Stakeholder Capitalism

3The Rise of Asia

The view from the Sham Chun River in Southern China offers a stark contrast. On its southern bank, rice paddies stretch almost as far as the eye can see. On its northern bank, skyscrapers dominate the skyline.

It wasn't always so. Forty years ago, there was almost nothing on either side of the river. The most developed part was on the southern banks, where the city of Hong Kong was a few miles out. Train tracks connected the British-ruled “Northern territories” with the empty Chinese mainland across the river. A lone Chinese guard would inspect the river's crossing point.

Four decades later, the contrast isn't one a visitor from the past might have expected. The rice paddies to the south still belong to Hong Kong, the long-time financial capital of Asia. But the skyscrapers to the north are now part of contemporary China's technology capital, Shenzhen, a city that appeared out of nowhere.

What happened north of the Sham Chun River in those 40 years, represents perhaps the greatest economic miracle ever. In 1979, those living there had an average income of less than a dollar a day. Today, Shenzhen has a per capita GDP of almost US$30,000, about a 100-fold increase over 1979. It is home to tech giants such as Huawei, Tencent, and ZTE,¹ and a “maker movement” of tech start-ups. Hong Kong didn't stand still either, but it now has a formidable twin next door.

How did this turnaround happen? And what does it tell us about the broader shift of the world economy to ...