In November 2012, Xi Jinping, who had just assumed the leadership of the ruling Chinese Communist Party, proposed the vision of the "Chinese Dream," which was mainly defined as achieving the great rejuvenation of the Chinese nation. Introduced as the great modern dream for Chinese citizens, its basic goal is to enhance the happiness of the people through national prosperity and renewal. Since formally becoming president in early 2013, Xi has continued to actively promote this ideal, and as a result, the Chinese government, the official media, and numerous academic agencies have discussed the topic from different angles and on a number of levels, making it clear that striving to achieve this dream has now become the common goal of the country.
From a more pragmatic point of view, the Chinese Dream actually embodies the dreams of all the descendants throughout many generations -- the dream of becoming a powerful nation. Although the Chinese economy is now the second-largest in the world, and Chinese trade totals, having recently surpassed those of the U.S., rank first in the world, the country still has a long way to go to become a true world power.
Just as Yale University history professor Adam Tooze wrote recently for the Financial Times, the unique conditions that helped the U.S. solidify its position as the world's largest economy beginning in the early 1870s were two world wars: World War I created its new position as a more powerful country, and World War II and the subsequent lengthy Cold War consolidated its superpower role.
In fact, it was not until the end of World War II, in 1947, that the U.S. became both the world's largest economy, as well as the number one global power, so it took over 70 years to move from its position of economic dominance to the international powerhouse it became.
In terms of GDP, the U.S. economic aggregate in 2013 was twice that of China; by comparison, though, recent calculations by the World Bank, based on purchasing power parity (PPP), have indicated that in 2014, China's economic aggregate will surpass that of the U.S. However, the former method of calculation has been more widely accepted.
China's economic aggregate will rank first in the world in the near future, but it must be said that when using the U.S. as the standard, the achievement of the Chinese Dream will truly be a long and difficult journey.
From the perspective of modern management theory, the process of achieving the dream falls under the category of change management. There are similarities between change management for a business and a country, so this article will focus on the stragility (strategy and agility, i.e., agile strategies) theoretical framework put forward by professor Ellen R. Auster of Schulich School of Business at York University, Canada, to re-sort and analyze the concept of the Chinese Dream with the hope of exploring the changes and strategies of national development by using the latest Western management knowledge.
According to the stragility theoretical framework, the first step in change management is to identify the stakeholders, specifically the core stakeholders, internal and external, formal and informal, and so on.
Therefore, if the realization of the Chinese Dream is, in fact, the process through which China becomes a powerful nation, then the core stakeholders in this process must be identified.
Some might say that since the Communist Party is the ruling party of the People's Republic of China, the 80 million party members would be the core stakeholders. Historically, in order to found the new China, party members fought bravely and many lost their lives. During the period of economic reform and opening up and the subsequent period of economic construction, they have been the backbone of the country. Currently, the state-owned enterprises, under direct leadership of the party, control the economic lifeline, and various departments of the central and all levels of government, the military, and other management departments are under the leadership of the party members.
While it seems natural that the party members should be considered as the core stakeholders in the pursuit of the Chinese Dream, the fact is that this would be absolutely wrong. Then who are the core stakeholders? The latest session of the central leading agency of the Chinese Communist Party -- the Chinese Politburo, has given us the answer. The current members of the Politburo, elected in November 2012, introduced the idea of the "Mass Line" campaign in June 2013, which proposes "doing everything for the masses, relying on the masses, from the masses, to the masses."
It is a guideline under which CPC officials and members are required to prioritize the interests of the people and persist in representing them and working on their behalf, and it is also thought of as a way to convert the views of the party into the conscious actions of the masses. This idea has not been created recently, but is one of the three fundamental aspects of Mao Zedong Thought. Therefore, the key stakeholders of the Chinese Dream are the people themselves, or the masses.
Secondly, who are the internal and external stakeholders? The Economist published an article entitled Chasing the Chinese Dream with the picture below in May 2013. I will not dwell on the content of the article, but the internal and external stakeholders have been depicted very clearly. As can be seen, the Chinese people's longing for a better life has attracted the attention of the U.S., Japan, and some of the other major countries. Uncle Sam is shown with his right hand raised, either for praising or finding fault. The symbol of Japan is a sumo wrestler, with hands on his hips, and who seems to have assumed a fighting posture. It is noteworthy that from their look, these external stakeholders in general do not seem very friendly.
(Source: The Economist)
While the Chinese Dream may mean a stronger nation for the internal stakeholders, thereby creating a better life, the external stakeholders may see more of a challenge, or a reallocation of interests and resources. As was pointed out by journalist Thomas Friedman, if the majority of the Chinese people yearn for the same material life as the Americans, with such things as big cars and large houses, it will be impossible to realize unless we find another earth.
