China’s Peaceful Rejuvenation

This China Daily article by Zhang Weiwei, dean of the China Institute at Fudan University, makes at least one good point: China’s economic development was not undertaken through plundering or colonising another country, or through exporting problems. I would add that it also did not require massive international debts to do so. In this respect at least, China’s socialist construction is analogous to the Soviet Union, which also had to find an endogenous path. The contrast with the Soviet Union, whose ‘socialist offensive’ of the 1930s effectively turned it into an economic powerhouse, is that it was often deeply disruptive and occasionally violent. China’s longer path – over the 40 years of Reform and Opening Up – has been overwhelmingly peaceful and stable.

China’s development is in sharp contrast to that of Western powers which has been based on wars of aggression and the plundered resources

The sharp contrast between China and Western countries in their rise shows that what China has achieved in the past 70 years really did not come easy. China’s per capita resources are so limited that the cost of its industrialization has been very high.

What’s more, China has had to properly handle relations with both Western powers and developing countries on the one hand, and address various domestic social contradictions and destabilizing factors on the other.

It is China’s unremitting goal to seek development and harmony within the country and to pursue cooperation and peace with the international community. This has already become the will of the country and has been translated into national development plans and guidelines and implemented in practice.

Guided by the goal of peaceful development, China’s various measures of reform and opening-up have promoted its development and progress across the board. The Communist Party of China’s observation of the ever fiercer competition and numerous challenges in the world, as well as its sober assessment of the times, are reflected in its governance wisdom and enabled the country to get a clear understanding of the current world, and closely follow the major trends and seize the momentum of the times.

China exports no revolution or ideology, engages in no arms race or value-oriented diplomacy, and does not intervene in the domestic affairs of other countries. China does not identify a circle of friends based on ideology and far transcends the cold-war zero-sum game mentality of countries being either friends or foes. Instead, it is committed to a path of win-win cooperation and a partner network of global reach is taking shape.

China’s participation in the World Trade Organization, the world’s largest multilateral trading system, has enormously enhanced win-win cooperation between China and the world, facilitated the allocation and flow of production factors in the world, helped China become the world’s biggest trader in goods and made it possible for China and other countries to benefit from the dividend of China’s peaceful development through fair trade.

China is both a contributor and a beneficiary of economic globalization. The essence of Western-propelled globalization over these years is the globalization of neoliberalism. It is both economic and political, and includes liberalization, privatization, marketization and democratization. Economic globalization is a major trend of history which China must seize and follow. Of course, it is a double-edged sword, if properly handled globalization will improve the wellbeing of the Chinese people, but if mismanaged it will lead to disaster or even obstruct China’s development. Therefore, China has taken the approach of drawing on its advantages and avoiding any pitfalls that may be created by its opening-up.

China has set a clear definition for globalization: It’s economic, not political. Instead of abandoning socialism, China uses the strengths of socialism with Chinese characteristics to harness the globalization of neoliberalism that is driven by Western countries. This has made China stand out on the international stage and made the Chinese beneficiaries of economic globalization.

A key reason why China can maintain its peaceful development is that it has relied on endogenous development. As a super-sized country, China faces population, environmental and social development pressure. But to resolve these difficulties, China has relied on domestic economic, social and political reforms to constantly emancipate and develop productivity. This forms a sharp contrast to some Western countries which exported their own crises to other countries. In some sense, the road of socialism with Chinese characteristics means finding Chinese solutions to various difficulties in the process of industrialization, urbanization and agricultural modernization and creating a new set of approaches.

History shows that China’s peaceful development is a journey in which it has to confront and overcome challenges of all kinds. China’s current efforts involve transitioning from exports and investment-driven growth to industrial upgrading and innovation and consumption-driven growth. This road of endogenous development is wider and brighter, China is likely to become the world’s largest consumer market. Endogenous growth and development can help us maintain patience and resolve, handle international trade frictions in a reasonable manner and push forward the Belt and Road Initiative and new-type of globalization.

The Chinese love and cherish peace, and there is a profound historical and cultural tradition in this nation for peaceful development. For the best part of the past 2,000 years, China was the world’s largest economy with a far more sophisticated economy than Western countries at the same time. The fleet of Zheng He’s overseas expeditions in China’s Ming Dynasty (1368-1644) was 100 times larger than that with which Christopher Columbus “discovered” the American continent. But what China engaged in was only international exchanges and trade. There was neither expansion nor colonization. China has held the wisdom from ancient times that a warlike country, not matter how strong as it is, contains the seeds of its own destruction.

