Like bamboo in a strong wind, China will bend but not break in response to the current trade war initiated by the United States. The Chinese government will tell its people that China stood up to the United States. Likewise, regardless of the outcome, President Trump will tell the people of the United States that America achieved a great victory. That is the nature of politics.
But far more is at stake. Global warming is clearly the greatest threat to the human race that has ever existed. If we want a chance to get it under control, it will require the active leadership of the world’s two largest economies. For several hundred years leading up to World War II, the world was driven by nations competing for greater slices of the global pie. Today, if nations do not work together in greater harmony, there will be no pie.
China has a well thought through plan. The United States does not. China has followed a highly successful five-year national planning approach to economic development pioneered by many other East Asian nations including Singapore, Korea and Taiwan in particular.
By thinking long-term and strategically, Singapore, under the leadership of Prime Minister Lee Kuan Yew from 1959 – 1990, transformed from a nation with a weak economy and unstable society into a strong economy and stable society. In similar fashion, South Korea, which had a per capita GNP at the end of the Korean war less than that of Haiti, Ethiopia, or Yemen, is now the world’s 11th largest economy.
In each case, economic growth was prioritized over democracy and the protection of human rights. But over time, as their economies have leaped ahead and their citizens have become better educated, greater democracy and the protection of human rights have followed. One can argue with the costs in terms of democracy and human rights but one cannot deny their economic success. One can also debate whether continued economic success and better educated citizens in China will lead to greater democracy and human rights, but that is not the subject of this blog.
The Chinese economy today is second in the world only to that of the United States in large measure due to the central government’s Five Year plan and immense central government spending. In the Made in China 2025 initiative, President Xi made clear where he wants to take the country both domestically and globally and the industries in which he intends China to take the lead. President Trump has reason to be concerned about this economic juggernaut, and to be frustrated that China has often gained access to advanced technologies from the U.S. and other countries by not abiding by the rules. He has the choice to be belligerent or seek common ground for the betterment of both countries and the world. The latter approach is essential if our world is ultimately going to survive and prosper.
For all the inherent strengths of the United States, the short-term thinking of our government, our corporations and our people is not one of them. Short-term thinking makes it difficult for the U.S. to focus on, much less invest in, the education of our children to prepare them for the very different future they will inherit, or invest in our physical infrastructure. Far more dangerous is our inability to focus on global warming, that freight train approaching at high speed and with destructive force while we play on the tracks and choose not to notice that the tracks are vibrating.
The United States Government has no long-term strategic vision or plan. Rather, despite the many civil servants who are committed to enacting sound long-term policies, we are driven by the short-term political aspirations of our politicians who feel compelled to appeal to the near-term wants of their constituents if they are to be elected or retain their offices. That was clearly demonstrated two weeks ago when thirteen U.S. Federal agencies released the Fourth National Climate Assessment, (see previous blog), predicting disastrous economic consequences coming from global warming over the next decades. The next day, the President dismissed the report saying, “I don’t believe it.”
Our corporations, who have many thoughtful leaders and employees, are well aware when their products are polluting the atmosphere and increasing the likelihood of global warming. But in the last analysis our corporations are driven largely by the near-term demands of investors for robust quarterly profits.
Most Americans, despite their genuine concerns for the long-term well-being of their children and grandchildren, make decisions every day to achieve their near-term wants and needs that will have long-term negative impacts on their kin. French President Macron’s recent plan to raise gas prices as part of his efforts to shift France to a green economy ran head long into the near-term concerns of French citizens. The problem was neatly summarized in this statement by one of the protesters: “Macron is concerned about the end of the world. We are concerned about the end of the month.”
In the current face-off between the United States and China, the stakes for both countries as well as the world as a whole could not be higher. President Trump is focused on achieving a short-term “win” that will demonstrate his tough negotiating prowess to help him win a second term, while President Xi can take a longer view. His power appears secure for far longer than the next two years, he has far more control over the Chinese economy and what his people will be told when some settlement is reached.
Clearly President Xi has to be deeply concerned about the near-term economic damage of an ever more divisive trade war with the United States, but I believe he also sees this as an historic opportunity to show the world that China is now an equal to the United States and will no longer be subservient to the West. Since the mid 1800s, when the British and other Western powers were victorious in the two Opium Wars and extracted commercial privileges and territorial concessions, China has wanted to gain the respect it feels it deserves from the rest of the world.
Author’s note: I feel I may have a perspective about China as well as the long-term economic planning of the nations of East Asia that has been worth sharing. I studied Chinese and taught in a Chinese college for two years in Hong Kong right after Yale. I then went to law school at Berkeley for the sole purpose of studying the Chinese legal system and subsequently played a role as a U.S. diplomat in the Nixon administration’s internal deliberations about exploring diplomatic relations with China. With regard to the long-term strategic thinking and planning of the nations of Asia, I led consulting teams that helped formulate the five-year plans for the electronics industries of both the governments of Korea and Taiwan.