Environments and Strategic Advantages
The stragility theoretical framework first proposed using the common political, economic, social, and technological factors (PEST factors), as well as an additional ecological factor, to analyze the changes in the external environment. Internal situation analysis includes examining strategy, leadership, structure and process, their policies and practices, culture, physical layout, and technology.
The external environment
To begin with, let us have a look at the external environment as it relates to the Chinese Dream. This theoretical framework is usually used to analyze the external environment of an enterprise, so when it is used to analyze a country, the external environment does not mean other countries, but the overall environment at home and abroad.
First, in the political environment, the world situation after the Cold War basically features U.S. dominance; the EU, Japan, and Russia are basically powerless to challenge American hegemony. The U.S. will also play a leading role in global affairs in the long term, and it will try to maintain this leadership position. From the viewpoint of the U.S., China is most likely to threaten its No. 1 status, so its overall strategy will feature interactions based on checks and balances; thus friction between the U.S. and China will be unavoidable in the long run.
In addition, owing to historical disputes caused by the Japanese invasion of China during World War II and the recent territorial disagreements, Japan has put itself into a position of teaming up with the U.S. against China. Furthermore, Vietnam and the Philippines frequently provoke China with disputes over the South China Sea Islands, with American support. Therefore, it can be said that the international political environment for creating the Chinese Dream is full of turbulence, and that China may face the provocation of local wars at any time.
Second, the economic environment, especially since the financial crisis in 2008, is also in a state of turmoil. Both the U.S. and Europe have been in economic slumps for a long time, recovery has been slow, and while China's economy may also be facing difficulties, both its economic growth and its size has been dominant in recent years. This huge economic size and the sustainability of growth will be the most powerful and solid foundation upon which China can achieve the goal of the Chinese Dream.
Third, the social environment is very complex. It involves a wide range of factors, such as population growth, age distribution, health status, class structure, culture, education, entertainment, as well as lifestyle, social values, and so on. Globally, there is a significant gap between the social environment in developed and developing countries, and China is still very backward in many ways compared to some of the relatively more developed countries.
Of course, we cannot say one is superior or inferior to another when it comes to certain aspects such as values and culture, but it is clear that China's overall social environment is comparatively less developed. An example which made a great impression on the Chinese people can illustrate the difference. Three years ago, the calm, cool-headed, polite social order Japanese nationals showed in response to the devastating earthquake and tsunami surprised the Chinese people. The social environment is a particularly important component of the Chinese Dream; increasing the quality of the population will also be a lengthy process.
Fourth, the technological environment is not conducive to achieving the dream. Not to ignore other issues, but the problems with network security have recently sparked heated debates, which was released by Edward Snowden. For example, the large scale surveillance operations conducted by the U.S. government, as well as the phone-taps carried out against a number of national leaders illustrate that many countries, including China, are subject to significant cyber security threats from the U.S. In fact, the Americans are far ahead in terms of software, network security, and a number of technology areas compared to China and other countries. U.S. network technology and software, especially, have long been used in industries in China, and the dependence on this American technology has placed the country in a very vulnerable position.
Fifth, the ecological environment is an area of serious concern. The National Center for Remote Sensing under the Chinese Ministry of Science and Technology believe that the problems of global warming, water scarcity and pollution, biodiversity loss, and land desertification are growing from bad to worse worldwide. In the Chinese mainland, the haze caused by an exponential increase in air pollution has become a common and hazardous phenomenon in recent years, and the extent of soil and water pollution is also very serious. Therefore, many people describe the Chinese Dream as simply being able to enjoy a blue sky, having clean air to breathe, pure water to drink, and safe food to eat.
To analyze the internal situation as it relates to the Chinese Dream, this article will mainly follow the stragility framework by examining strategy, leadership, human resource policies and practices, culture, and technology.
First, from a strategic point of view, it is a significant decision to propose that the state and all the Chinese people should have a common dream or goal. Without a goal, a person, company, or organization can achieve nothing. The realization of the Chinese Dream will not just lead to national prosperity, it will also lead to the improvement of people's lives; thus it is a far-sighted strategy.
Second, in terms of leadership, China has often been criticized as a non-democratic country by the Western nations, and even more stridently as a dictatorship, but this does not mean that the most outstanding officials are not being promoted to the core leadership positions. Although the election of the Chinese leadership and the decision-making processes on major issues are different from those in the West, this leadership structure can sometimes be more efficient.
For example, the American struggle for power between two parties often leads to inaction and paralysis, and can actually cause the government to temporarily shut down. Furthermore, critics have argued that if the U.S. government decision-making process was more efficient, for example, the government could have taken earlier pre-emptive measures to rescue Lehman Brothers and some of the other large financial institutions, thereby helping to defuse the severity of the 2008 global financial crisis.
