Real change will not come from experiments with fancy titles, but will happen on the ground

Investors have been looking for changes since the beginning of the year, when the government shifted its priority to reform and shifting from just maintaining growth.

Six month later, how has reform and transition come along - not in government papers and official speeches, but on the enterprise level? One gets little information from the national business press, whose headlines are usually occupied by old policy-level debates with few, if any, implications in daily business.

Nor can one learn about progress from the rare briefing sessions by communications officials in various pilot reform schemes - not from the free trade zone in Shanghai, not from Qianhai in Shenzhen, not from the economic integration program of Beijing, Tianjin and Hebei province.

The once-celebrated local financial reform experiment in Wenzhou, Zhejiang province, launched two years ago, seems largely forgotten and is hardly mentioned in the media.

Plans to open up industries formerly under state monopoly to private capital and more competition have mostly remained plans or just slogans.

Shortening the time required to establish a new business to two or three days, as some officials boasted as their new achievement in reform, is far from the best world record.

One cannot but have sympathy for Premier Li Keqiang in his recent criticisms of some of the economic officials he saw in his field trips, which we discussed in this column two weeks ago. They don't do their jobs, as the premier noticed.

But another question should be: Why should they want to do their jobs since they are provided by the central government with so many privileged policies, along with state-assigned projects, large tracts of land that could be used in auctions, and perhaps higher government ranks, for doing just anything?

This is not reform. This is like an inexperienced kindergarten teacher throwing candies to a bunch of crying children.

The true reform from the late 1970s was not like this at all. As one saw in provinces like Sichuan, Anhui and Guangdong, all reform attempts were taken on by people faced with immense economic difficulties and political risks. Their only weapon was their own courage, out of the conviction that if they helped the local people remove the shackles of the Soviet-style planned economy, they could build a much more productive society.

It was a time when many successes in reform grew from unlikely situations - mostly impoverished villages, workshops equipped with cast-off machines from state-owned enterprises, and provinces with hardly any modern industry.

If the logic then continues to work now, one would tend to think that probably the new successes of China's reform and transition would also come from places other than frequently highlighted projects.

But of course, they can't come straight from the places that still remain underdeveloped and have yet to see any modernity. Some of the small cities in the more industrialized coastal region, especially the Yangtze and Pearl deltas, may stand a good chance.

In fact, the economy is still growing at 7 percent or more a year despite the severe overcapacity in many old industries. There must be some bright spots in the economy to provide it with new driving forces. And they can't come from the kind of industry that China has known - like just producing garments and shoes for international brands.

According to data from Guangdong province, privately owned companies' share of its industrial value-added output rose from 27.6 percent in 2010 to 28.3 percent in 2011, then to 39.1 percent in 2012, followed by 40.1 percent in 2013. Some of the towns into which young factory workers poured into are now among the pioneers in China's robotic revolution.

In the meantime, as a rare case in all Chinese mainland provinces, services are contributing more than manufacturing to local GDP, which would be about $1 trillion (738 billion euros) this year. With total employment of 2.7 million, Guangdong accounts for one-seventh of all China's large service companies.

This, more importantly, was not achieved under the code name of a grand state-level project, such as a "Great Pearl River Delta Industrial Rise" scheme. Beijing granted no extra policy incentives or tax cuts.

Wonderful things could continue to happen if Guangdong can keep most of its cities away from fierce housing speculation and massive government debt. And, if it can build a relatively orderly local debt market by relying on the financial market of Shenzhen and its close ties with Hong Kong. With luck, Guangdong could be China's new champion.

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

(China Daily European Weekly 06/20/2014 page12)