The New Normal and The Theory of Enough

China is about to enter its annual December Central Economic Work Conference. Huge changes are taking place in China but perhaps the biggest is the decline in the significance of the growth rate.

While the USA and UK are caught in a debt fueled growth rate chase, and Europe suffers from economic problems, best solved by restructuring and growth to offset bad debts and excessive government spending in many western nations, China needs growth to maintain employment, otherwise the transfer to domestic and sustainable consumption is not measured by growth alone.

China is moving to a market economy but towards two targets 2021 and 2049. We would do well to understand the characteristics of these two phases ahead, as they will tell us that China is on a completely different trajectory to the West.

They are heading for “enough”, sustainable “enough”, a nation not based on equality but on shared prosperity. It will not be based on a never ending search for growth, although that will not be the case for the next 30 years or so. China needs growth to complete urbanisation, to create a modern caring state, to complete urbanisation, to complete infrastructure across China and beyond for hundreds of miles.

But beyond that is a nation of moderate prosperity more similar to Northern European economies where three pairs of shoes is enough, and debt is not encouraged. Where social values are still held high. They are not without their problems but their model is closer to China’s aim than the British and American model. Growth based on debt is not a Chinese target.

Some narrow minded people see only the single party state. I may be day dreaming but I see phenomenal development and single mindedness, and long term planning with a capability to react and adjust to short term impacts.

I see their anti-corruption as a long overdue attempt to win back the soul of China from its excessive pre-occupation with money and wealth – Adam Smith warned of this in his Theory of Moral Sentiments, and the New Testament also warned about that.

They seem very capable and we best take them seriously or watch as we slip in the slip stream….

There is a lot of benefit for us in working with China. We need to learn the New normal is not only about growth but also respecting them.

The Hong Kong problem has arisen to trouble UK/China relations. What is my take?

The Foreign Relations Committee of the House of Commons chose this sensitive time to decide to launch a British review of the Joint Declaration. They wanted to visit Hong Kong to review it. China bridled at this, because to go to Hong Kong now would only lead to discussions about the protests.

It would be disruptive, even were they to try to stay to the Joint Declaration, which the Chinese did not see as something the British had a unique right to review – a hangover from the colonial past they believe.

Universal Suffrage is part of the Chinese Basic Law, and as Hong Kong is part of China it would be a gross intrusion for our Parliament to interfere in this matter.

As we are entering a General Election period, the Chinese will be sensitive to our politicians need to be concerned about headlines, and the management of them.

But the issue of universal suffrage is a Chinese matter and not one for our Parliament to try to get involved in.

We would not have been at ease if the Irish Parliament, at the height of the troubles in Northern Ireland, decided to send a Foreign Relations committee to Belfast to review the partition of Ireland Act of 1920.

The Chinese road to democracy is , like ours, a matter for them, and they will not change it if we throw shoes at their Premier or call them names.

They have a rich civilisation of 5000 years and are part way through an Industrial Revolution. It took us 200 years to get to full universal suffrage and then we choose from two candidates, indirectly, who have been elected by small groups to lead our two main political parties.

The Chinese road may learn from the Western way or may find a better, or different, way.

Hong Kong is part of China and it is governed from Beijing under the successful Chinese formula of one country two systems, and we best leave them to find their own way, as they leave us to find our way.

I am sure that our Foreign Relations Committee did not intend to stir up a hornets nest, but then they do not understand China well enough.

Categories: Chinese Foreign Policy

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