When China Survives The Economic Cold War Many “Experts” Shall Swallow Their Pride

It is common enough to hear anti-China nationalists of the Bannon/Trump variety claim that the only reason that China’s Reform and Opening Up was successful was due to increased economic connectivity with the United States. But even among western “experts” who applaud China’s economic miracle that has transpired since 1978, many continue to proffer the insulting myth that China’s economic rise would have been impossible without the United States.

The fact of the matter is that China’s Reform and Opening Up represented the seismic shift in a domestic economic model first and foremost. As part of Deng Xiaoping’s reforms, the very economic models that had previously governed China’s agricultural and industrial sectors were completely revised. This ended the failed process of agrarian collectivisation whilst also allowing a quota based industrial model to shift to one which encouraged enterprise and innovation by lifting multiple restrictions and embracing market socialist reforms.

Deng also encouraged foreign direct investment as part of his drive to switch China from a model of failed self-sufficiency to one that reflected China’s ancient traditions of supreme success in global commerce. As such, it was always one of the goals of Reform and Opening Up to being China back to its traditional status as a major exporter and importer on the global market.

It was no secret that Deng Xiaoping was a great admirer of Lee Kuan Yew who between 1965 and the end of the 1970s transformed his island country into an economic tiger by combining modern economic reforms with a system of intelligent management that was free from a bloated and costly bureaucracy. In spite of China’s size vis-a-vis tiny Singapore, Deng implemented his own versions of many of Lee’s successful policies in order to solve China’s economic problems in all respects.

As a result, whilst 88% of the entire Chinese population lived below the poverty line in the late 1970s, today, that figure is under 2% and is set to go to 0% by the end of next year. Thanks to the evolving process of Reform and Opening Up, China has lifted more people out of poverty in a shorter period of time than anything that had previously transpired in human history.

And yet, whilst the essence of Reform and Open Up involved a return to China’s historic position as a major trading nation, many “experts” in the United States and elsewhere in the west believe that the US and not China should be credited with China’s post-1978 success story.

It is highly insulting to claim that the consumer should be credited with the creation and sale of a product and likewise, it is foolish to think that investment opportunities are one sided zero-sum affair rather than an ongoing win-win process.

If China did not produce what outside countries desire and if investment in China did not offer a positive return on investors, no one in any foreign country, let alone one with as many options as the United States would have brought from nor invested in China.

And yet, China has always stated that a cooperative rules based global trading and investing atmosphere is preferable to a dangerous lose-lose zero-sum mentality based on hostile competition.

Now however, it appears that the Trump administration is keen on reversing the trend in positive China-US relations that developed since Richard Nixon extended an olive branch to Mao Zedong in the early 1970s. The fact of the matter is that both the Chinese and the US economies are strong enough to withstand an economic cold war.

That being said, there will be suffering on both sides and as many have pointed out, China’s system and culture are better prepared to withstand these blows without resorting to hysterical measures vis-a-vis a US whose stock and shares driven economy and culture of instant gratification are less prepared to take the inevitable blows that will accompany an economic cold war between the world’s to largest and most dynamic economies.

The very fact that China’s inevitable survival in an era of potentially long ranging economic cold war will soon be a matter of global public record will at least serve to quash the rumour that China’s erstwhile economic relations with the US were parasitic rather than symbiotic.

It will soon become clear that China’s status as a great economic superpower will not be diminished because of a cold war economic mentality in Washington. While no one in China cares to prove this as it is not part of Chinese cultural characteristics to prove major points using zero-sum bravado, if forced to engage in economic relations which largely exclude the United States, China will still thrive. This will show many in the US that China and the US presently rely on one another in order to achieve major economic goals but that neither country is dependent on one another. China’s greatness was achieved because of China and its continued process will likewise continue due to China’s internal drive for further Reform and Opening Up.

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