Tuesday, June 27, 2017

China & the New Silk Road - Lessons for Canada

I’m often away from the news these days and now and again I turn on the Radio. One day I turned on the radio and they were talking about the New Silk Road, a Chinese initiative to build “new” trade access to Europe and Africa. The initiative brings several Arab countries into the trade picture, looks to Russia and others. It is about infrastructure to connect trading regions, highways, railways etc.  It is a massive initiative, it is visionary, it is real leadership. In management we always look to find the BHAG – Big Hairy Audacious Goal, the New Silk Road is such a thing.

The details of the initiative are less important than fact that China has gotten started on something that is interregional, that reaches out to many “incompatible” national actors and so promises peace and prosperity in the amalgamation of interests under the banner of trade. China sceptics will say this is all in China’s interests, I agree, that is only a problem if you believe China’s interests are mutually exclusive to other actor’s interests – of course, this is in no way the case. Other actors will only participate if they see value in the exchange. It does signal, however, that the “hermit nation” China once was, has now graduated even more dramatically onto the world stage.

Do I see a threat in this, yes – less from the fact that China is doing it and more from the fact that the West is so complacent it has failed to offer such leadership. We use to “do” leadership, Suez Canal, Panama Canal, Breton Woods, British Empire … you’re getting the picture – the west has too many chubby and comfortable people avoiding making waves to lead anymore.  China, by contrast, is emerging, emerging with the most powerful combination of authoritarian government, national homogeneity and a vigorous corporatist culture – if that sounds familiar it should, it is the combination the built the British Empire. We, rightly, let China into our markets so that it could transition from a generally reduced state to be a player at par on the world stage – they and we have a responsibility to ensure measured progress; they in working toward liberating the masses and us in exercising ourselves robustly.

When the wall first fell, there was optimism in the world – we were talking about building a bridge over the Bearing Straight – a North America / Europe connector – I remember my heart leaping at the prospect. Have we wasted that opportunity by miss-management – perhaps? I think that Russia could be convinced to contemplate such a project – imagine the impact if you will – of a Trans-world highway with a cloverleaf exit to the New Silk Road and inter-modal ground transport from Montreal to Johannesburg. It would have been nice to have initiated such a proposal and hence been able to more effectively define the project, now our only option is to augment and then compete to gain influence in what promises to be one of the most revolutionary “infrastructure” projects in world history.

China has in the main developed infrastructure that pays, that is, national high-tech infrastructure, transportation infrastructure, human capital infrastructure – there has been some overkill in some areas certainly, however, the focus is correct. There is an adroitness in authoritarian government that can and has in Canada’s case, get lost in democracies. Further, there is longevity in policy, a course is plotted and taken to fruition. This can be a bad thing too, as was the case with the Great Leap Forward that resulted in some 30 million souls starving to death – there is a balance to be struck to be sure.  The embrace of market incentives and a free market stance generally and trade has made a dramatic difference in the progress of the country.

So what’s the take away from China’s success for us, Canada, the provinces and communities? First, sit down and clearly define a 25 year and 50-year infrastructure program founded on consensus from interest groups, commit to the program via legislation that isolates it from the rigours of the political process, and execute with vigour and integrity.

What would this infrastructure program look like?

1.       Education – no buildings – intellectual capital
a.       Intellectual Capital is infrastructure – I submit the most important infrastructure, the challenge we have is convincing people to donate time and energy toward valuing it and communicating that value in dollars and cents – the language universally understood by all.
2.       Big pipes for the internet and a world network of server stations
3.       Nationwide Communications
4.       Road, Rail, Sea and other transport – Transmission Lines, Pipe Lines etc.…
5.       Conservation, the general greening of infrastructure, infrastructure support for alternate energy sources.

China’s intellectual capital is growing exponentially, China generates 300,000 engineers annually, we do a tenth of that – engineers apply technology. The world’s knowledge is nearly doubling every 6 months – the fax machine was invented in WW2 and the technology only gained penetration into the population in the 1970s. We need people to convert a mountain of latent technology into usable products and services, it is the world’s weakest link – Canada needs to occupy this space. Disruptions like a transistor radio, the computer will become a weekly event – so knowledge acquisition can no longer have a massive institution attached to it with four, six and eight year time frames to action. In WW2, the time it took to train a piolet was measured in weeks, basic training was six weeks – they were farm boys who had just left the age of horse farming – surely we can get a doctor up and running faster than eight years or a carpenter faster than four years. We are warehousing our best, brightest and most vigorous population in universities for nearly a decade, think what they could do if they learned on the run as I have and many others have. It is far more efficient to set about a task and collect the knowledge needed for that task than to try and educate yourself for every eventuality or contingency; properly structured knowledge transfer can do this – self-paced, independent and freely accessible are the order of the day.

While China’s infrastructure program is less than perfect, it is better than ours. The Chinese transformation has lessons for us, we would be wise to avail ourselves of them and act decisively. If we meander along as we have, or let the political pendulum send us to and fro, the Chinese assent will be both wasted on us and will likely consume us. 

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