrepreneurs get together to discuss the future pattern of industry, industry, and the Chinese entrepreneurs to get together to discuss the most or political or policy issues. So you want to further reduce theGovernment intervention on the market. A national innovative capacity enhancement, not a leader of a word or two will be able to decide. The education system is particularly important. We want to foster scientific and rational thinking. No formation of enlightenment after the Renaissance of scientific, rational thought, would not have been the rise of the Western world. China's education have been many improvements, but the influence of ideology or too large, on the person's thinking too much, and control of the educational system efficiency is too low, it is important to large changes. The last change is from the enterprise number grows to industry consolidation. Generally, over the past 30 years, China's economic growth is driven by the small and medium-sized enterprises. After this crisis, China may want to experience growth from enterprise to enterprise scale change, industry mergers and acquisitions (including domestic mergers and cross-border mergers and acquisitions) will form the new wave, industrial concentration will be greatly enhanced. Western countries of the development process, transregional, transnational enterprises of mass appear in crisis. Crisis has also had a positive side. In the case of the dead is completely gone; died, is in fact the assets reorganization, the assets more effectively. Countries to adjust policies in this regard, on loan to save enterprises is not a solution, the bankruptcy of let it ruin, the only way, really excellent enterprise can grow up to become an economic driving force. Guard against the "State into people retreat", reform of the market through to the end of China's achievements over the past 30 years, in the final analysis, or rely on the reform and opening up. Future China could become the world's largest economic power, depending on their market reform to the end. The so-called market reform, price liberalization, privatization and decentralization of enterprise delivery, open and globalization. China's reform and not designed or well thought out, many are being forced out. Day better than when no one wants to reform, days not only think of reform. Don't forget we get came. Price liberalization reforms, for example, in 1978, 100% of industrial products is national pricing, roughly 15 years later, the proportion of the industrial products market pricing up to 81%, in 2004, is close to 90%. There is also the reform of State-owned enterprises. The first 15 years, the State-owned enterprises of property rights has not changed, but the entry of non-State-owned enterprises, the development, the relative importance of the State economy; in the lower back 15 years, turned to the State-owned enterprise reform itself, including the sale, auction, etc. As a result, to the urban population in employment, for example, in 1978, a town 78.3% population in employment, State-owned enterprises in 2006, this proportion drops to 22.7%. Before and after the crisis, there is a phenomenon, that is, "States into people retreat", a large number of loans to State-owned enterprises, State-owned enterprises compulsory acquisition of private enterprise, this is the need for vigilance. In the long run, this time the crisis easier to spend money in the State-owned enterprises, the easier it gone bankrupt. According to past experience, in a few years these doubtful of State-owned enterprise grows, the Bank will carry out debt restructuring. In the 1990s, the State-owned enterprises for money to find banks accumulated considerable debts, and finally can only sell. Has been reorganized once, the Chinese are no major crisis, because a few years ago has spent jiwanyi solved the problem. In addition, the promise of the welfare State, the future of normal financial income could not have the support, the only solution for the problem would be to sell State-owned company. State of the economy now is 36%, 2040 should be below 10%, no matter how willing or unwilling, results may be available only in this way. The basic task of State-owned enterprise reform has been completed, do not need to open Congress discusses directional problems. Maximum of those State-owned enterprises have also been listed, then only the technical and operational issues, i.e. how fast-owned shares. Such as CCTV, the future of the sector is also likely to go private. As networks, local stations of competition, its advantages are decreasing, the end may nobody reads. Taiwan was such that the original copy of the Central journal, official status, but nobody reads it. I believe that, although there will be short-term setbacks, but since the past 30 years of reform, reform of the general trend is not going to change. Now live a good, basic State-owned enterprises rely on monopoly money, inefficient State-owned enterprises in occupies a society; two-thirds of the financial resources, the creation of value only one-third, they all can imagine after privatization, the Chinese economy will demonstrate how potential. Political reform and the path in the emerging in developed countries, China's reform and the reference point is to get to market, then get democratization. This is the Deng Xiaoping's wise. Democratization in the country prior to commercialization, the effects are not very good, including India. Why does the market have to go before the democratic? because democracy is a political system, political institutions are forced to solve the problem, not the first choice. Market decisions and political decision-making? for example, in a group, more people want to eat, market decision everyone their own choice, each person's