Author's Note: My first connection to China was a spiritual journey over 35 years ago. I wanted to identify individuals who "died with a smile." I visited China over 80 times as a consultant, and connected with hundreds of individuals from all walks of life.

These relationships led me to develop a deep respect and understanding of the Chinese history, culture, government, and way of life. I've encountered the country's highly competent and educated executives and government officials, witnessed the high level of pride in what China has accomplished, and seen firsthand the intense commitment to family and the future of China. 

I read extensively on Chinese history, philosophy, and literature, written by Eastern and Western authors alike. I closely followed articles and editorials written in the Western press. The picture of China emerging from these readings is very different from my personal experiences. Words like "authoritarian," "oppressed," "absence of human rights," "unfair trade practices," "military threat," and "suppression of minorities" just don't fit. I dig up the roots underneath this disconnect in my book on the subject, which publishes next year. 

In this two-part article, I address two key topics which are closely related: What are the core strengths driving China's economic growth since reform and opening up? What are, and what causes, the primary misperceptions the West has about China? 

China's economic growth since reform and opening up began in 1978 is nothing short of miraculous. The "cultural revolution" (1966-76) left China with a struggling economy, a disorganized government structure, a broken educational system and a starving population. The country used new technologies to completely overhaul its agricultural model and manufacturing capabilities. 

How did China do it? It relied on five key components.

An agricultural worker waters plants with the drip irrigation system in Yudu County, east China's Jiangxi Province, on September 28 (XINHUA) 

A disciplined, top-down corporate governance model 

What late Chinese leader Deng Xiaoping needed was an overhaul of the agriculture sector to dramatically increase productivity and output, and to build a competitive manufacturing sector by leveraging new technologies and low-cost labor. In order to do this, Deng introduced a governance model mirroring that used by major global corporations to drive performance.

This corporate governance model has a few main elements. The first is a strong leader and the second is a small team of highly talented and experienced senior officials to oversee efforts and advise the leader. For China, this is the Standing Committee of the Political Bureau of the Communist Party of China Central Committee. The third is a consensus-driven leadership willing to compromise among leaders who collectively work with one vision. This decision-making model is in sharp contrast to the adversarial multi-party system used in most Western countries.

The fourth major piece is a talent pool of the best and brightest. Under Confucian values, which are deeply embedded in China's history and culture, many of the country's most gifted aspire to government work.

China's top talent pool is managed through a performance-driven meritocracy with ongoing performance reviews, with advancement also tied to peer respect. This keeps everyone focused on meeting the objectives of the plan and taking corrective actions when needed.

China's governance model uses a five-year planning process built on extensive input from expert leaders, within and outside the government, and refined through debate and discussion. The high-level plan is then tailored to specific situations in each ministry, province, major city and industry sector, complete with aggressive economic objectives, backed by precise operating plans. Finally, performance is driven by clear accountabilities, performance metrics and variance analyses, and is reinforced by incentives.

This remarkably simple and well-tested model helps large corporations succeed globally. It has also allowed China's economy to grow and develop in the past 40 years on a scale never seen before in a country its size.

Integrative problem resolution across all important economic levers 

While major corporations can apply this model to what they control, many important performance levers are controlled by governments. These include laws, taxes, trade agreements, fiscal policy, infrastructure, immigration, education and healthcare. China's model applies the five-year planning process across the entire economy, allowing for close coordination and a cohesive plan of action. While the government can't directly control private enterprises, it can significantly influence their actions indirectly through these levers.

Mechanisms to ensure the government responds to people's needs 

The U.S. electoral democracy gives people the right to elect officials, but rarely gives them the ability to influence outcomes on specific issues. Alternatively, China utilizes the Chinese People's Political Consultative Conference to tap into specific opinions from various population segments to help shape proposals for the National People's Congress, the national legislature, when formulating its five-year plans. On the issue of pollution, for example, the people's voice is reflected in China's global leadership in renewable energy and electric vehicles. The ultimate test of the responsiveness of a government is measured by the people's support for it and their expectations for the future. According to research by the Pew Foundation and Edelman, China rates near the top of major countries on both of these measures.

Military expenditures focused on defense 

Governments must make critical choices when balancing investments in national development (infrastructure, healthcare, education) and defense. China invests heavily in areas most directly improving the standard of living of its people and the results are there for all to see. While military expenditures to provide for domestic security are essential, China avoids those focused on foreign wars or interventions to effect political change.

Globalizing to benefit the Chinese people

China is a major player in global trade, infrastructure development in other developing countries, global finance and global efforts to improve the environment. China is also active in bilateral deals to secure access to energy supplies and minerals.

This governance model, properly implemented and maintained, allows China to continue growing to this day at a rate never seen before in such a big country. It has also pushed the Chinese economy to become one of the largest in the world. Many see it on a path heading straight to the top of the global economies within a decade.

The author is a former senior partner of McKinsey and a trustee of the New York-based China Institute 

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