NOVEMBER 15, 2009
Bill Powell / Shanghai
On the evening of Nov. 15, President Barack Obama, the youthful leader of
one of the world's youngest countries, begins his first visit to China, among
the world's most ancient societies. Obama and his Chinese counterpart, Hu
Jintao, have much to discuss. Nukes in Iran and North Korea. China's
surging military spending. Trade imbalances. Climate change.

But the visit comes at an awkward moment for the U.S. China, despite its
5,000-year burden of history, has emerged as a dynamo of optimism,
experimentation and growth. It has defied the global economic slump, and
the sense that it's the world's ascendant power has never been stronger.
The U.S., by contrast, seems suddenly older and frailer. America's national
mood is still in a funk, its economy foundering, its red-vs.-blue politics as
rancorous as ever. The U.S. may be one of the world's oldest capitalist
countries and China one of the youngest, but you couldn't blame Obama if
he leaned over to Hu at some point and asked, "What are you guys doing
(See pictures of people around the world watching Obama's Inauguration.)

Could the world's lone but weary superpower actually learn something from
China? It's a politically incorrect question, of course. China is an
authoritarian nation; its ruling Communist Party deals ruthlessly with any
challenge to its hegemony.

It remains, relatively speaking, a poor, developing country with huge
problems to confront, massive corruption and environmental degradation
being Nos. 1 and 1a. Still, this is a moment of humility for the U.S., and
China is doing some important things right. If the U.S. were to ask the
Chinese what it could learn from their example, it might gain some insight
into what it's doing right and wrong. Here are five lessons from China's
success story:

1. Be Ambitious

One day this summer, Sean Maloney, an executive vice president at Intel,
was bouncing from one appointment to another in northeastern China,
speeding along in a van traversing newly built highways. He gazed out at
one of the world's biggest construction projects: a network of high-speed
train lines — covering 10,000 miles (16,000 km) nationwide — that China is

As far as the eye could see, there sat vast concrete support struts, one
after another, exactly 246 ft. (75 m) apart. Each was full of steel cables and
weighed about 800 tons. "We used to build stuff too," Maloney mused,
unprompted. "But now it's NIMBY [not in my backyard] every time you try to
do something. Here,'' he joked, "it's more like IMBY. There's stuff happening
here, everywhere and always."

It's not just NIMBYism that constrains the U.S. these days, of course.
America is close to tapped out financially, with budget deficits this year and
next exceeding $1 trillion and forecast to remain above $500 billion through
2019. But sometimes the country seems tapped out in terms of vision and
investment for the future.

Some economists believe that given its stage of development, China spends
too much on expensive items like high-speed rail lines. But step back from
the individual infrastructure projects and the debates about whether a given
investment is necessary, and what's palpable in China is the sense of
forward motion, of energy.

No foreigner — at least not one I've met in five years of living here — even
bothers denying it. And the Chinese take it for granted. When a brand-new
six-lane highway opened in suburban Shanghai in October, Zhong Li Ping,
who shuttles migrant workers to the city and back to their hometowns, said,
"I don't know what took them so long."

In truth, it took about two years — roughly the time it would take to get the
environmental and other regulatory permits for a new highway in the U.S. If,
that is, you could get them at all.

There's no direct translation into Chinese of the phrase can-do spirit. But
yong wang zhi qian probably suffices. Literally, it means "march forward
courageously." China has — and has had for years now — a can-do spirit
that's unmistakable. Americans know the phrase well. They invented it. It
used to define them.

Critics of the authoritarian Chinese government would say it's a system
more accurately called "can do — or else." And they have a point. No one in
the U.S. would argue that it should adopt China's dictatorial style of
government. America doesn't need to displace tens of thousands of people
in order to build a massive dam, as China did in Hubei province from 1994
to 2006. (The value of checks and balances is, in fact, among the many
things China could learn from the U.S.)

But you don't have to be a card-carrying communist to wonder how
effectively the U.S. develops and executes ambitious projects. Ask James
McGregor. He's a former chairman of the American Chamber of Commerce
in China and now a business consultant who divides his time between the
two countries.

