Rutronik News

The fire-breathing dragon

  Newsletter Article

With an almighty, earth-shaking WUMP, the dragon takes to the air with a thunderous beat of its leathery wings. Swinging its gigantic head, it opens its yellow eyes and emits a blast of fire in the direction of the rising sun. As it glides majestically across the firmament, it makes the people below look like tiny ants.

Dragons are the stuff of fantasies across every country and culture of humankind and are firmly anchored in pop culture, appearing in movies, series, books, computer games, and songs. Some are cute and friendly, like Toothless from How to Train Your Dragon, while some are scary and evil, as in Reign of Fire, and some serve as mighty companions, like Daenerys Targaryen’s Drogon in the popular series Game of Thrones. In any event, they are always very, very powerful.

Dragons therefore act as a symbol of power and strength. In Chinese mythology, the dragon is responsible for conveying people’s hopes and desires to heaven – and for returning with divine blessings. These blessings have clearly been extremely effective: Once described as the “extended workbench of the West”, the People’s Republic of China has now evolved into the world’s second-largest economy. In terms of its economic, political, and military influence, it is often reverentially termed the “dragon” – and not without good reason. After all, with its growing self-confidence, the People’s Republic is asserting its position as a leading superpower, second only to the USA. With this gigantic country having long outstripped the European nations, the United States can now feel the dragon breathing down its neck – and the recently agreed economic sanctions will do little to change that.

China has completed its transformation from a developing country to an industrialized economy with breathtaking speed. Following the death of Mao Zedong in 1976, the Chinese economy began opening up under the aegis of Deng Xiaoping, gradually evolving from a centrally planned economy based on the Soviet model to an industrial strategy organized according to the principles of a market economy. True to Deng’s pragmatic motto “It doesn’t matter whether a cat is black or white, as long as it catches mice”, the People’s Republic has flourished since the early 1980s, ultimately becoming a world power and the only socialist country ever to achieve economic success. A veritable Red Dragon.

China began its transformation by taking advantage of the West’s insatiable hunger for cheap products, as well as the natural modus operandi of capitalism: As large industrialized nations could no longer produce these goods cheaply enough, they outsourced production to low-wage countries. China willingly accepted the stigma of being a “copy-and-paste” country. After all, its adopted political course was leading to rising prosperity for the general public and breathtaking growth rates in the economy. Having hatched under Deng’s watchful eye, the dragon was coming of age. It grew bigger, stronger, and hungrier. The standard of living rose, and so too did the country’s expertise thanks to joint ventures and the Internet – so that, today, the People’s Republic manufactures innovative, high-quality products. Smartphones from Huawei or laptops from Lenovo serve as prominent examples.

Chinese researchers and companies now play a prominent role in the areas of artificial intelligence and electromobility and are world leaders in numerous other innovative sectors. There are several reasons for this: First of all, China is still a development dictatorship – the Communist Party has a firm grip on the economy and on society. This is extremely concerning from a human rights perspective, but – from an economic perspective – China succeeds in planning and implementing major projects in record time. Secondly, there are many small and medium-sized businesses across the country that engage in fierce competition with one another. This prevents successful companies from becoming sluggish and shying away from risk. Thirdly, Chinese business leaders adhere to a Confucian world view in which the company is viewed as a family whose members live in harmony with one another. This reinforces their sense of belonging and extends their willingness to work for the company beyond the concepts of working time and hourly wages. Together, these three factors contribute to the dragon’s ever greater strength.

But will the dragon continue to grow indefinitely, getting stronger and stronger until one day it guards a huge mountain of treasure like Smaug in The Hobbit? Not necessarily, because – unlike their parents and grandparents – the generation of young people now growing up in China are no longer driven by fear for their livelihood and economic situation. Dai Weihui, a professor at the Fudan University School of Management, explains: “There is also no incentive to work hard. In my view, this will have a very negative effect on the rate of innovation in the future. Ultimately, this generation will have much more to lose, and the appetite for risk will subside,” says Weihui.

Whether this will actually happen remains to be seen. After all, the US sinologist David Shambaugh of George Washington University also reported in the Wall Street Journal in 2015 that the era of Communist Party rule would soon be over. Actually, the opposite happened: For President Xi Jinping, the constitution has recently been amended and the term limit has been lifted. In any case, the Red Dragon continues to rise for now, with experts predicting 6.7% growth in the Chinese economy in 2018.