China’s new face

Just back from three weeks in China, I’ll spare you the boring slides except for two observations. First, China presents amazing contrasts. You can bounce over mountain roads and still enjoy four bars of reception on your cell phone. (In general, China’s cell coverage makes that of the United States seem Third World.) Second, China has a great future in IT.

Statistics tell part of the story. Our sister company IDC expects the Chinese IT industry to grow by nearly 15 percent next year, well more than twice the global (and U.S.) forecast of 6 percent growth, which makes China the world’s second fastest growing market in absolute terms.

That growth is driven by reduced government oversight plus pent-up entrepreneurial demand. “China is unique …  in that it’s a centrally planned economy that decided to transform itself gradually into a market economy,” says Liang Hong, chief Chinese economist at Goldman Sachs. As a result, private enterprise has jumped from 18 percent of GDP in the early ’90s to 40 percent today, and should hit 60 percent within five years.

The Chinese can do brilliant work. At its sleek research center in Beijing, Microsoft’s 170 researchers generate hundreds of new patents a year, many for visual or graphic tools such as the

3-D face generator shown bottom left.

Without knowing exactly why Microsoft founded the institute, I’d bet one reason was to give the Chinese a stake in intellectual property worth protecting. If so, I hope it works. And I hope China continues to give its marvelous private sector a freer hand. The Chinese have too much to offer the world for any other path to make sense.