Great Leap Backward
Wednesday, March 7, 2007 | Wayne MulliganRating:
In 1958, Communist China embarked on a mission to turn its agrarian society into an industrial powerhouse. By making use of an abundant workforce, some Russian engineering and a lot of baseless ideology, China sought to surpass Western countries in economic output within five years - This effort was known as "The Great Leap Forward"Aside from creating one of the worst famines in history, the country also proved that trying to control its population and take away the ability of the market to dictate how resources were allocated was a losing battle.
Now, just when the country is finally emerging onto the world stage as an up-and-coming economic superpower, China still can't seem to get out of its own way. Let me explain what I mean…
Here we have a country that has one of the largest and fastest growing middle class demographics in the world.
They have the largest wireless subscriber base in the world.
They have one of the highest numbers of internet users in the world – but why, oh, why does China constantly try to impose draconian controls over its population?
Case in point: A recent article on wired.com (http://www.wired.com/news/technology/0,72872-0.html?tw=wn_index_15) discusses how China recently blocked its citizens from accessing LiveJournal.com – a popular blogging web site.
Now this might not seem like a big deal - I mean, China is always censoring its media outlets. Why should we get concerned about this latest set of censorship?
Well, we have to look at it in the context…
Right now, the web is all about user-powered content – the biggest deals done this year have involved sites like YouTube (acquired by Google (Nasdaq: GOOG)), Del.icio.us (acquired by Yahoo! (Nasdaq: YHOO)), and the list goes on. What all of these sites have in common is that all of the content on them – and in turn, the real value behind the companies – was contributed by users.
So, when China takes steps to block sites like LiveJournal – a network of blogs written by independent publishers on their own free time – it not only makes me sick to my stomach, it makes me nervous about the future health of the Chinese internet space.
And as an active investor in the region, I’m less concerned with my stomach and more concerned with my wallet!
What the Chinese Government needs to understand is that they’d be more productive spending their time and money helping the rest of the country develop and not investing in the world’s greatest firewall and filtering technologies.
Watching their citizens like a hawk is a great way to build paranoia and discontent, not to mention hindering investment in new technologies like the web.
During the Great Leap Forward, China actually felt as if they were spurring innovation and that would lead to a better country and a better life for its citizens.
Now the government is taking proactive measures to restrict innovation – maybe they think it’ll have the opposite effect? (Can you detect the sarcasm?)
Unless China gets its act straight, this one might be called the "Great Leap Backward".
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Wayne Mulligan
Contributing Editor
The Tycoon Report
