Much of China’s extraordinary development has been based on moving peasants into manufacturing. The key to future job growth, says Stephen Green, chief economist at Standard Chartered Bank in Shanghai, will lie in the service sector. And the largest components of the services sector—financial services, entertainment, media—remain firmly in the grip of the state. Going forward, it will become more difficult for a services-based economy to prosper with restraints on communication and expression. China faces a fundamental paradox, says Damien Ma, an analyst at the Eurasia Group. “It needs to have fairly closed information flow for political stability purposes, but doing so stifles innovation.”
And that’s the rub. Any type of political system can produce excellent hardware; the Soviet Union, which ruled Russia when Google cofounder Sergey Brin was born there in 1973, managed to produce nuclear weapons and satellites. Likewise, China has built truly impressive hardware: some 67 bridges now span the Yangtze River, a superfast supercomputer made entirely from parts made in China, high-speed trains. But in the 21st century, a country needs great software in order to thrive. It has to have a culture that facilitates the flow of information, not just goods.
Read also an op-ed from the Chinese newspaper Economic Observer about Google in China, “Google Pledge of No Censoring Spurs Tiananmen Searches in China” from Bloomberg and “Google wins praise for its defiance of China over censorship” from the Los Angeles Times.