Third, human resource policies and practices are more about knowledge and skills, personnel cultivation, and selection. In China, this is mainly reflected in the college entrance examination system and the recruitment selection system for civil servants and staff of state-owned enterprises. In China, it is vital for career advancement to enter a well-known university, and it is similarly important for the development of a country to let the real talent stand out. Therefore, the decisive test at this major turning point, the college entrance examination system, has long been of concern, and the relevant reforms launched recently that have committed to make it more scientific and rational are inspiring initiatives.
The majority of state-owned enterprise jobs are relatively stable, with salaries that are significantly higher than the average level of society, but it is well known that the children of existing staff have better access to these jobs. They have been accused of "inheriting" their positions, thus diminishing the concept of social fairness. Making the Chinese Dream come true is dependent on the country promoting world-class personnel to critical positions and implementing a fair and equitable employment system. This will certainly require reforms and improvements.
Fifth, an examination of culture is far more complex. It covers a broad area, and includes such issues as language, customs, values, history, rituals, and religion. In short, Chinese civilization has a long and colorful history, being one of the few unified major countries in the world, with a history of over 5,000 years. The impact of a country's culture is one of the important soft powers. Although in recent history the Western civilizations are far more developed, does this mean that Chinese culture lags behind? This is a question that needs further research and reflection. The realization of the Chinese Dream will also provide a gradual process that will allow Chinese culture to go out into the world.
Sixth, in terms of technology, there is a wide gap between China and the Western countries, mainly reflected by the technological capabilities of a large number of companies, as well as the research strength of research institutions and universities. This is one of the difficult tasks in the process of achieving the Chinese Dream, and although there is a considerable gap, the speed of China's development is quite amazing.
For example, China's aerospace industry may be inferior to the U.S. and Russia, but is far superior to many other countries. As another example, recently some foreign media reported that China has become the world's largest purchaser of industrial robots; although the country is not the largest manufacturer, this step also represents a significant level of technological advancement.
Competitive strategic advantage
This part of the stragility theoretical framework is more suitable for business rather than national situations. Therefore, some adjustments have been made using Porter Diamond Models to analyze the industrial competitiveness of the nation in its quest to realize the Chinese Dream, and the comprehensive formation of a number of industries can be used to illustrate the national competitive advantage. Porter argues that four factors determine the competitiveness of an industry within a country. China, with its population ranking first and national economy ranking second, basically has all the elements. Sadly, owing to the monopoly structure of state-owned enterprises and other business advantages, a truly competitive environment is hard to find.
- Productive factors include human resources, physical resources, knowledge resources, capital resources, and infrastructure. As for human and knowledge resources, China has a large population, but the overall level of education is low, and few manage to master the most advanced knowledge. Physical and natural resources, if calculated on an average basis, are also scarce. Infrastructure has been greatly improved in recent years, but new problems arise, such as serious traffic jams in big cities like Beijing, and inadequate high-quality hospitals and schools. Because reforms in the financial sector are slow and the state-owned economy rules a high proportion of the overall economy, there is seriously irrational and inefficient capital allocation. Overall, there is still a relatively large gap between China and the developed countries in terms of the factors of production; in spite of low overall quality, though, many of the productive elements needed to meet the basic conditions for the realization of the Chinese Dream are quite complete.
- Demand conditions mainly refer to the demand in the domestic market. I need not discuss this aspect in too much detail; China has been or will soon be the world's largest market for a lot of industries. A huge domestic market is an important part of a country's competitiveness, which breeds and fosters industries and enterprises with global competitiveness. The downside for China is that its economy is too dependent on exports, while the hoped for huge increase in demand in the domestic market has not been fully released.
- The performance of related support industries can be specified to include comprehensive industries integral to the economy and those that are complements at the national level. That is, not only is the industry internationally competitive, but its upstream industries are also not controlled by others.
- The corporate strategy, structure, and performance of the competitors need not be explained in detail. China should pay extra attention to creating an environment for competition among enterprises, and the ideal is that competition is welcomed in almost all industries, but not that monopoly or oligopoly operations and other advantages are given to some industries. Only when companies continue to compete can international competitiveness be formed for the industry, and when a number of industries and enterprises achieve world-class standards, then the country's comprehensive national strength can be enhanced.
These four elements interact with one another forming a diamond shaped system, which can determine a country's competitiveness in some industries. In addition, there are two other variables: the role of government, and opportunities. Opportunities may be difficult to manage, but technological breakthroughs, innovations, and inventions can open doors to bring about major opportunities.
Porter believes that once formed, the diamond system is a powerful force, functioning under the premise that the government only helps provide the resources needed for the enterprise and creates an environment for industrial development, but does not intervene in business operations. The Chinese government has recently decided to "let the market play a decisive role," which will create an extremely important condition for the realization of the Chinese Dream.
