In the past several months, China has been in the news less for trade statistics and more for the spread of SARS, the deadly respiratory disease that in April seemed on the verge of an epidemic. Thankfully, the World Health Organization has pronounced the spread of SARS contained.

The outbreak initially was ignored and then was mismanaged by Chinese authorities, who acknowledged this with the resignation of the Chinese health minister. Will SARS affect China politically as Chernobyl affected the Soviet Union?

In 1986, a reactor exploded at the Chernobyl nuclear power plant in Ukraine, in the heart of the Soviet Union. Within days, Swedish nuclear engineers had identified the radioactive cloud, spreading across Europe, and its origin to the east in the Soviet Union.

Thousands of people have died from exposure to Chernobyl's long-term radiation. But Chernobyl has political significance as well. Mikhail Gorbachev used the disaster as an opportunity to advance his policy of "perestroika," the openness and honesty that began as reform and ended three years later in the fall of the Soviet Union and the Communist states of Eastern Europe.

Yet SARS resembles Chernobyl only in superficial ways. In 1986, the Soviet Union had been frozen in reactionary amber for more than 30 years, since Stalin's death. The economy was arthritic, helpless to compete in the emerging knowledge-based international economy. The armed forces were demoralized from the quagmire of Afghanistan. Chernobyl was just another nail in the coffin of the Soviet Union.

In contrast, in the nearly 30 years since Mao's death, China steadily has been confronting reality and dynamically reforming itself. In January, I wrote a column titled "Why China Likes Linux," describing how China is attempting to comply with international agreements protecting intellectual property, as a condition of being admitted to the World Trade Organization in 2001.

Disparity and repression

China has real problems, of course. There is the disparity between the prosperous coastal provinces and the undeveloped inland; corrupt officials of the Communist Party and People's Army controlling (and looting) much of industry; political and religious repression, and the wild card of a demographic imbalance between males and females due to China's official "one-child policy."

Some see no progress. Consider this report by BBC correspondent Tim Luard, of Nov. 16. Luard visited China after having been a BBC correspondent in Beijing during the late 1980s. "The gap between haves and have-nots is greater than when the Communists came to power. It is quite possibly the most unequal society on Earth. There are no real dissidents left anyway. Private entrepreneurs still have a free rein -- they are the engine of economic growth, after all -- but even they are now being co-opted into the party. As China becomes a bigger power in the world, its government is becoming ever more fascist."

Is he right? Thankfully, no. It is possible to contemplate a dismal future in which China degenerates into provincial fiefdoms, ruled by warlords, much as it was 100 years ago. That China may be deeply disruptive in international affairs. As events of the past several years have demonstrated, history is not an inevitable upward progression.

But it is not plausible to imagine China simultaneously as an economic powerhouse and as deeply fascist. Nazi Germany and every long-term Communist government demonstrated that totalitarian regimes eviscerate themselves economically. As Peter Drucker described in "The End of Economic Man," fascist societies recognize no priority other than the power of the state. They can do no more than feign successful economic activities.

Positive possibilities

Thirty years ago, China was truly closed to the West, allowing an observer to project whatever fantasies he or she wished on that society. In fact, it was the time of the Cultural Revolution, in which an estimated 20 million to 40 million Chinese were murdered for arcane ideological reasons.

Unlike Hitler, or Mao, there is no overriding ideological theme to China's current leadership other than self-interest. A China that shows its warts to the world and is brutal -- but not evil -- is more likely than not to evolve into something positive.

That is why China's eventual response to the SARS outbreak bodes positively for China and for its trading partners.

China already is a key player in outsourced manufacturing. It is considered to have the potential to be a key player in information technology as well, with massive numbers of well-educated engineers. But the more China competes in high-value, knowledge-based services, the more China's political openness becomes a critical factor.

Corporate leaders continue to make outsourcing decisions in increasing frequency, size and strategic importance. These decisions are driven by two core factors -- cost savings (by contracting the use of less-expensive resources in another country) and risk management (increasing the likelihood that a vendor will provide consistent service to fulfill the contract).

In managing risk on an outsourcing contract, several issues come into play: the competencies and financial stability of the service provider, the reliability of technology infrastructure, and the political stability of the country where the resources are located.

Financial transparency is impossible without political transparency. Free speech and rule of law is a necessary precondition, though not a guarantee, of accurate financial reporting and reliable contract law. A government that cracks down on political speech will treat the release of unpleasant economic facts just as harshly.