From the August 2002 issue of World Press Review (VOL. 49, No. 8)


China, Wired

Andreas Lorenz, Der Spiegel (liberal newsmagazine), Hamburg, Germany, June 5, 2002

China Internet Cafe
People play Internet games at an Internet café in Shanghai, June 18, 2002 (Photo: AFP).
The “House of the Sea Dragon” in Beijing’s Fourth Ring Road is like an Oriental bazaar, chaotic and noisy, as customers push in front of stands and delivery men shove carts full of goods down the narrow corridors. But this five-story department store offers no vegetables; and not a bit of mutton is for sale, but rather computers and printers, hard drives, monitors, and keyboards. This is the new face of China.

This computer shopping center is located in Zhongguancun—the Village of the Central Pass, better known as China’s Silicon Valley. Since Deng Xiaoping opened the gates to reform in this giant nation 23 years ago, more than 9,000 computer producers, Internet companies, and software makers have settled here.

China is preparing to make a great leap forward into the future. It plans to trade its reputation as a maker of cheap toys, textiles, and household goods for something higher-tech, thus joining the global market in information technology. The leaders in Beijing have set high goals for themselves: China’s high-tech sector is scheduled to grow by 20 percent each year and become the country’s major source of economic growth. By 2010, China wants to surpass the United States. “IT production,” says the vice minister for the information-technology industry, Lu Xinkui, “will grow three times as fast as the gross
domestic product.”

About 150 million Chinese are already using cellphones—roughly 20 million more than in the United States. By 2005, according to predictions by analysts, 260 million Chinese will own a cellphone. Foreign cellphone producers such as Nokia, Motorola, Ericsson, and Siemens are thrilled about their sales in China. The Germans, who assemble cellphones in Shanghai, now have a 14-percent share of the Chinese market.

Reaching out here is not exactly cheap: Depending on the model, a cellphone costs from 120 to 600 euros [US$110-550]. Anyone who wants to use a cellphone to call overseas will have to pony up 700 euros [$640] for the privilege—about two-months’ salary in Beijing.

The Internet is booming, too. Almost 57 million Chinese are already online, and this number is increasing by 5-6 percent each month. The potential for development, in a country of 1.3 billion people, seems enormous. But for millions of people in the countryside, the abacus is still more common than a laptop, and many villages still do not have a single telephone. For now, just 90,000 of the 8 million companies in China have their own Web sites.

No other sector of the Chinese economy has a dynamic to match that of the electronics industry. From DVD players to floppy drives, from color TVs to hard drives, from computers to computer mice—virtually every IT product is now “Made in China.”

According to a forecast by the Institute of Development Studies, a British market-research institute, as early as next year more PCs will be sold in China than in Japan. Only 20 years ago, Chinese wanting to make a phone call had to go to the neighborhood committee and ask to use its phone; placing an overseas call meant pedaling off to the central telegraph office. Today, about 180 million offices and residences have permanent Internet access. In the next four years, according to the experts, another 80 million customers will be added.

China’s ambitions are so high because the government, according to Vice Minister Lou Qinjian [from China’s Ministry of Information Industry], is aware of the fact that “the information industry will change the structure of the world economic system.” As an up-and-coming power, China wants to take its place next to IT countries such as South Korea, Japan, and the United States.

Above all, it wants to liberate itself from dependency on the American computer industry. Because the Chinese, until now, have not been able to produce any reliable chips, they are collaborating with a Taiwanese company to construct a chip-making plant, for $1.3 billion, in Shanghai. The Chinese also intend to attack the software monopoly Microsoft. Their answer to Bill Gates is a pleasant, round man named Liu Bo.

In Zhongguancun, this 41-year-old is developing, with help from the Chinese Academy of Sciences, an alternative operating system based on the Linux system. Its name is a reminder of the old days: Red Banner.
“It is as good as Windows, cheaper, and does not attract viruses,” says Liu. “With it, we can catch up to the Americans.” Under government pressure, the army and other official entities in China are already changing their computers to operate with Red Banner. When this happens, users will see a yellow penguin waving a red flag when they
boot up, rather than the colorful Windows logo.

China’s leaders are working to create the necessary infrastructure from the ground up. The leader here is China Netcom, whose head, Edward Tian, 38, has rapidly gained a reputation as an IT guru. He is connecting China with broadband cable. Within five years, by his estimates, 300 million people, government offices, and companies will be online 24 hours a day. “China will soon be the biggest Internet country in the world,” Tian says.

He embodies the new generation of IT managers: With an American college diploma, Tian returned home to China because he wanted to do something for his native land—and because it offered him huge potential in an untapped market.

His company has lots of similar employees: They do not have Communist Party membership cards and connections, but they do have Western college educations, speak foreign languages, and have ideas. And, as is the norm in Silicon Valley, state-owned IT companies here now offer stock options.

Even so, China’s IT managers have to deal with some obstacles that would defeat their foreign colleagues. Licenses and laws are often vaguely written, and insane prohibitions hinder business. For example, software developers in Zhongguancun can only open start-ups in expensive office buildings, not set up shop in the back of a store or at home, though no one knows why. Sometimes China’s leaders push the IT industry with all their might; other times they try to strangle the free flow of information—which is an impossible goal. Companies that offer Web sites risk fines if their customers allow criticism of the government or post so-called state secrets.

And the Old China is still around in other ways, as Peggy Yu found out. Yu emulated, and opened up, a Chinese Internet bookstore. She now has more than 210,000 titles on her site, and is adding 200 more each day. But because there is no national courier service in China, she is forced to send the books to her customers using the post office—and this often takes longer than the 30 days her firm guarantees. In some cities, as a result, Yu has set up her own bicycle delivery service.

Another handicap: Credit and debit cards are still not widely used in China, and it can take weeks for a bank to make a wire transfer.

But there is one thing that no longer stands in the way of the information age: the Chinese written language, with its 50,000 characters. Chinese can now write just as fast as people anywhere else in the world. They use a normal keyboard and type in the characters, using their Latin transliterations. A recent invention by Chinese software developers makes things even easier: Computer users can draw characters on a small touch-pad next to the keyboard, and they are transformed instantly into characters on the screen.

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