My wife and I briefly visited China two years ago, as part of a cruise that started in Hong Kong and ended in Beijing. We spent a day in Shanghai and 4 days in Beijing. We had been to Hong Kong twice before and had been tremendously impressed by it. But we didn't expect very much in mainland China. In fact, when the ship stopped in Seoul, Korea, I stocked up on American candy bars, thinking that we would have to live off them during our days in China. We were very pleasantly surprised by what we actually saw.
Shanghai and Beijing have skylines rivaling or even surpassing New York's. Beijing has elevated highways running through its center which seem far more modern than those in Los Angeles. I think there must be some significant element of economic freedom in important parts of China to make this possible.
As for having to live off candy bars, not so at all. It turned out that Beijing has quite a number of brand new 5 star hotels belonging to major global chains. Ours served some of the most lavish buffets we've ever seen, either in the US or in Europe. (Cruise passengers staying at a different hotel reported the same thing at theirs.)
Our tour guide in Beijing, who could not have spoken contrary to the policy of the Chinese government, stated that the economic system of China was now capitalist. In my judgment, the most significant piece of evidence he offered to that effect was when our bus passed a prominent McDonald's in the heart of Beijing (there's a large number of them in the city and, if I remember correctly, many other similar American fast food restaurants as well), he related how a former mayor of Beijing had lost his job by trying to revoke McDonald' lease on its site in order to turn the use of the property over to some crony. This indicates that there is some serious enforcement of contracts in China, which is very important.
I want to add that to get to Beijing, our ship docked in Tientsin, which is a considerable sized city in its own right. It possessed a substantial number of high rise buildings too. We got from Tientsin to Beijing by traveling over a modern 4-lane highway. (The distance was roughly a hundred miles.) More important was what I saw from the ship as we left Shanghai: mile after mile of factories, power plants, wharves, an incredible number of cargo cranes and containers. (About once a year, I get a view of the cranes and containers in San Pedro, which is the port for Los Angeles and by some accounts the busiest in the US. I'm sorry to say that I think it's dwarfed by what I saw in Shanghai.)
As the 2008 Olympics approaches, which is to be held in Beijing, I think there'll be a major discovery process with respect to China. The television cameras will be working overtime to show the sights in the city and probably elsewhere in the country. I have to conclude by noting that I think our four days in Beijing must have been subsidized by the Chinese government. The four days were offered as a freebie by our Japanese-owned cruise line, which I don't think would have been possible otherwise. I didn't come to this conclusion until after I saw Beijing and realized that a shipload of well-to-do American and Canadian tourists had been shown sights most of them would probably not otherwise have seen and which could not help but lead them to report very favorably on the economic development of China. As you can see, this is exactly what I'm doing.
I'm confident that what I saw was not a Potemkin village. But I also know that to have a reliable appraisal of China's development, it would be necessary to be fluent in the leading Chinese dialects and to spend a few years traveling extensively throughout the whole country. Then one might form a judgment as to whether spectacular development in some places was part of an overall process of improvement or was at the expense of decline elsewhere in the country.
We ourselves saw major poverty along the highway to Beijing, with farmers carrying buckets from their shoulders and having to use draft animals. And, of course, there's major, widespread poverty in Beijing and Shanghai themselves. But such poverty has always been there. Given a knowledge of the desperate poverty of China in the past, it's difficult to believe that there could have been room for decline elsewhere in the country on a scale sufficient to provide the wealth I saw.
What I believe is that the provision of modern capital goods to millions of hard working Chinese by foreign investors has resulted in a substantial increase in China's overall production, an increase an important part of which consists of further such capital goods or goods to exchange for such capital goods, with the result that more millions of Chinese workers become similarly equipped, and so on and on, in a process of rapid compound growth.