preferences are met. Democratic politics is like everyone by voting to decide whether to eat meat or vegetarian; if more than 50% of the said to eat meat, all people have to eat meat. Democracy is a compelling way. If a country in establishing good property system before, the Government also controls a large number of resources that can solve the problem of democracy, to engage in the electoral democracy, it is easy to get to the market should have been resolved in decision making to the Government, not only resulted in productivity losses, but also the breeding ground for serious corruption. Therefore, you should first define the market and the role of Government, as far as possible, the choice to the market. Then a rise of the middle class is important. If you do not have a wide range of middle class, democratization is likely to become a populist, and even led to mob politics. Democracy on the basis of the rule of law, which requires that each citizen has a fundamental civic consciousness and sense of responsibility. The middle class has a private property, but not rich enough to just bullying people; they are willing and able to assume responsibility, social stability, not love. If the majority of people in a society, a few people get nothing, it is in trouble. Poor people may not behave, they lose the shackles of the just, the entire world; the extremely rich people may or may not abide by the rules, because they can use the power of money oppress others. This society is very bad. The rise of the middle stage, should be the adoption of free market competition,To their ability to get the wealth of the gift. An ability to get rich on their own, and a rich by fraud, violence, social views are not the same, the legitimate competition in the market to prosperity of people, usually a stronger sense of civic responsibility, ethics and morality. Of course, cannot be said that the economy market can replace political democratization. In 1990, I was attending a Conference in the United Kingdom, for the then popular Western academia (Russia) and unfavourable Russia mandarins (China), China's reform, long-term process a long-term forecast. I think that China's reforms, you can use a simple match Tai Chi-like: a vertical ellipse, intermediate draw a S-shaped curve, divided into two, from top to bottom, the first half of the big and small is the economic reforms, the first half of a small after the political change, draw a horizontal line in the Middle, economic reform and political reform is such a relationship. The first phase focuses on economic reform and political progressive on some; the second phase focused on political reform, economic reform and slowly closing. Now China stage of reform, economic reform is the most important aspects largely completed, the remaining technical, operational closure work, political reform and it's a start. In the next reform, political reforms are more and more important. 13 million people of how to establish democracy in the country, it's not to say. I would like to emphasize points: first, China's political reform should be gradual, and engage in shock therapy. After the founding of the United States spent 89 years liberated slaves, spent only 144 years women to vote took 189 years, also is to 1965, black talent get voting right; early voting is the United Kingdom have land, property, not everyone can vote. Social development today, China is not likely to leave their old, but the truth is worth thinking about. Second, the rule of law, we should first and foremost, to strengthen the independence of the judiciary. There is no relative independence of the judicial system, there can be no democracy. Chinese political reform faces a major challenge is, how to democratization and elite governance. Democratic reform must not become a populist, homeboy movement. United States may be democratic and elite governance with the best national, political and legal framework of design, including the Senate, the House of representatives, the Supreme Court, and so on, are preventing the riffraff movement and mob politics. China also need to find good electoral system, guaranteeing democracy and elite governance. Given China's traditional and population size, the challenges of the future is very large. India's political reform to walk in front of economic reform, it has been over the ridge. If China's future economic development to India, is likely to be in the process of political reform. Finally to say China's international strategy. China's growing influence, especially after the financial crisis, the future of the international community has a lot of game rules need to be involved in the development of China, but never arrogant. Low profile, the most important is the development of their own, do not compete for world leadership. Be sure to rely on economic development to enhance its international status, from a historical point of view, any reliance on military force to the international status to do not last long. Westerners stressed the responsibility of China, it is reasonable, responsible would have international status. The next 30 years, China could become the world's largest economies, at that time, China's best businesses also must be the world's leading enterprises, China's leaders, government leaders, business leaders, academic leaders, will be a world class leader, the Chinese people a hundred years of powerful Renaissance dream will be achieved, a Chinese citizen will also take pride in. �� Of course, all this is we build a democracy, the rule of law, market-based economy. (The author is Dean of Peking University Guanghua School of management; this article by the author on our students ' lecture content finish from; thanks to CEN, Fu small wing on the finishing of this article)