Welcome 2020 – Happy New Year

How does China Look

 

China’s Two Main Challenges

 

As we enter 2020 the two main challenges of China’s current period can be seen and assessed.

 

The first is concluding the first phase of opening up and reform as a major global first and starting the next phase. China’s achievements over 40 years are nothing short of miraculous. Transforming a poor 90pc peasant nation into a modern economy in 42 years. Peasants now make up less than 45pc of the nation and its agriculture is fast transforming into a modern mechanised, large scale form and the peasantry is being replaced by agricultural workers in large cooperatives. In the end 20pc of the population will produce three times the agrarian output once produced by 90 percent of the population.

 

Manufacturing of modern high tech goods will mark manufacturing by 20pc of the population, which once reached 45pc in its low cost export days of 2000-2010. China’s focus on innovation is taking China to a leading position in the world of advanced manufacturing by 2025-30. 5G will change the world for ever and enable A.I. through big data.

 

China’s service industry has reached 60pc, led by household names and a stable finance sector, and will continue to lead with major innovative global champions. The world of finance is about to change for ever. The digital world is here now.

 

Its population will increasingly be grouped in large metropolises, based in 15 regions, three of which – Greater Bay Area, Yangtze Delta and Beijing/Tianjin/Xiongan – are already into their second stages of unification. New ones are merging with relevant characteristics. Regions are here and will dominate planning across China and then the world.

 

In all China is moving into a defined second stage of a managed market economy combining the state and private sectors to meet a national plan for 2035 – interim – and 2049 – finished next phase. This target of 2035 through to 2049 is now well under way with the basic structure complete. This is a first in the world but has been prepared for over 70 years and tested in many ways.  Managed economies will increasingly feature in the world as the Chinese example is clearer.

 

By 2049 China will be ready to move to its next stage of development to complete by the end of the century with an interim date of 2078 to organise around.

 

Production will be for the people of China, and the worlds goods will be in China, and made in China by foreigners, and China will be in the world. Whether that world is is initially half the world or most of the world is to become clear. But China will not stop its pursuit of a globe that is at peace and helping each other modernise.

 

The second challenge.

 

When China entered WTO it was not long before the USA realised that China had its agenda to be an independent nation but they did not read China. They thought that China wanted to be the world’s cheap exporter. But that was just a phase to go through to enable peasants to be moved East into productive urban jobs. The attempt by the USA to take control of China failed then because it misread China’s trajectory.

 

China intended to become a modern nation with modern forms and technologies. Now the second challenge is the attempt by the USA to bring China’s emerging modern economy under control within the three hundred year rule of the West.

 

The USA sees the Chinese as intending to become the new sole superpower. Again the USA is wrong in its depiction of China and it makes for the USA to be unable to manage China. But this realisation will take time for the USA and we may find that this period is dangerous as economic warfare of a vast form is waged.

 

From my 50 years’ experience of China they are ready and tested and prepared. They are also not interested in becoming a superpower, knowing there is only one direction after this is achieved – down like the 16 empires in the world’s history.

 

The USA sees BRI as the moves to create a Chinese Empire but this is another example of the USA misreading China, getting its tactics wrong, and, probably, losing this moment. China intends to fund only 10-12pc of BRI. It is already widely owned.

 

China does not seek to defeat the USA. That would be a hugely expensive and pointless task. The USA is the world’s greatest economy and taking it down would undermine the world’s economy let alone the effect on the American people with unpredictable outcomes.

 

China wants to have a mature major nation relationship with the USA as it does with Russia. It would be very different from that with Russia but major.

 

The USA has substantially changed the one nation agreement with China and therefore the rules of the game have been broken by the USA. That is remediable but China is playing by American rules now. China wants a positive outcome and does not want battles, but if the USA maintains its challenges to China then it will experience China. That is my experience of China over 50 years.

 

The USA does not need this battle. It needs to protect its interests but not the cost of running the world.

 

This phase of the USA coming to terms with a changed world may be very harsh, certainly dislocating. One hopes that a world where army, navy and air force are largely extinct, and replaced by cyber, space and nuclear, may have skirmishes but if pushed then the economic consequences of conflict cannot be contained easily. All nations would suffer in their own geographies, which is something the USA has never experienced.

 

Europe knows this era well and will work to reduce tensions but in the end we are in a phase of economic sanctions from the USA on the world outside. This cannot last and the UN will be restored again sometime.

 

China is prepared to compromise with the traditional order but as the USA would not reform the old order, there will be a new order. Or there will be conflict which is not feasible.

 

So we have a few years in which the West finds itself in a new era of the world. And then a new order will emerge. It is unfortunate that the pages of the intellectual parts of the West are full of demonising China and not considering a new world order which protects the West’s interests. The world once found Chinese food strange and unattractive.

 

But change takes time and can be painful. It depends now on how nations like the UK decide to turn. To defending the old order or participating in the growth of the new world. Growth is coming from the new world and upon that we depend. London will find it hard to survive if the new world turns to new financial centres. It will have already lost Europe.

 

So nations of the West have to decide how to react to this era of Change. China is clear. It does not wish to be a superpower but the USA is pushing the Chinese to consider this to manage transition. China wants to be a modern mature economy and society based on Chinese history in a fair world where the challenge of climate change is paramount eventually. The world will spread across the globe and address new ways to meet the resource needs of the people of the world. But enough will replace more as the basis for planning. And not a meagre enough but a pleasant enough.

 

Sharing will become a normal way of thinking, but equality will be a long, long way off.

 

China is on a journey for China respecting its global responsibilities. BRI is both a gift from China to the world but also a basis for the new world if we want to join it.

 

China has no soldiers outside China and has no such ambition. It has some soldiers with United Nations peacekeeping forces only. The USA is challenging China and has very large forces across the world. Most of them are redundant in the new world, but they are a vivid danger to peace. 

 

The world is at an economic crossroads and a military one. China is continuing its transformation but will not allow itself to be forced to accept the domination of Western history. That is how they see it. They can help the West meet the challenges of the future or deal with aggression. That is how I think they see it. The world will change because it has always changed.  How is the big question for now.

 

Bet against China and you are betting against a nation that has transformed itself in just 40 years, or 70 years depending upon how you view China.

 

So a tough period of change ahead for China internally and with BRI, and a tough period of challenge from the USA. But China is built on challenge. China needs to compromise with the USA and will. The USA must be able to flourish in any new formed world. This is China’s second great challenge.

 

To face this unprecedented pressure from the USA and to manage change, China has become more protected in its form. It sees itself as facing many challenges in many forms, and is dealing with them as they decide necessary. They are not affected by Western media depictions of them. They will return, I expect, to building a modern Democracy with Chinese Characteristics when this era of huge challenge has passed.

 

 

Wishing you a Constructive New Year

 

Stephen

 

 



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