Economic wisdom from the margins

This year's two sessions - the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference's National Committee - will provide investors with a rare window through which to watch the parade of the nation's local officials. This year's two sessions are particularly important because they are happening in the middle of a transition from the old economic growth model to the new one.

Broad changes coming in finance, premier says

NDRC plans internal reforms

So this is a year of change. But changes do not usually come about in a planned way. More often than not, the most innovative ones will come as something of a surprise, as a phenomenon arising from the periphery rather than from the center, as used to be the case.

In the history of Chinese economic reform, the first victory - namely the unprecedented increase in agricultural output on private farms in the late 1970s - came about thanks largely to local leaders' courageous dismantling of collective farms in Sichuan and Anhui provinces.

The legalization of private grocery vendors was pioneered in Guangdong province in the early 1980s, despite a temporary rise in prices for basic daily supplies and misgivings from many people about the return of the capitalist monster of inflation.

Private enterprises began to flourish in Wenzhou, Zhejiang province, before the city was linked with the outside by either air or rail services. The limited road connection was so poor that no traffic was possible on rainy or snowy days.

Shenzhen, the shining example of China's special economic zones in the 1990s, was just a fishing village 10 years earlier. Pudong, the new part of Shanghai that now hosts clusters of large financial services and high-tech companies, was seen by the residents of old Shanghai as a boring area of vegetable farms.

There were also cities and provinces where brand names died out, trailblazing experiments went ignored and industrial ventures were suppressed. And inevitably those places missed some key opportunities.

Cities and provinces are still to be closely watched because at the regional level the most powerful changes will still be pioneered, and supported, by the more innovative local leaders.

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