The World's New Culture Meccas

Tom Masland, with Esther Pan

Zhongguancun China: A High-Tech Incubator

There's something about Zhongguancun that makes it feel hotter--literally--than the rest of Beijing. Perhaps it's the way sunlight reflects off the new high-rises buzzing with tech start-ups and Internet cafes, or the crowds of scruffy students and salesmen shoving past lines of touts hawking pirated software, fake diplomas and pornographic DVDs. Or it could just be the clouds of dust emanating from the countless work sites where China's new capitalists envision shopping malls and software parks. This is a place that makes you sweat. It's also the most frenetic neighborhood in Beijing, perhaps in all of China, and one that the ruling Communist Party has pronounced will lead the world's most populous nation into the Information Age and beyond.

Nestled among the country's most prestigious universities in northwest Beijing, Zhongguancun is home to China's largest concentration of students--and millionaires. Drawn by the pool of cheap, educated labor, more than 4,000 companies have already set up shop here; they include global giants IBM, Nokia and Motorola and Chinese success stories such as Legend and Founder. Last year, according to government statistics, foreign firms moved in at a rate of one per day, investing a total of $600 million. Creative clusters abound in Beijing and all around China, from rock-and-rollers in Tree Village, a shantytown enclave in the capital, to artists in Shanghai. But here in Zhongguancun, the focus is on creating future Bill Gateses.

The energy and freewheeling spirit of Zhongguancun today are largely a reaction to the decades it spent tied down under the rule of Mao Zedong, when intellectuals and entrepreneurs were forced to suppress or renounce their "bourgeois" ambitions. After China embraced market reforms in the 1980s, residents began experimenting with capitalism. Students and, eventually, professors set up tiny companies, mostly in the technology field, based in cheap dorms and empty classrooms. Word spread quickly, and other entrepreneurs began moving in to sell everything from office supplies to computer components. "It all started on one street," recalls Xu Hong, a professor at Beijing University and lifetime resident. "The government had nothing to do with it. It was all grass roots."

Now the Chinese government is among its biggest boosters. It has classified the area as a special development zone, offering tax breaks, reduced rents and speedy operating permits to new businesses. The city has also widened the roads, built new highways and flattened entire neighborhoods to make way for sterile-looking high-rises.