Reform to be announced by govt next month is already well under way in urban and rural China

All media, Chinese and international, are talking about China's next reform. But reform, since its very beginning in the country's impoverished rural grassroots in late 1978, is not a business that depends on the push of the government.

The big picture always is that the government's role is to respond to the rising demand from society, not the other way round. China won't be different. Many changes require the government to write national policies and standards for them to become widespread and institutionalized, but changes themselves happen outside the government.

So, investors don't have to wait for a new reform program to come forth from next month's top-level conference. They don't have to wait to peruse the lengthy official communique to tell where the reform is.

For instance, it is widely expected that urbanization is going to be part of the grand scheme for the next reform. But large volumes of internal migration is already happening, in which a huge number of rural workers flood the cities, taking whatever jobs they can, and a few very large cities are collecting the cream of the entire nation's human capital, trying to provide the best educated young professionals with the kind of opportunities they can hope for anywhere in the world.

One can easily tell the difference between old cities and new cities. The old cities are built around one, two or three industries featuring heavy machinery and big factories, and usually have a high energy demand and heavy pollution.

Taking a walk down the street in these cities or in the old industrial district of any city, one can spot many empty shops or ones selling basically the same low-end goods and services. Restaurants, most typically, are all run by people from nearby areas and offer the same local foods.

In the new cities, one can see more young, college-educated office employees. More small companies are taking orders from outside the city, the province and the country. More young people are taking foreign language courses and learning skills not highlighted by the State educational program. And more restaurants offer a larger variety of cooking styles.

A city can grow into a very fertile ground for entrepreneurial opportunities without gaining free trade zone status from the central government, as long as it can keep attracting swarms of young people to come to find their dreams.

Three cities - Chongqing, Chengdu and Xi'an - are leading the business boom in western China. They haven't built their business entirely on the local workforce, and are the adopted homes of many young professionals from different parts of the country. Those people have lent them the ability to catch up with the coastal cities that were the trailblazers in the first round of China's reform.

Seen from this perspective, it is not an exaggeration to say that urbanization is to a great extent a campaign for an increasing variety of businesses, especially services.

Cities with more and a larger variety of services are going to grow more rapidly than those with less.

The cities with more services flourishing on the Internet, and especially the mobile network, are going to generate even more interesting investment opportunities.

The cities that are more connected with the outside, with more professionals from around the country and the world, are going to build up their population of entrepreneurs.

The cities with a mayor's office more capable of coordinating complex trends in development are going to put out a better performance than those that continue to struggle along on one or two or three industries.

Just as management teachers say, you don't need to look for the future, because the future is right under your feet. China's next reform is right here. It is already on the go.

The author is editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn.

(China Daily European Weekly 10/25/2013 page13)