The state visit to Washington DC by President Hu Jintao last week was the first by a Chinese leader since 1997, and closes a long loop that began almost 40 years ago--when President Richard Nixon visited Chairman Mao Tse-Tung-in a way that Chinese President Jiang Zemin's 1997 meeting with President Bill Clinton did not.

In 1997, the biggest issue between the US and China was Taiwan-today, Taiwan and China are major trading partners with one another and have as good a relationship as they are able. In 1997, the US had a trade deficit with China of about $50 billion annually-that amount represents eight weeks' worth of activity today.

In the interim, China has emerged as an economic superpower, due to reforms begun by Mao's successor Deng Xiaoping. It now has the world's second-largest economy, in terms of sheer output, although its per-capita output still stamps it as a developing nation, in the lower half of the world's nations.

Meanwhile, the United States is...what? Fading? Sliding? In irreversible decline? A recent report by Price Waterhouse Coopers predicts the US will be the world's number 3 economy by the year 2050. A recent report on BBC-which I watched with, frankly, a sick feeling in my stomach-took a tone that assumed the US was now past its prime, even headed toward insignificance.

Are the good times really over for good this time? I'll write more about this question later.

Friend or Foe?
For now, the issue at hand is, is China a friend or a foe of Cloud Computing? Specifically, is it a friend or foe of non-Chinese vendors-whether North American, Western European, or Other?

When President Obama declared to President Hu, "we want to sell you software," he was no doubt referring to software from Microsoft. And Redmond CEO Steve Ballmer met with Obama and Hu during the visit. He decried that 90% of Windows installations in China are pirated, and further cited statistics that show 84% of Chinese users still run Windows XP (which debuted in 2001 and was discontinued in 2008), and 50% have not upgraded from Internet Explorer 6 (also released in 2001 and superseded by two newer versions since then).

In other words, the Chinese are software pirates of the highest caliber, in this view.

China has also been routinely accused of stealing product designs and producing identical products of its own-and high-end stuff, too-cars, aircraft, missiles, and the like. The country is also considered the world's prime source of fake luxury merchandise-Gucci, Rolex, etc.

But the country needs good enterprise software to maintain its growth. It needs Cloud Computing. It doesn't need Microsoft Office so much as it needs flexible services-the SaaS/PaaS/IaaS continuum-delivered to an amazing array of industrial companies, financial services companies, government agencies, and universities.

You can't pirate services delivered from the Internet. I doubt it's possible to reverse-engineer them for one's own use, and what would be the point with Cloud services, which require massive infrastructures to deliver them?

It is possible to copy the look-and-feel and salient features of appealing software, and create products of one's own to sell; Steve Ballmer should be able to attest to that.

So it seems that, despite its shaky reputation in the industrial world, that China should be seen as a friend of Cloud Computing, ie, there is opportunity there that didn't exist in a shrink-wrapped software world.

The good "stuff" is all coming from the West (and with Fujitsu, from Japan) these days. China cannot be considered a credible competitor in Cloud Computng today; it should be considered as an incredible potential customer.

Note: I'm moderating a pair of Cloud Computing events in China this year, in Beijing March 24 and Shanghai September 15. They are fully independent of the Chinese government, and should both attract several hundred people with a variety of IT and business line titles.

I'd love to hear how you are doing, and how much of an impediment the old pirate habits have on your view of China and its prospects. Email me at strukhoff@yahoo.com or @strukhoff through Twitter.

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