President Xi Jinping has stressed that the 5,000-year-old Chinese civilization has always upheld peace; and that the pursuit of peace and harmony is deeply rooted in the spiritual world of this nation and runs in the blood of its people. The Chinese nation has always advocated precious harmony, peace for the whole world and good neighborly and friendly relations. The history of Western invasions and national humiliation have given the country an acute and deep understanding of the value of peace. Therefore, the People’s Republic of China, from day one, has made solemn pledges that China will never seek hegemony even when one day it is strong. The success of China’s peaceful development is also rooted in the traditional wisdom of its civilization which valued harmony and stability. The success embodies the combination of our cultural genes and modern spirit. Our cultural legacy has been brought into life by reform and opening-up, and has become a major source of wisdom for China.

The resilience of a socialist market economy

In the article copied below are some useful insights into the current ‘trade war’ that the USA has launched against China (among many other countries). I am not sure the article – by John Ross – fully understands the socialist market economy of China, but the reality is that this economy is far more integrated, resilient and advanced than the chaotic and hollowed-out capitalist market economy of the USA – which Ross does analyse quite well. One thing is increasingly clear: the US advisors who are calling the shots are both annoyed and alarmed that they are hurting and now slipping behind.

Global Times, 13 May 2019:

Current US administration actions on trade make it important to carry out a calm objective comparison of the economic situation of China and the US. This is particularly necessary because the US administration engages in inaccurate boasting while China tends to present its economic situation in a calm, even modest, way. But, in very serious matters, there is no virtue in exaggeration — there is only virtue in realism.

Factual comparison of the economic situations of China and the US reveals the following: growth under the Trump administration is extremely slow by US historical standards, while China’s economy is growing twice as fast as the US and has greater resilience than the US, and China’s methods of macroeconomic control are much stronger than those of the US. These relative situations are confirmed by both the latest economic data and long-term economic trends.

To accurately analyze US economic dynamics it is necessary to remove false claims made by the US administration. President Trump has repeatedly claimed that “America’s economy is booming like never before,” but when this claim was made to delegates at the UN General Assembly, the Washington Post noted that “people actually laughed.” Such skepticism was justified. Facts show that under President Trump, the US is currently experiencing the slowest economic growth of any presidency since World War II.

Using the method by which the US presents data, peak growth under Trump of 4.2 percent in the second quarter of 2018 was significantly lower than the 5.1 percent under Obama, 7.0 percent under George W Bush, or 7.5 percent under Clinton. These peaks were in turn lower than under former US presidents since World War II. Peak growth under Nixon was 11.3 percent.

To make an accurate comparison to China, it should be understood that the way the US presents economic data differs from China and most countries. China states its economic growth as the increase from one quarter compared to the same quarter in the previous year – that is real year-on-year growth. The US presents economic growth as one quarter’s growth compared to the previous quarter presented at an annualized rate – approximately multiplied by four. This greatly exaggerates short-term US growth. The real highest year-on-year growth achieved under President Trump, making an accurate comparison with China, is only 3.2 percent.

China’s economic growth of 6.4 percent in the first quarter of 2019 was therefore twice the peak growth under Trump. But this still understates China’s growth lead over the US. US growth is more cyclical than China’s and falls to lower levels – during the last five years US growth fell to 1.3 percent during 2016. In that five-year period US average growth was 2.6 percent, whereas China’s was 6.8 percent — two and a half times as fast as the US. China’s lowest growth was 6.4 percent – almost five times as fast as the lowest US growth.

This determines the economic problem currently facing the US administration. US growth in the last quarter of 3.2 percent was a peak in the current business cycle – unsustainably above average growth. Therefore, US growth is likely to decline during 2019. The IMF projects US growth to fall as low as 2.3 percent for the year compared to China’s projected 6.3 percent. More worryingly for President Trump, as 2020 is a presidential election year, the IMF projects US growth to fall to only 1.9 percent in that year, while China’s growth is projected as above 6 percent.

This forecast of a US economic slowdown explains both current domestic economic demands by the US President and the administration’s position in trade talks. China does not undergo significant cyclical slowdowns because it has a socialist economy.  Tom Orlik, author of a serious Western study of China’s economy, Understanding China’s Economic Indicators, summarized why China had a more resilient economy: “Most economies can pull two levers to bolster growth: fiscal and monetary. China has a third option. The National Development and Reform Commission can accelerate the flow of investment projects.”

The dilemma the US faces amid threats of an economic slowdown, is that it rejects state intervention in the economy and is already running a very large budget deficit. Therefore, the only weapon available to attempt to limit an economic slowdown, which would affect the 2020 presidential election, is to reduce interest rates. Consequently, President Trump has recently launched public attacks on the US Federal Reserve, demanding that it reduce interest rates.

This threat of a US economic slowdown simultaneously explains the aggressive approach taken by the US in trade talks and the sharp falls on the US share market in reaction to this. Foreseeing that China’s economy will continue to grow far faster than that of the US, and that the US will slow, US neo-cons are desperate to attempt to slow China’s economy through tariffs. However, US stock market thinks that the combination of a slowing economy and tariffs would be toxic.