Author: DENNIS O'BRIEN

The Great Wall is a Chinese treasure, and a symbol of China. That's too bad, since it was erected to keep the rest of the world out of China.

A new Chinese treasure is being erected over at the State Information Centre (SIC). Unlike the Great Wall, this treasure is being created to connect China with the rest of the world.

Instead of locking the world out of China, it's putting China at the centre of the world's economic activity.

At SIC and its subsidiary companies, a vast information network and analytical system is being expanded daily. It is an electronic monument to the new China, and it is a national asset that will benefit every person in China.

Under the direction of Wang Changsheng, SIC executive deputy director, the centre has linked more than 1,600 government entities, at the State, provincial, city and community levels.

Although it does not reach into every community, it has developed an astounding 58-per-cent penetration rate.

SIC utilizes a veritable force of 13,000 technicians working to collect and assemble the raw data.

This raw data are then transformed by SIC's 1,200 employees in Beijing into vital information and sped on its way to its user community via SIC's data network, which is China's largest.

SIC and its subsidiaries deliver this information, along with the software and models used to analyse it, to an assortment of State agencies and departments, and to private companies.

At a macro level, it is used by the most senior policy-makers in China to direct the national economy and to prioritize the nation's investment opportunities.

On a micro level, it is used by major international corporations to assess Chinese market opportunities, and to evaluate microeconomic policy alternatives.

When asked about the nature of his operations, Wang agreed there is really no Western institution equivalent to SIC.

It functions partly like a semi-official agency providing macro and micro economic analyses and information data to both the State and its business clients. SIC generates profits from its commercial consulting services.

In some ways, it operates like the US Commerce Department and the Bureau of Labour Statistics in the kind of data it makes available.

Then again, it behaves like the US Library of Congress and Council of Economic Advisors because of the research and analyses it does.

When viewed from above, it operates like a private information company, a data processing company, a market research firm, a think-tank, a consulting company and a network systems group - all rolled into one.

Answering a question about the kind of work his companies perform for the central government, Wang was characteristically modest about his company's role.

But it is quite evident the services and information products SIC provides play a key role in the analysis of alternative economic policies and regulations.

Because of the way in which the SIC macro and sectoral models are set up, senior policy analysts can make initial estimates of the impacts of various policy alternatives.

As a result of theses simulations, they can observe the sensitivities of various segments of the economy to alternative policies.

Such simulation capabilities dramatically increase the number of policy alternatives that can be considered, and they also improve the fine tuning of such policies.

While remaining quite discrete in the description of the exact scenarios which his companies have participated in developing, Wang indicated such things as the economic effects of the SARS epidemic and the cost in jobs of a revaluation of the renminbi can be estimated and forecast by SIC's systems.

When asked about the private uses of SIC's information company, Wang told a "war story" of how SIC helped one of the United States' largest manufacturers of automobiles evaluate the Chinese market.

Serving as both a market research firm and a strategic consulting company, the SIC Group estimated the size and growth of the Chinese market, with estimations of the price point breaks that allowed for the creation of niche markets.

Wang then asked Huang Luming, deputy director of SIC's consulting group, to provide an example of the detail that can be developed from their sectoral models and research capabilities.

Huang explained how another major automotive manufacturer asked SIC's consulting group to measure the market's price response.

Combining its data, models, research and analyses, SIC responded that without a price reduction in certain market segments, the company would rapidly lose market share.

The company took SIC's advice - reduced its prices - and captured market share from its poorly advised competitors.

SIC's economic and forecasting group has an array of models, both macro and sectoral, and has linked them with the world's system of economic analysis through LINK, the UN project.

SIC's economists have participated for many years in such projects and have become friends with many of the world's leading economists.

Some executives, such as University of California-educated Zhu Yi, who is vice-president of SIC's China Information Corp, were trained at world-renowned WEFA. That organization was founded by Nobel Laureate Larry Klein.

Right now SIC sits upon a treasure trove of data that will be the envy of any economist or financial analyst.

They have the ability to go from macro overview to micro detail literally at the speed of light on CEInet's fibre optic network. But in spite of this, when asked about future expansion plans, Wang and his senior staff said they wanted to expand their databases in every direction.

Wang's current ambition lies in the direction of e-government. SIC is playing a key role in both IT infrastructure and content management. Wang not only has identified that as a critical problem, but has his sights on it as the next major problem that his group will tackle.

SIC and its group of dedicated and talented men and women have created a major national asset, a veritable treasure trove of information and analyses.

Unfortunately, even with all the progress that SIC has made, there is still much that has to be done within China's information infrastructure. In order for China to support her current plans for economic development and expand her role to that of an economic superpower, China needs a business credit system. Desperately!

The overlapping institutional fiefdoms within China have made that a difficult problem to address, even though the underlying solutions are readily available, especially given the existence of SIC.

Perhaps, with any luck, at some time in the near future, SIC might have its considerable set of talents and assets directed at that most critical bottleneck to China's economic progress.

It should be viewed as a symbol of the new China; a China that once again finds itself at the centre of the world.

The author was recently named China Business Weekly's US editor of finance and economics.

(Business Weekly 08/05/2003 page2)