Why Study Mandarin – The Last 20 Years of Chinese Modern History

To learn Mandarin in 2010 is more interesting than it has ever been before in the four to five thousand years of China’s history. The reason for this is the Cambrian explosion that has happened in the world’s most populous economy in the last 20 years. The trend towards economic reform started earlier than 1990 but it was then that China became ready to take the first major steps towards a freer and more incentive based economy. In the early 1990’s a few important things happened. The Shenzhen pilot zone, a place where they first tired to introduce some capitalist element, was proven a resounding success. The first ever stock market in main land China, in Shanghai, was important as both a symbol for reform and for the enabling effect it had on major investment prospect within the country. So when China joined the World Trade Organization latter on in the decade, things had already begun moving at an incredible pace. But with the successful application to the WTO and with further reforms regarding foreign and domestic capital flows into and within the Middle Kingdom, the stage was set for major growth.

China accounts for about 1 in 5 of humans, so when China’s policies changes even a little bit, it means that the world changes a lot. Since then, around 1 in 12 of the worlds population has gotten a much much better job in direct correlation to these reforms. The job shift that I am talking about is of course how the world biggest agricultural sector got on its boots, headed to the city, and got a much better paid factory job. In terms of history it happened at the blink of an eye, but 600 million people were lifted from poverty into relative wealth and the remaining 600 million people in China are well on their way to joining them. The pace of these changes are astounding in terms of their absolute values, and equally impressive in terms of their relative value.

China has grown at an annualized rate of about 10 percent in the last 20 years. That is unbelievable. It means that in the scope of my own life time (I am 25 this year) Chinese people has almost gotten 4 times richer. Adam Smith said that there is not force greater in the world than compound interest and when applied to the world’s greatest nation, this mathematical concept takes on a force of its own. If America grew at this pace The United States’ many households would today have around 6 cars (wow).  If the last 20 years had been equally favorable in terms of growth rates for my home country of Sweden I could be typing this on one of my 5 PCs.

That would of course not happen though. China is growing so fast because it was so far behind when it started. It is easy for an economy to grow when most people are working in rice paddies with antiquities as tools. All you need to do is hand someone a basic machine and their productivity skyrockets. Today it is much harder to find that someone and hand them a better way of producing stuff. What is interesting though is that the machines that Chinese people so far have been handed are not that good, in fact, they are abysmally basic. A Chinese person today produces less than 25 percent of what an American can churn out in the same time frame. As the supply of people standing in water, trying to pull out rice with their hands, finally dries up and China then becomes a full worthy member of the club of modernized economies, there is still a lot a lot of leverage left in China. As long as wages don’t rise faster than the pace that Chinese people become better at using their new tools China will continue to grow at fantastic rates, and Mandarin will become more and more important for each year.