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Digital silk road provides path to progress

By Yang Yuanqing (China Daily)
Updated: 2008-09-23 10:55

Human civilization has engaged in global trade for millennia, and China has played a major role for nearly all of that time. Indeed, China is one of the oldest trading nations on earth. Dating from antiquity, the ancient Silk Road connected China and its goods to the markets of the Middle East and Europe until the mid-19th century.

There is no question that today China has built one of the largest economies in the world, with a growth rate of 10 or 11 percent annually over the past five years. So it's natural that, once again, people are asking what that means in terms of China's role in the global economy.

What's behind that question is an assumption that runs from the first days of the Silk Road. For much of the last two millennia - and too often today - global trade has been seen as a zero-sum game. China's growth, according to that view, must come at the expense of other nations. Thus, the constant focus on the balance of trade: if your metric is your share of a static "sum", then you are concerned with your "rise" or "fall".

The real question isn't China's role in the global economy, but whether you can separate China's economy, which is interconnected with all the major players on the global stage. No nation today exists in an economic vacuum. So China can neither prosper nor even survive without being part of the most dynamic and interwoven global economy that has ever existed on earth.

I would argue that we are witnessing the creation of a new road, the Digital Silk Road. Instead of being built on the threads of an insect, it is built on the strands of fiber optic cables. Instead of plying a single route hauling goods using pack animals connecting East to West, this Digital Silk Road is a web of interconnections that begin and end nowhere, but extend everywhere moving the digital packets of an information-based economy.

That difference is important because when you have a web instead of a thread, anywhere you pull has an effect everywhere else. While everyone readily points to the rise of China's global exports, for example, far fewer take note of the growth of Chinese imports, which this year are projected to exceed $1 trillion for the first time, second only to that of the United States. Combine that with China's foreign investments in places like the US and Western Europe, and it becomes clear that China's success depends on the long-term economic success of other major economies. These nations are crucial markets for the goods China manufactures. They are also crucial suppliers to the emerging middle class that has grown along with China's economy.

But there is a more powerful force at work driving growth, creating what we call "Global 2.0". While our modern roads move goods, the Digital Silk Road's trade is in ideas and information. We've replaced pack animals with packets of data. Ideas are really the capital of the 21st century, and unlike raw materials such as silk, iron, tea or oil, no nation has or ever will have a monopoly on them.

It is the exchange of these ideas, and the innovations that come from them, that are the real basis of global trade today. They are the raw materials from which we forge growth. Ideas are what lead to innovative new processes, products, services and to innovative new business models like the world sourcing model we use at Lenovo.

The idea is to source materials, innovation, talent, logistics, infrastructure and production wherever they are most available in the world, and to sell what you produce wherever profitable markets exist.

The foundation of world sourcing is looking across cultures and geographies and looking at your organization as a tightly integrated web. And this web means that the best practices created by your organization in one part of the world can be almost instantly adopted anywhere else.

This same idea applies to the global economy, creating a single economic web that is interconnected, instantaneous, interdependent and infinite in its implications for growth, prosperity and global inclusion.

Now, I won't tell you that the transition to Global 2.0 is, or will be, painless. So many people view the world through nation-by-nation, zero-sum lenses, and nations erect barriers to trade. Taking down those barriers - whatever form they take - is an important step to alleviating this temporary economic pain.

So we're all extremely dependent on one another, and it is in our collective global interest to support the growth of developing economies and the continued rise of the middle class.

As China's economy, as well as India's and those of the developing world, become stronger, we will continue to lift millions more out of poverty, improve their lives and create prosperity in the farthest corners of the world, all thanks to the New Digital Silk Road.

The author Yang Yuanqing is chairman of Lenovo Group Limited. The article is adapted from remarks prepared in advance for delivery on Sept 28 at the World Economic Forum in Tianjin.