Mon, Jan 31, 2005 page11

• Rising China becomes specter at Davos feast

  DISTANT China's economic potential is almost too great for western pundits to grasp while the Chinese themselves stay aloof for the annual Swiss jamboree

  • NY TIMES NEWS SERVICE
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  In almost every panel discussion at the annual meeting of the World Economic Forum, there comes a moment when somebody mentions China.

  A hush typically ensues, as panelists draw their breath, gather their thoughts and struggle to put the bewildering vastness of the topic into a few words.

  "China is going to be the change agent for the next 20 years," said Bill Gates, the chairman of Microsoft, when asked about the country's future on a panel led by the television interview host Charlie Rose.

  China's staggering potential, coupled with the steep language barrier and cultural discomfort of many Chinese who come to this conference, has made it Davos's annual enigma.

  After three days of outsiders' dissecting its motives and prospects, China finally took the stage on Saturday, with a speech by its executive vice prime minister, Huang Ju (黃菊).

  "China's development will by no means pose a threat to other countries," Huang declared cheerfully, as if to soothe people here who spent the week fretting about China's lengthening shadow.

  Huang, however, said little on the two issues of overriding importance to the investors and business people here: whether China would allow its currency to rise against the US dollar, and whether the Chinese would crack down on the rampant theft of intellectual property.

  "We have to maintain the exchange rate at a reasonable level," said Huang, who directs China's finance policy and was billed by the organizers as Beijing's chief operating officer.

  Some here interpreted that comment as a signal that China would not allow its currency, the yuan, to rise against the US dollar this year, as some Europeans and Americans have demanded. But Michael S. Dell, the chairman of Dell Inc, who had breakfast with Huang, said he did not draw any conclusions.

  Huang also did little to ease investors' concerns about China's regard for intellectual property rights, saying only that through new laws and tougher enforcement, China was trying to achieve in a dozen years what it had taken the Western world a century to do.

  At a dinner with the theme of investing in China, several foreign executives said they discerned little progress on the issue. The only way to avoid having their proprietary technology pilfered by Chinese competitors, they said, was to keep most research and development activities at home, and to use China for simple manufacturing.

  For the Chinese who trek to this Alpine ski resort, the problem is less one of legal tradition than cultural disconnect. Except for a handful of fluent English speakers with long experience with foreigners, most keep to themselves - shying away from the high-octane networking that is the fuel of Davos.

  "Davos's history is as a European and American conference," said Chen Feng (陳鋒), the chairman of Hainan Airlines Co (海南航空). "People come here to relax and ski. China's culture is not about skiing."

  Chen, an irrepressible entrepreneur who worked the hallways like a Davos regular, is one of only four chief executives of major Chinese companies at this year's conference. He said more of his peers had come to previous meetings, but had found the experience uncomfortable.

  Zhao Jianfei, an editor at The Observer, a Shanghai-based magazine, said, "In China, the basic idea is to watch Davos, not take part in it."

  People have other theories for why the Chinese do not turn out in droves. "China is not exactly soliciting investment," said Stephan F. Newhouse, the president of Morgan Stanley. "They're turning it away."

  Huang dramatized China's potential with forecasts. Its economic output will grow to US$4 trillion by 2020, from US$1.6 trillion today, he said, and its output per capita -- a more accurate measure of wealth -- will triple to US$3,000 per person.

  For its part, the World Economic Forum says the Chinese turnout this year has been noteworthy, mostly because of the attendance of Huang, a member of the Politburo's powerful standing committee. The deputy governor of the People's Bank of China also came.

  The conference organizers have gone to considerable lengths to make this a congenial place for China. There are no sessions on Taiwan -- a topic sure to drive away Chinese officials. Huang did not take questions from the audience.

  "It's understood that some things about China don't come up in polite conversation at Davos," said Orville Schell, the dean of the Graduate School of Journalism at the University of California, Berkeley.

  Politesse did break down occasionally. At a lunch held by Schell, several non-Chinese participants confronted the handful of Chinese guests about how Beijing could justify not allowing the Taiwanese people to vote on whether they wanted to be an independent nation.

  After an awkward silence, a few Chinese spoke about the passionate feelings in China regarding Taiwan's status. Yuan Ming, the director of the Institute of American Studies at Pekjing University, alluded to the frustration that outsiders might have in seeking to understand China.

  "The world needs China to play some roles," Yuan said in a polite yet weary tone. "But it's too early to rank ourselves among world nations. We do need some time to develop ourselves."
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