"One key thing we can learn from China is setting goals, making plans and
focusing on moving the country ahead as a nation," he says. "These guys
have taken the old five-year plans and stood them on their head. Instead of
deciding which factory gets which raw materials, which products are made,
how they are priced and where they are sold, their planning now consists of
'How do we build a world-class silicon-chip industry in five years? How do
we become a global player in car-manufacturing?'"
Some of this is the natural arc of a huge, fast-growing country in the
process of modernization. The U.S. in the late 19th century was nothing if
not what Intel's Maloney would call an IMBY country. America was
ambitious. There's no secret formula to help the nation get back its zeal
for what it used to enthusiastically and sincerely call progress.

But even though the U.S. is a mature, developed country, many
economists believe it has shortchanged infrastructure investment for
decades. It possibly did so again in this year's stimulus package. Just
$144 billion of the $787 billion stimulus bill Congress passed earlier this
year went to direct infrastructure spending.

According to IHS Global Insight, an economic-consulting firm, U.S.
spending on transportation infrastructure will actually decline overall in
2009 when state budgets are factored in — this at a time when the
American Society of Civil Engineers contends that the U.S. should invest
$1.6 trillion to upgrade its aging infrastructure over the next five years.

When the economic crisis hit China late last year, by contrast, almost half
of the emergency spending Beijing approved — $585 billion spread over
two years — was directed at projects that accelerated China's massive
infrastructure build-out. "That money went into the real economy very
quickly," says economist Albert Keidel of the Carnegie Endowment for
International Peace.

But it's not just emergency spending on bridges, roads and high-speed rail
networks that's helping growth in China. Patrick Tam, general partner at
Tsing Capital, a venture-capital firm in Beijing, says the government is
aggressively helping seed the development of new green-tech industries.

An example: 13 of China's biggest cities will have all-electric bus fleets
within five years. "China is eventually going to dominate the industry for
electric vehicles," Tam says, "in part because the central government has
both the vision and the financial wherewithal to make that happen." Tam, a
graduate of MIT and the University of California, Berkeley, says he does
deals in Beijing rather than Silicon Valley these days "because I believe
this is where these new industries will really take shape.

China's got the energy, the drive and the market to do it." Isn't that the
sort of thing venture capitalists used to say about the U.S.?

2. Education Matters

On a recent Saturday afternoon, at a nice restaurant in central Shanghai,
Liu Zhi-he sat fidgeting at the table, knowing that it was about time for him
to leave. All around him sat relatives from an extended family that had
gathered for a momentous occasion: the 90th birthday of Liu's great-
grandmother Ling Shu Zhen, the still spry and elegant matriarch of a
sprawling clan. But Liu had to leave because it was time for him to go to
school. This Saturday, as he does every Saturday, Liu was attending two
special classes. He takes a math tutorial, and he studies English.

Liu is 7 years old.

A lot of foreigners — and, indeed, a fair number of Chinese — believe that
the obsession (and that's the right word) with education in China is
overdone. The system stresses rote memorization. It drives kids crazy —
aren't 7-year-olds supposed to have fun on Saturday afternoons? — and
doesn't necessarily prepare them, economically speaking, for the job
market or, emotionally speaking, for adulthood. Add to that the fact that
the system, while incredibly competitive, has become corrupt.

All true — and all, for the most part, beside the point. After decades of
investment in an educational system that reaches the remotest peasant
villages, the literacy rate in China is now over 90%. (The U.S.'s is 86%.)
And in urban China, in particular, students don't just learn to read. They
learn math. They learn science.

As William McCahill, a former deputy chief of mission in the U.S. embassy
in Beijing, says, "Fundamentally, they are getting the basics right,
particularly in math and science. We need to do the same. Their kids are
often ahead of ours."

What the Chinese can teach are verities, home truths that have started to
make a comeback in the U.S. but that could still use a push. The Chinese
understand that there is no substitute for putting in the hours and doing
the work. And more than anything else, the kids in China do lots of work.

In the U.S., according to a 2007 survey by the Department of Education,
37% of 10th-graders in 2002 spent more than 10 hours on homework each
week. That's not bad; in fact, it's much better than it used to be (in 1980 a
mere 7% of kids did that much work at home each week). But Chinese
students, according to a 2006 report by the Asia Society, spend twice as
many hours doing homework as do their U.S. peers.

