Posts Tagged ‘China as number one’

The greatness of Deng Xiaoping

May 26, 2021

Arguably Deng Xiaopeng was the greatest Chinese statesman of the 20th century.  Ezra Vogel wrote a biography of Deng, and discusses it in the video above.  I found the video highly enlightening, and maybe you will, too.

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China pioneers digital currency

May 26, 2021

How did China become so mighty?

May 24, 2021

Image via Debating Europe

When I was a schoolboy in the 1940s, I felt sorry for the poor Chinese.

I was taught they were doomed to famine because their enormous population—400 million—exceeded the carrying capacity of the land.

The saying was that if the Chinese marched four abreast past a given point, they would march forever, because by the time the first 400 million had passed, there would be another 400 million behind them.

All this was too bad, because the Chinese were a highly civilized people and in some ways very wise.  For example, they paid their doctors when they were well and not when they were sick.  But, so I was taught, they were hopelessly behind the times.

Now China has a billion more people than it had then.  While some of them, especially the rural villagers, are poor by European and North American standards, none are in danger of starvation anytime soon.

The fertility rate of Chinese women is below the replacement rate, so the imaginary columns of marching Chinese would end at some point.

And much more importantly, the Chinese in many ways have replaced us Americans as pace-setters for world progress.  Charts in my previous post show some benchmarks of Chinese progress

The Chinese are the world’s top manufacturing nation and top exporting nationTheir technology is highly advanced.

During the past 20 years in particular, the USA has been struggling with self-created problems–military overstretch, governmental paralysis, racial conflict, while the Chinese have gone from strength to strength.

China’s rise does not, in and of itself, threaten American independence and prosperity.  The reason we Americans should be concerned is that China’s rulers reject America’s professed ideas of democracy, free-market economics and human rights, and yet are moving ahead while we Americans are falling behind.

China’s mercantilism

Click to enlarge.

China’s economic takeoff began shortly after the death of Mao Zedong, when the government shifted from a centrally-planned economy of state socialism to be loosely-guided economy of capitalist mercantilism.

Mercantilists do not believe in unrestricted free enterprise and they especially do not believe in unrestricted free trade.  Instead they believe in supporting industry by means of infrastructure improvements, protective tariffs and other subsidies.

This was the policy of Alexander Hamilton in the USA, of Friedrich List in Germany and of Deng Xiaopeng in China. 

It has been the policy of many countries, not always successfully.  But the Chinese made it work.

American companies were allowed to operate in China, using Chinese labor and gaining access to the huge Chinese market.  But they were subject to certain conditions.  They had to employ Chinese workers—not just blue-collar workers, but engineers and managers.  They had to allow some Chinese ownership.

And, most importantly, they had to transfer technological know-how to the Chinese.

Other countries besides the Chinese set conditions for entering their markets.  When I reported on business for my local newspaper, I was told by Kodak and Xerox managers that these companies had branch plants in Mexico because the Mexican government would not allow them to see film or copies in Mexico unless there was a certain amount of ”value added” in that country.

China represents an extreme and the USA represents another extreme. 

The Chinese government wants foreign investment to add to that country’s industrial base.  The U.S. government doesn’t care.  About 98 percent of foreign direct investment in the United States consists of purchase of existing assets, not investment in new capacity.

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China, the emerging superpower: in charts

May 24, 2021

The USA still has the world’s largest gross domestic product, but that may not mean as much as it seems.  It includes useless and harmful spending as well as useful spending.

China is by far the world’s leading manufacturing nation.

It is overtaking the United States as the world’s leading trading nation.

China’s global reach is being extended by its “belt and road intiative.”   China intends to finance pipelines, railroads, highways, seaports and other transportation infrastructure so as to economically integrate the whole of Eurasia, with China as the hub.  Admittedly, much of what’s shown on the maps is still on the drawing board, but even if the plan is only partly carried out, it could have a big impact.

Click to enlarge.

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China bids for world leadership

February 19, 2020

China has the world’s largest or second largest economy, depending on how it is measured.  It is world’s leading manufacturer and exporter.  It has nuclear weapons and the world’s largest standing army.

Its leader, Xi Jinping, has a plan to connect the interior of Eurasia an integrated whole, through construction of railroads and oil and gas pipelines.

