The New Normal, the Chinese Dream, the Silk Roads, Shared Prosperity, Managed Market Economy , the Rule of Law,
And now a new 5 Year Plan
These series of leading pronouncements are a guide to the situation and direction of travel of China. Much of the essence is being hidden due to superficial western reporting. For example, the New Normal is seen as about a change from 10pc growth to 7pc growth, and if that is achievable this year.
In the process of this approach to reporting we miss so much and our policy makers, corporate and government, are left with partial understandings.
Perhaps my interpretations are only partial but we try to focus on what the Chinese are saying and not what we think of what they will achieve. For the latter point 37 years of success suggests we better look at where they say they are going, and not if they will get there – ask Hong Kong.
The new 5 year plan beckons. Well, it will tell us about how different elements of China’s thinking weave together, especially the combination of the Silk Roads and Going Global combining with managing the growth of the Chinese economy.
The industrialisation and formation of large-scale agriculture is proceeding well, and companies like Glencore should be thinking long and hard about the way Chinese agricultural companies will influence the shape of the world’s agriculture. The urbanisation of China and through towards Europe will pick up a pace and that will be significant in its effect on Western demand. This will have major impacts on companies in the auto industry and most global sectors. Whole new markets opening up.
The development of Chinese managed capitalism in the next phase from 2021 towards 2049 will become clearer as the last pieces are put in place with this 5 year plan. This then will create the basis for the development of Socialism with Chinese Characteristics which will be about how the benefits of development are spread with the people of China – more like Denmark than the USA , and how China will share its development with its neighbours whilst helping build a new Asia.
In all this the development of an officials class, including soe leaders, who aspire to build a good China will be paramount. Some of the first stages of dismantling those who seemed to have institutionalised corruption appears to be closing. But I would expect a new phase of respect and serve the people to follow as Xi and the Party commit themselves to the development of a manager class of public officials, who do not participate in the revolving doors into commerce.
The days of guanxi are coming to an end although it will take more than a decade.
The internal contradictions of transitioning China to a new state of economic development which I call managed capitalism, but China would describe as a managed market economy, are substantial. But we should not judge it by Western media analysis of China’s management of its stock market and currency in the last few weeks. The apparent shambling approach was more a reflection of China’s approach to news management than their skills, which produced exactly what they intended.
There is still a racial tendency in the Western media towards Chinese capabilities, and sometimes the Chinese media feel unable to resist or argue against western analysis and so join in. But I have not seen any signs that the Chinese leadership is uncertain or incapable.
It may happen but it has not happened yet.
Change involves the unpredictable. And that means headwinds and adjusting. Don’t mistake that for core problems.
The Chinese market and Chinese investment abroad are both transformatory for Western business – George Osborne gets it and American and German business gets it. The City of London has not yet seen the changing financial world that is coming as they are so affected by the arrival of China in London, but it is everything that happens from Shanghai to Istanbul and Berlin that will really impact London. And how they react to global change will determine the success of London in the next 50 years.
London’s challenge is to get out of London and understand Eurasia.
The main external contradiction for China is the relationship with the world’s sole superpower – the USA. The USA seems troubled but less so than Western media analysis would suggest.
China is better able to manage the USA than any other nation, as it has long planned and prepared for this phase of its relationship with the USA. And China has the offerings of economic opportunity which can turn the head of the USA. The Silk Roads are an incredible opportunity for the USA if they can find a way to manage the G2 relationship. In fact that is crucial for us all.
The broad development of China towards Socialism with Chinese Characteristics does not involve defeating the USA. That is a diversion that China has determined would be fatal. If the USA forces China there then China will be, is , ready. But that is not the route that works for China. China believes in and benefits from global peace.
The USA is not fundamentally threatened by the rise of China because China’s aspirations are only in relation to its relations with its 20 neighbours. And there China has identified that shared prosperity is the right formula.
TPPA, if it happens, will likely merge with Asean and Apec. It is not going to sit alone. It needs be part of a global solution that follows from WTO.
So the new 5 year plan, Xi’s visit to the USA and to the UK create a time for us all to get to know the world that will likely emerge for the second quarter of this century. A lot of cranes in Western China through to Istanbul and Moscow.
Go West Young Man from China and see two systems meet in Istanbul. One the Western one, and one the Asian one but they will meet often in each other’s systems and that will go well, so long as the focus stays on sustainable development. The two systems are not incompatible or opposed. They are different ways to get to the targets.
One world two systems and go west young man from China.