Part of the reason is family involvement. Consider Liu, the 7-year-old who
had to leave the birthday party to go to Saturday school. Both his parents
work, so when he goes home each day, his grandparents are there to
greet him and put him through his after-school paces. His mother says
simply, "This is normal. All his classmates work like this after school.''
Yes, big corporate employers in China will tell you the best students
coming out of U.S. universities are just as bright as and, generally
speaking, far more creative than their counterparts from China's élite
universities. But the big hump in the bell curve — the majority of the
school-age population — matters a lot for the economic health of

Simply put, the more smart, well-educated people there are — of the sort
that hard work creates — the more economies (and companies) benefit.
Remember what venture capitalist Tam said about China and the electric-
vehicle industry. A single, relatively new company working on developing
an electric-car battery — BYD Co. — employs an astounding 10,000

China, critics will point out, doesn't produce (at least not yet) many Nobel
Prize winners. But don't think the basic educational competence of the
workforce isn't a key factor in its having become the manufacturing
workshop of the world. It isn't just about cheap labor; it's about smart

"Whether it's line workers or engineers, we're finding the candlepower of
our employees here as good as or better than anywhere in the world,"
says Nick Reilly, a top executive at General Motors in Shanghai. "It all
starts with the emphasis families put on the importance of education.
That puts pressure on the government to deliver a decent system."

And the Chinese government responds to that pressure in some
intriguing ways. It insists that primary-school teachers in math and
science have degrees in those subjects. (Less than half of eighth-grade
math teachers in the U.S. majored in math.)

There is a "master teacher" program nationwide that provides mentoring
for younger teachers. Zhang Dianzhou, a professor emeritus of
mathematics at East China Normal University in Shanghai who co-chaired
a committee charged with redesigning high school mathematics programs
across the country, says recent changes have begun to reflect more of a
"real-world emphasis."

Computer-science courses, for example, have been integrated into the
math curriculum for high school students. And China is placing even
more importance on teaching young students English and other foreign

If you think China's willingness to constantly fine-tune its educational
system is not going to have much of an impact 20 years from now,
there's a 7-year-old boy in Shanghai who'd be happy to discuss the issue
with you. In English.

3. Look After the Elderly

it's hard to imagine two societies that deal with their elderly as differently
as the U.S. and China. And I can vouch for that firsthand. My wife Junling
is a Shanghai native, and last month for the first time we visited my father
at a nursing home in the U.S. She was shaken by the experience and later
told me, "You know, in China, it's a great shame to put a parent into a
nursing home."

In China the social contract has been straightforward for centuries:
parents raise children; then the children care for the parents as they
reach their dotage. When, for example, real estate developer Jiang Xiao Li
and his wife recently bought a new, larger apartment in Shanghai, they
did so in part because they know that in a few years, his parents will
move in with them. Jiang's parents will help take care of Jiang's daughter,
and as they age, Jiang and his wife will help take care of them.

As China slowly develops a better-funded and more reliable social-
security system for retirees — which it has begun — the economic
necessity of generations living together will diminish a bit. But no one
believes that as China gets richer, the cultural norm will shift too

To a degree, of course, three generations living under one roof has long
happened in the U.S., but in the 20th century, America became a
particularly mobile and rootless society. It is hard to care for one's
parents when they live three time zones away.

Home care for the elderly will most likely make a comeback in the U.S. out
of sheer economic necessity, however. The number of elderly Americans
will soar from 38.6 million in 2007 to 71.5 million in 2030. But, says Arnold
Eppel, who recently retired as head of the department of aging in
Baltimore County, Maryland, "There won't be enough spots for them" in
the country's overwhelmed nursing-home system.

Appreciating the magnitude of the coming crisis, the U.S. government has
begun to respond. Two new initiatives — Nursing Home Diversion and
Money Follows the Person — expand subsidies for home elder care, and
the Veterans Health Administration has just put in effect its own similar
initiative. "The whole trend will be into home care, because nursing
homes are too expensive," Eppel says, noting that nursing-home care in
the U.S. costs about $85,000 annually per resident.

In China, senior-care costs are, for the most part, borne by families. For
millions of poor Chinese, that's a burden as well as a responsibility, and it
unquestionably skews both spending and saving patterns in ways that
China needs to change. For middle-class and rich Chinese, those costs
are a more manageable responsibility but one that nonetheless ripples
through their economic decision-making.