This Belt and Roads Initiative, together with China’s informal military alliance with Russia, would make the interior of Eurasia an economic zone dominated by China and largely invulnerable to U.S. sea and air power.

It would mean world leadership for a nation whose leaders explicitly reject such ideas as universal values, intrinsic human rights, freedom of the press and an independent judiciary—ideas that we Americans consider foundations of Western civilization.

How likely is it that China’s leaders can realize these ambitions?  A scholar named Elizabeth C. Economy took a calm and skeptical look at China in a 2018 book entitled THE THIRD REVOLUTION: Xi Jinping and the New Chinese State.

The first revolution, in her view, was Mao Zedong’s victory over Chiang Kaishek in 1949.

Mao made China a unified nation free of foreign influence, and started China on the road to industrialization.  But his utopian dreams and totalitarian government brought China to the brink of collapse.

Hundreds of thousands and maybe millions of Chinese were killed in purges.  Millions and maybe tens of millions starved to death because nobody dared tell the truth about his failed agricultural policies.  Mao’s Cultural Revolution, intended to break up a new emerging social hierarchy, reduced the whole country to chaos.

The second revolution, in her view, was the emergence of Deng Xiaoping.  He accomplished what few leaders in history have been able to do—reform an authoritarian government.   Typically reformers fail to change the system, like Khrushchev, or undermine the stability of what they are trying to reform, like Gorbachev.

Deng loosened the authority of the Communist Party and relaxed economic controls just enough to allow for individual initiative, while keeping control.   He set up a system of collective leadership with an orderly succession.

Unlike Mao, he kept in the background and exercised power from behind the scenes,  On the world scene, his policy was to quietly make China stronger without alarming the existing great powers.

His policies, and not Mao’s, produced a great leap forward in economic development.  China’s rise from the wreckage of the Cultural Revolution was as great an economic miracle as the rise of Germany and Japan from the ashes of World War Two.  Deng was one of the great statesmen of the 20th century.

Many Western observers thought that as China became integrated into the world economy, it would adopt liberal and democratic values.  Xi Jinping’s third revolution is intended to prevent this from happening.

Xi has eliminated tern limits.  He evidently intends to serve for life, which could mean a succession struggle like the one that followed the death of Mao.  He has reaffirmed Communist Party control of the economy, and insists on ideological orthodoxy.

But what is the meaning of Communist ideology in a country with a stock exchange, giant profit-seeking corporations and 485 billionaires?  Under Xi, Communism is reduced to Chinese nationalism and obedience to authority.

One reason for the downfall of the Soviet Union was that people stopped believing in Marxism-Leninism as an ideal.   How long can the Chinese believe in a “socialism with Chinese characteristics” that is indistinguishable from capitalism?

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Why U.S. business kowtows to China

October 21, 2015

In the USA, government serves the needs of business.  In China, business serves the strategic aims of government.

No foreign corporation is allowed to operate in China without conceding something of long-term benefit to China.  That can be manufacturing operations in China, transfer of technological knowledge or a Chinese stake in the company’s ownership.  It goes without saying that the CEOs do not criticize Chinese foreign policy.

Cartoon by Xu Jun for EEO

Cartoon by Xu Jun for Economic Observer

Barry C. Lynn, writing in the November issue of Harper’s, said that some American corporate executives have even submitted to Communist-style self-criticism sessions, in which they volunteer confessions of misdeeds without being accused.

As China becomes more powerful, and the United States becomes more dependent on the Chinese for finance and for critical manufactured items, the leverage of Beijing over the United States becomes greater.  Lynn explained the reasons:

First is the fact that so many U.S. companies now depend on China for the products they sell.  For Walmart, it’s barbecue grills and shoes.  For Apple, it’s assembly work.  For Pfizer, it’s chemicals.

And while foreign companies have talked a lot about reducing their reliance on China, they nevertheless keep upping the ante, year after year.  Just last April, General Motors announced plans to pour another $16 billion into China.   In September, Dell pledged a whopping $125 billion over the next five years, with an ominous promise to “closely integrate Dell China strategies with [Chinese] national policies.”

