Charles Zhang (张朝阳):Without Reform There is No Way Out

Charles Zhang (Zhang Chaoyang 张朝阳) is the Founder, Chairman and current CEO of Sohu, China’s second largest Internet portal and the first Chinese-language search engine. Widely recognized as one of China’s Internet pioneers, Zhang has been on the Forbes China Rich List and was named by Time Magazine as one of the 50 Cyber Elite. Born in Xi’an in 1964, Zhang received his doctorate from the Massachusetts Institute of Technology before launching the Internet company ITC, which later developed Sohu.

Zhang recently delivered the keynote speech at a media forum in Beijing organized by Sohu. From Reuters:

China will never have its voice heard on the international stage unless the government loosens its tight grip over the media and film industry, the CEO of the country’s No. 2 Internet portal said Wednesday.

Charles Zhang, the often outspoken chief executive of Inc, told a forum in Beijing that plans to create global Chinese media giants were doomed to fail if the government did not relax controls.

CDT has translated portions of his talk below:

I was a student and scholar of physics before age 30. Until now, I have been to many countries, and have been part of many things. I have many thoughts on a lot of subjects. So please let me spend some time to talk about this today.

In Year 2049, many of us who are sitting here today will still be alive, and we will have many children and grandchildren. By that time, will all Chinese be able to live happily and with dignity, and have a lot of face in front of Americans? And will China be respected by the world? This has everything to do with now, with every person. Between now and the happy life in 2049 there are still a lot of barriers; whether we can arrive at the glorious shore critically depends on the choices we make today being wise or stupid. By that time, if the rise of China and wealth becomes a delusion, our descendants will point their fingers at us and say: What has your generation done? How can you be this stupid?

Chinese are the most hardworking people in the world. Confucian culture requires us to be practical, striving forward in life, always moving upstream. With a little opportunity we can make wealth; with few resources we can flourish. Chinese government officials are the most hardworking officials in the world. Chinese society has a much lower tolerance for corruption than Russia, Brazil and India. The thirty years of market reform have given hardworking Chinese opportunities; workers in the Pearl River Delta and Yangtze River Delta have been working on production lines day and night with low salaries, and our Confucian leaders in every city and region also work day and night, under the competitive pressure of neighboring cities or regions and the pressure of being promoted, leading their subordinates, running on the road of accumulating wealth. The hardworking culture of the Chinese and the marketization of the manufacturing industry created the miracle of “Made in China.” The mid and lower stream of the world’s consumer product chain are almost monopolized by cheap Chinese products. This is the reason for our economic miracle over the last 30 years.

The accomplishment of the last 30 years is tremendous, and we are therefore overwhelmed by the celebratory feeling of this success, we even feel high. Now we cannot stop talking about the rise of the great nation, excitedly (such as the Global Times) collecting any piece of praise from westerners, whom we still worship as our superiors, as if the Middle Kingdom has returned to the ancient glorious order as the center of the world, worshipped by the surrounding countries. This is an illusion! Westerners still do not think too much of us!

In fact, we have only participated in the preliminary round of the economic games. Now we have entered the final game. Our opponent is the most powerful, most advanced country – the United States. If we still keep the current status, then the intellectual thesis is: hardworking Confucian spirit + incomplete market economy vs. individualism + fair and complete market economy. I think the answer is certain and depressing: We have no way to defeat America!

The problem comes from the incomplete market economy. Quality and excellence come from full competition. Innovation comes from fair competition. And the incomplete market economy is interrupting the competition every minute.

… In the field of media, newspapers and television stations within the Chinese system lack meaningful competition, and therefore have no credibility and respect. When the Wall Street Journal, or the New York Times point to something, the whole world pays attention, and believes them. Because there is no respectable media organization, China’s global communication power is very weak. The national media team organized by the government to promote China’s brand globally is doomed to fail and has no competitive strength, because they are not a product of market competition.

You may ask, what should we do?

The answer is obvious. Continue the marketization reforms with determination. Without reform there is no way out! Without full and fair market competition, there will be no quality, no excellence, no employment opportunities, no stability, and no real rise of China.

How do we do this practically? The problem is complicated, but the fundamental point is to limit the power of the government and to thoroughly pursue fairness. Only by realizing maximum fairness, can those talented individuals and organizations emerge, and the society can be filled with energy and creativity. Otherwise what we have developed will not be a full market economy, but the power-elite capitalism. The government should drop those actions which take profits from the society, but spend its main energy to protect fair competition.


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