A Chinese Tale With a Tragic Ending

In 2011, the first German investors went to China. They did not go to the United States, Switzerland or France, the following three prospects. The Chinese did not invest in commodities, as is customary in Latin America, but in industrial, technological and engineering activities.

Among the Chinese purchases is the company Putzmeister, founded in 1958, a German giant dedicated to construction equipment. It was acquired for billions of dollars in 2011 by SANY China, a company founded in 1986 by three partners who then assembled a small capital of about $10,000 in current exchange rates.

The president of SANY is Lian Wengen, the richest man in China. Some will calculate a capital of $11,000 million; because his company is so rich and successful, the curious Chinese Communist Party has offered Wengen a seat on the Central Committee. What I want to get to is the following two conclusions: First, that the Chinese success is not the triumph of a particular economic model, but the result of releasing the immense creative capacity of the company in the private business field.

The state ceased to be an obstacle to private business development and became its sponsor. It continued cutting or blocking individual freedoms, but ceased to hinder the creation of wealth by citizens.

Secondly, the Chinese economic phenomenon essentially resembles what happens in the U.S., Switzerland, Holland, Israel or any of the successful nations on the planet: countries that are rich and developed because they have a private business sector that generates wealth and technological advances in the midst of intense economic competition.

Simply put, this multiplication of loaves and fishes is not possible to do by the state and from the state. The unsuccessful great leap forward Mao tried finally took place — not with Marx’s recipe in hand, but with that of Adam Smith.

The examples of China, Japan, Taiwan, South Korea, Germany, the U.S., all those nations that we admire in the economic field, must lead to a logical reasoning: If among the essential societal objectives is to create wealth and fight poverty and backwardness, it is an absolute priority that the state secrete the conditions for the development of private business that is varied and complex.

It’s true that in the way the most skilled entrepreneurs will be enriched and blessed tremendously, as Mr. Lian Wengen, but in their impetuous march to the top will drag millions of people toward higher forms of life.

When the economic change in China started during the 1970s an industrial worker in that country made a 16th of what a U.S. worker in a similar position earned. Today that Chinese worker earns a quarter of what the U.S. worker receives.

Eventually, as it happened in Japan, you may get to meet or exceed the American. Those 300 million Chinese who are now part of the middle social levels are due largely to private enterprise fury unleashed in that country.

Naturally, this impressive economic miracle is and will be in danger of blowing up if China fails to evolve in the political arena to a reasonable system to that settles disputes and transfers authority based on the consent of citizens, as it did, for example, in Taiwan.

The paradox is that every Chinese who gets through the countryside to the city, from illiteracy to knowledge and from poverty to middle class, is a socially nonconformist person who shares rising demand for freedom and reversal of power relations from the state.

When everything was received from the state, it was its miserable servant. Now, with its work in the private sector creating wealth and helping maintain the state, the state wishes to turn its citizens into public servants. Whoever pays is in charge.

Fortunately, the model of liberal democracy, with all its imperfections, has resolved the tensions between society and state and is increasingly looking to the West as a source of civic inspiration. It is in this atmosphere where capitalism thrives best, not one-party dictatorships.