A second reason corporations are so willing to accede to Chinese diktats is the allure of Chinese markets.  For General Motors, China already accounts for roughly a third of the cars it sells.  For Qualcomm, China accounts for roughly half its business.  For Rio Tinto, China accounts for considerably more than half its output of iron ore.

Chinese sales of Apple’s iPhones topped U.S. sales in 2015 — and when global markets were tanking in late August, Tim Cook helped arrest a rout in the company’s stock by publicly assuring investors that the Cupertino giant had “continued to experience strong growth for our business in China through July and August.”

Source: Harper’s Magazine.

Chinese investors own the AMC Theater chain of movie theaters in the United States, and also are major investors in American-made movies.  China also is the world’s largest market for Hollywood movies.

The result: Chinese are never the foreign villains in American movies—Russians, Arabs, Colombians, North Koreans, anybody but Chinese.

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China overtakes US as world’s biggest economy

October 9, 2015

panda eagleThe World Bank has noted that China has quietly overtaken the United States as the world’s largest economy.

Washington is responding to this in exactly the wrong way—by trying to checkmate China’s power rather than rebuilding the sources of American power.

China already led the United States in a number of important respects.  According to the CIA World Factbook, it exceeds the United States in industrial output, in agricultural output and in electricity production.

While China had a $260 billion trade surplus in 2013, the USA has a $698 billion trade deficit.

It is true that while the Chinese nation is rich, the Chinese people are still poor compared to Americans—not just in the amount of stuff they own, but in terms of infant mortality, life expectancy, literacy and access to public water and sewerage systems.

Inequality and concentration of wealth are just as great in China as they are in the United States.  China is the world’s largest polluter overall, although the USA is the largest on a per-capita basis.  Interestingly China has a lower birth rate and population growth rate than the USA.

But life has been getting better on average for the average Chinese person, while the earning power of the average American has been slipping behind.

The United States has the world’s largest and most expensive military, but the Chinese may be a match for the USA in their own backyard—the South China Sea.

Joseph Stiglitz, former chief economist for the World Bank and former chairman of the President’s Council of Economic Advisers, argued in a recent article that the USA still has great residual strength, but American leaders are letting it slip away by concentrating on military dominance and corporate profits at the expense of everything else.

In a full-fledged Cold War between the USA and China, China is in an economic position to do the USA great damage.  China could stop buying U.S. Treasury bonds, for example.

It’s not in the interest of China to wage economic war against the United States.  Both sides would suffer.  American leaders should not push China into a corner and put its leaders in a position in which they think they have no choice.   Instead American leaders should concentrate in reducing US economic vulnerability.

China does have big problems—inequality, pollution, corruption, unrest among workers and among minorities in Xinjiang, Tibet and elsewhere.

Maybe these problems will be fatal, although I doubt it.  But these are not issues the United States can affect one way or the other, or should try to affect.

And if China should start to collapse, history has many examples of declining empires that try to restore internal unity by going to war.  This is not something we Americans should hope for.  Our problems originate at home, not in China.

LINKS

China Has Overtaken the United States as the World’s Largest Economy by Joseph Stiglitz for Vanity Fair.

China vs. United States from the CIA World Factbook.

G-Zero: US-China Relations in the Age of Xi by Peter Lee for China Matters.

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The longest bridge in the world

July 18, 2015

1.Worlds-Longest-BridgeSource: The Top Tenz

The Danyang-Kushan Grand Bridge, completed in China in 2010 and opened to traffic in 2011, is 102.4 miles long.  It is listed in the Guinness Book of World Records as the longest bridge in the world.

It crosses rice paddies, canals, rivers and lakes in southeastern coastal China, and provides a link in the Shanghai-Beijing High-Speed Railway.

1280px-Danyang–Kunshan_Grand_BridgeSource: Wikipedia.

The world’s second longest bridge, according to the Guinness Book of World Records, is the Tianjin Grand Bridge, also a link in the Shanghai-Beijing High-Speed Railway.  It is 70.6 miles long.

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The real U.S. strategic rivalry with China

June 18, 2015

Don’t look back. Something might be gaining on you.
==Sachel Paige

 The big issue that we Americans have with China is not who controls the Spratly Islands in the South China Sea.