The blueprint and objectives
The core meaning of the Chinese Dream described by President Xi Jinping is the great rejuvenation of the Chinese nation, and its basic idea is to achieve national prosperity and revitalization, with the ultimate goal of enhancing the happiness of the people. The goal is to build a flourishing society by 2021, the 100th anniversary of the founding of the Communist Party of China, and to build a prosperous, democratic, civilized, and harmonious modern socialist country by 2049, the year marking the 100th anniversary of the founding of the People's Republic of China.
In addition to strategy and objective, the stragility theoretical framework requires splitting the objective into multiple small goals and setting evaluation criteria. By completing every specific small target, the overall goal is gradually achieved. Skipping the targets of a moderately prosperous and democratic society, I will focus on my understanding of "prosperous," or in other words, "rich and powerful."
In 2013, China's GDP per capita was about $9,800, ranking it 97th among 195 countries (see figure below: Global GDP per capita, China is just higher than some African and South Asian countries, such as India). The U.S. GDP per capita is more than five times that of China; other major developed countries, such as Canada and Australia, are more than four times China, and Germany, Britain, and Japan are close to four times the level of China. If the GDP per capita in China can reach $20,000 by 2021, it would not be overstated to call it a well-off society. In the next 35 years, if the country can continue to maintain the overall trend of economic growth, it is not impossible that it can close the gap with many of the major developed economies by 2049, making it reasonable to call it a wealthy country.
However, the word wealthy itself is a relative concept. What is worth thinking about is the question that if the majority of China's 1.35 billion people, which accounts for about 19% of the more than 7 billion people across the globe, belong to the affluent class, then who will be the poor? Whether competition among countries in the end is a zero-sum game, or can be a win-win or multiple-win scenario is worth exploring.
In addition to GDP, per capita income, and other economic indicators, there are other common international indicators that can measure the degree of prosperity of a country or its international competitiveness. The International Institute of Management Development (IMD) located in Lausanne, Switzerland, summarized four components: economic performance, government efficiency, business efficiency, and infrastructure. These components can become branch targets for realizing the Chinese Dream.
Economic strength is the foundation and core of the Chinese Dream. A powerful country starts by aiming for economic growth and prosperity, and strives to own a large number of world-class companies that are able to lead their industries. Currently, competition among countries is reflected more by the competition among enterprises, while there is rare direct competition between countries. Although China currently has the world's second-largest economy, it can be said to be big but not strong, mainly because of a lack of first-class enterprises. For example, there were 95 Chinese enterprises listed among the Fortune 500 in 2013, but very few of them have any measure of international competitiveness, and even fewer still can be called global industry leaders.
How can the state oversee good change management?
The Stragility theory proposes a number of good ideas on change management operations. The following points can be applied to the realization of the Chinese Dream; some points have been extended according to the circumstances.
- Inspiring the passion and engagement of the people or stakeholders, in particular, enabling them to understand and be aware of the reasons for change (in fact, China's official television, newspapers, Internet, and other media are publicizing the idea extensively, but there are few activities for the masses because of the large number of people involved).
- Developing people-related stories and mantras (mantras with three Chinese characters are the best, for example, Chinese Dream: zhong guo meng in Chinese pinyin, is such a mantra); visualizing publicity, creating and releasing the information that can join people together, generate resonance, and provide incentive effects.
- As for the smaller targets under the core objectives, evaluation criteria should be set to be checked periodically; regular analysis should be carried out to examine internal and external environments; results for the internal environment should be analyzed to highlight successful experiences, to learn from failures, and to explore deeper reasons.
- Necessary tests should be done in advance in terms of policy uncertainties; the habit of continuous learning and evolution should be cultivated.
In addition, the realization of the Chinese Dream is a process of continuous improvement in national competitiveness. Ten suggestions proposed by the IMD are worth noting: 1. Establish a stable executive and legislative environment; 2. Construct efficient government and a simple business environment; 3. Sustain investment in infrastructure and public services; 4. Expand the middle class; 5. Develop medium-sized enterprises; 6. Coordinate the relationships between wages, productivity, and taxes; 7. Encourage private savings and domestic investment, and develop the domestic market; 8. Encourage high value-added industries to compete in the international market; 9. Strike a balance between maintaining social solidarity, cohesion and values, and making full use of the advantages of globalization; 10. Let the people enjoy the fruits of economic prosperity.
Considering what China has done and still needs to do, some of these ten suggestions have not yet been realized, and some will require years of sustained effort. No matter from what perspective we view the Chinese Dream, whether it be from the perspective of business change management, as this paper has done, or from the macro-strategic viewpoint, the Chinese Dream is a road leading the country to a powerful and prosperous future. Many countries and people also have the same dream, but how can China stand out? It is my hope that the above discussion can provide some inspiration.
(The article is based on the Stragility theoretical framework put forward by the Professor Ellen R. Auster from Schulich School of Business at York University, Canada. The author would like to express his most sincere gratitude to Professor Ellen R. Auster.)
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.