Still, there are benefits that balance the financial hardship: grandparents
tutor young children while Mom and Dad work; they acculturate the
youngest generation to the values of family and nation; they provide a
sense of cultural continuity that helps bind a society. China needs to
make obvious changes to its elder-care system as it becomes a wealthier
society, but as millions of U.S. families make the brutal decision about
whether to send aging parents into nursing homes, a bigger dose of the
Chinese ethos may well be returning to America.
4. Save More

You've now heard it so many times, you can probably repeat it in your
sleep. President Obama will no doubt make the point publicly when he
gets to Beijing: the Chinese need to spend more; they need to consume
more; they need — believe it or not — to become more like Americans,
for the sake of the global economy.

And it's all true. But the other side of that equation is that the U.S. needs
to save more. For the moment, American households actually are doing
so. After the personal-savings rate dipped to zero in 2005, the shock of
the economic crisis last year prompted people to snap shut their wallets.
Now that it's pouring, in other words, American households have
decided to save for a rainy day. The savings rate is currently about 4%
and has gone as high as 6% this year.

In China, the household-savings rate exceeds 20%. It is partly for
straightforward policy reasons. As we've seen, wage earners are
expected to care for not only their children but also their aging parents.
And there is, to date, only the flimsiest of publicly funded health care
and pension systems, which increases incentives for individuals to save
while they are working.

But China, like many other East Asian countries, is a society that has
esteemed personal financial prudence for centuries. There is no chance
that will change anytime soon, even if the government creates a better
social safety net and successfully encourages greater consumer

Why does the U.S. need to learn a little frugality? Because healthy
savings rates, including government and business savings, are one of
the surest indicators of a country's long-term financial health. High
savings lead, over time, to increased investment, which in turn
generates productivity gains, innovation and job growth. In short,
savings are the seed corn of a good economic harvest.

The U.S. government thus needs to get in on the act as well. By running
perennial deficits, it is dis-saving, even as households save more. Peter
Orszag, Obama's Budget Director, recently called the U.S. budget
deficits unsustainable — this year's is $1.4 trillion — and he's right.

To date, the U.S. has seemed unable to have what Indiana Governor
Mitch Daniels has called an "adult conversation" about the
consequences of spending so much more than is taken in. That needs to
change. And though Hu Jintao and the rest of the Chinese leadership
aren't inclined to lecture visiting Presidents, he might gently hint that
Beijing is getting a little nervous about the value of the dollar — which
has fallen 15% since March, in large part because of increasing fears
that America's debt load is becoming unmanageable.

That's what happens when you're the world's biggest creditor: you get
to drop hints like that, which would be enough by themselves to create
international economic havoc if they were ever leaked. (Every time any
official in Beijing muses publicly about seeking an alternative to the U.S.
dollar for the $2.1 trillion China holds in reserve, currency traders have a
heart attack.)

If Americans became a bit more like the Chinese — if they saved more
and spent less, consistently over time — they wouldn't have to worry
about all that.

5. Look over the Horizon

The energy that so many outsiders feel when they are in China and that
President Obama may see when he is there comes not just from the
frenetic activity that is visible everywhere. It comes also from a sense
that it's harnessed to something bigger. The government isn't frantically
building all this infrastructure just to create make-work jobs. And kids
aren't studying themselves sleepless because it's a lot of fun.

A few years ago, I interviewed Zhang Xin, a young man from a deeply
poor agricultural province in central China. His parents were wheat
farmers and lived in a tiny one-room house next to the fields. He had
graduated from Tsinghua University — China's MIT — and gotten a job
as a software engineer at Huawei, the Cisco of China.

His success, Zhang told me one day, had changed his family forever.
None of his descendants would "ever work in the wheat fields again. Not
my children. Not their children. That life is over." (And neither would his
parents. They moved to prosperous Shenzhen, just north of Hong Kong,
soon after he started his new job.)

Multiply that young man's story by millions, and you get a sense of what
a forward-looking country this once very backward society has become.
A smart American who lived in China for years and who wants to avoid
being identified publicly (perhaps because he'd be labeled a "panda
hugger," the timeworn epithet tossed at anyone who has anything good
to say about China) puts it this way: "China is striving to become what it
has not yet become. It is upwardly mobile, consciously, avowedly and —
as its track record continues to strengthen — proudly so."

Proudly so, because as Zhang understood, hard work today means a
much better life decades from now for those who will inherit what he
helped create. And if that sounds familiar to Americans — marooned, for
the moment, in the deepest recession in 26 years — it should.