It is the shifting of U.S. manufacturing jobs to China and the U.S. trade deficit with China.

The United States probably does have legitimate economic grievances against China.  Some American economists, for example, think the Chinese government keeps the exchange rate for its currency artificially low in order to make its exports cheaper in world markets.

But the main problems we Americans have with China are due to things we have done to ourselves.

The Chinese never forced U.S.-based companies to give up domestic manufacturing capability. It never forced us Americans to neglect our physical infrastructure—our Internet service, our roads and bridges, our dams and levees. It never forced us to neglect our human resources—our higher education, our industrial research. It never forced our financial elite to invest in debt rather than invest in production.

Trying to substitute a military rivalry for an economic rivalry may or may not hurt China. It will not do us Americans any benefit because our problems do not originate in China.  They originate at home.

China has its own problems—labor unrest, ethnic conflict, corruption, air pollution, suppression of dissent.  Whether any of these problems are potentially fatal, I do not know.   What I do know is that it would be foolish for us Americans to count on China self-destructing.

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The powerful and precarious rise of China

September 26, 2014

The rise of China is one of the most important historical events, maybe the most important, of our time.

Jonathan Fenby, an experienced reporter and former editor of the South China Morning Post, gave a good account of China’s rise in his 2012 book, TIGER HEAD, SNAKE TAILS: China Today, How It Got There and Where It is Heading.

I finished reading Fenby’s book a week or so ago.  It reminded me of histories of the United States in the late 19th century, the era of the so-called robber barons.

Like the USA then, China has sweatshops, child labor, pollution, slums, suppression of minorities and rampant bribery and corruption.  But also like the USA then, China is full of energy and optimism, growing in wealth and power, and a land of opportunity for its entrepreneurs.

fenby.tiger.headWhen I was a boy, most Americans thought China was eternally doomed to upheavals, poverty and famine.

From the Opium Wars to the death of Mao Zedong, that was China’s fate.  But during the past 40 years, the Chinese leaders have made their country one of the world’s great economic powers, brought population growth under control and provided a basic subsistence to all and prosperity to many.

From 1978 to 2012, China’s economy grew 17-fold.  China’s economy is the second-largest in the world, although still far smaller than the United States.  It has a positive balance of trade.   It is the largest trading partner of Australia, the largest trading partner of Africa and a growing presence in Latin America.

Chinese companies compete and expand worldwide, while China’s own territory attracts industry from the USA, Europe and Japan.

The Chinese challenge, however, is much different from the Japanese challenge of the 1980s.  The Japanese challenge was that Japanese companies made products of a higher quality than U.S.-based companies.  This resulted in a competition for quality that was good for both the United States and Japan.

This is a different from the Chinese challenge of making products more cheaply than U.S.-based companies.  This results in a race to the bottom which is bad for most countries.

While many Chinese companies make world-class products, others cut corners.  Chinese companies are noted for cheap imitations of foreign brand name products.  Violation of copyright and theft of patents are common.  Fenby reported that 80 percent of counterfeit goods seized in the USA and Europe originate in China.

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China as number one

July 2, 2010

China, which has overtaken Japan as the world’s second-largest economy and Germany as the world’s largest exporter, is poised to overtake the United States as the world’s largest manufacturer, according to the Financial Times of London.

China has been a manufacturing and exporting powerhouse throughout most of its history, going back to ancient times when the Romans bought Chinese silks transported over the central Asian silk road.  The Chinese lost the preeminence only after the Industrial Revolution in England and, at that, it took the Opium Wars for the British to obtain a favorable balance of trade.

So, as the FT points out, the rise of China shouldn’t be surprising.  It is a giant both in area and population.  It has the resources to create a high-tech sector the size of Germany’s while maintaining a low-wage sector the size of India’s.

China’s progress could be a good thing for the United States, if we ourselves were not falling behind. We have more to gain from the prosperous China of today than the starving China of the 1950s and 1960s.  China could be as a good customer for our companies as it is for German and Japanese companies.

China has a lot of problems, which may cause its economy to falter or crash. I would not wish to live under the autocratic Chinese government. But the Chinese leaders get one important thing right.  They understand that the key to national power is a productive economy, and their priority is jobs, jobs, jobs.

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