Date: 02-12-12 20:37
China must inevitably leave the American hegemony ship.
I give below an article in Chinese with my translation. Following this article, I give my comments.
Exposing the 3 serious strategic errors of the Chinese military administration brain trusters
更新时间：2012-02-03 14:17 发帖于：军情观察
The 3 serious strategic errors of the Chinese military administration brain trusters have long term repercussions
As the high level brain trusters of the Chinese military administration, they have always received great attention from the people. Not only are these people influencing China's external policies but it is also possible to see the future possible directions from their expressed voices. But due to the nepotism and inbreeding of some brain trusters it has made the brain trust singular (without input from outside). Maybe it has become too academic which has rendered these brain trusters to make erroneous judgments in important matters.
If the error in judgment were minor then it can be reversed. But if the error were major then the repercussion will be very serious. We will examine below 3 very major errors in strategic judgments with respect to the American problem. From this we can perhaps see the errors of these academicians and how far reaching their influence is on China.
Number 1: The Chinese-American relationship is neither friend nor foe or either friend or foe
With respect to culture and economics, the policies adopted by China are very radical; but with respect to foreign relation polices it has expressed excessive conservatism. The most crucial is in determining the relationship between China and America there exists great differences. So what is the real relationship between China and America? Even though all are now saying that Chinese American relationship is all encompassing covering all levels of society. But the Chinese American relationship is not as what the elites and experts have said of being neither friend nor foe or either friend or foe.
That this kind of error in strategic judgment has appeared is due to neglecting the consideration of the differences between the system and method of China and that of America. China's actual situation also is different from that of America. These kinds of differences are definitely not superficial differences but are intrinsic differences.
Even though China and America have always sought to establish commonality while reserving differences, to cooperate mutually or to exercise mutual tolerance so that the number one throne of the world can contain both China and America, but the reality is that there are some problems that cannot be reconciled between them or be solved by deliberate neglect. If these problems are not addressed and simply defining the Chinese American relationship as being both friends and foes is unscientific. It will lead to major problems.
In some respects, the relationship between China and America is one of adversaries. In that case it should use the method of vanquishing the enemy to solve the problem. For example, if America interferes in China's internal affairs, or America provokes disputes over China's sovereign territories, etc. then these are the acts of an enemy. Therefore, in order to neutralize these impasses it is not necessary to make concessions or to disregard these problems due to other so-called benefits.
Number 2: If good relationship can be established with America then China will be prosperous
These words were the most crucial ones uttered 30 years ago. But is it really true that the mere establishment of good relationship with America will assure China of prosperity?
Up to now 30 years have gone by in a snap of the fingers. What should a prosperous China do? What are the conditions China must fulfill in order to be considered prosperous?
Looking at it now, the relationship between China and America can be said to be as good as it can be -- of course this is only the understanding of the Chinese themselves. The brain trusters are also pondering, is the Chinese-American relationship still not good enough? In almost all problems involving America, China doesn't even dare to say a single "no"; is this still not good enough?
But, proceeding from a normal person's thinking, we should understand that no matter how good two truly good friends are, in certain problems they must still have some reservations. With respect to fair weather friends, it is even more necessary to have some reservations.
Therefore, a normal relationship must be one such that it guarantees the independence of philosophy and ideology and moral quality and human dignity. It is not a question of which one is dependent on the other. In this question, China has been bound too tightly. Therefore, sooner or later there will be problems.
Number 3: Ride the American hegemony ship, China quietly getting rich
This is exemplified by the blind worship of English! Some people think if China can learn English well then it can go anywhere in the world, to be placed among the ranks of the honored countries of the world. This way of thinking is a degraded thinking polluted with self-inferiority and lacking self-confidence.
Now there are no less than 800 million people who are learning or had learned English. How much social resources and people's intelligence have been squandered! In the end, it is useful? As far as many people are concerned is basically the way to slaughter the dragon.
Learning English and improving the relationship with America has been recognized by all the people to be characteristic of wanting to ride the American hegemony ship and rely on the American flag to travel the world. But looking at it now, the result is not so idealistic.
As to the question of getting rich, not being concerned for matters not related to oneself has created many practical problems for China that are insoluble.
Summing up, tactical problems can be easily adjusted, but strategic problems need a long time before flaws can be discerned. This makes its dangerous nature even bigger.
It must not be left unexamined!
Ever since some 30 years ago China has been following Deng’s “hide the light” dictum which was based on the philosophy of “ride the American hegemony ship and quietly get rich.” According to this philosophy, China should join the WTO, learn English, export as much as possible and get rich as quickly as possible. But after some 30 years later China can no longer continue to ride the American hegemony ship and must get off. This is because many problems have cropped up in the intervening time and its is becoming increasingly obvious that China can no longer increase its national wealth based on exports.
When Deng came to power some 30 years ago China was in very poor conditions. Its technologies were backward, its people were unproductive and had no jobs. China was also having a dangerous confrontation with the USSR. In 1979 China fought a war with Vietnam as a proxy against the USSR which had threatened to use nuclear bombs against China. Therefore, it was a good idea from China’s security standpoint to ally with the US against its biggest threat at the time which was the USSR. Also allying with the US had diminished the danger from India and Japan as well as other allies of America such as S. Korea and Philippines and other small but hostile countries in ASEAN.
In terms of economic development, China began to increase its exports to America. By successively reducing the value of its RMB China had been able to make its products cheaper than other exporting countries and be more competitive in the international markets, especially in America. The rapidly increasing exports allowed China to earn more hard currencies to import critical technological products such as large electric generators, jumbo jets, etc. to raise the productivity of Chinese economy.
Therefore, from the perspectives of national security and economic and technological development, it seemed a very good idea to get on the American hegemony ship which obviously allowed China to get rich rapidly. In the late 1970’s and early 1980’s America was having serious problems with stagflation. It was also at the height of cold war against the USSR. So America was very happy to have China on its side both as a counterweigh against the USSR and Vietnam and as a supplier of cheap consumer products to reduce inflation. At the same time America was increasing its exports to China which increased jobs in America. Therefore, the closer relationship was mutually beneficial and timely. China was eager to get on the American hegemony ship and America was eager to welcome China aboard. It was a match made in heaven.
But conditions have changed drastically since then. By the late 1990’s America was doing very well economically. Inflation was down and significant surpluses was being made in the national budget. The USSR had collapsed and disintegrated. Gorbachev had ushered in democracy and the Russian economy tanked and was no longer a threat to America. Therefore, by the beginning of Bush Jr.’s presidency America was ready to squeeze China. By forcing China to join the WTO it put the dog collar on China’s economic neck and proceeded to dominate China in every way possible. America’s hostilities against China would have come sooner and with greater force had it not been sidetracked by the 911 attacks and the subsequent wars in Afghanistan and Iraq. But now with the Afghan and Iraqi wars concluded, America is ready to raise the level of confrontation to the highest possible level. As a sign of this, it is blatantly “pivoting” to Southeast Asia at a time when China was increasingly having greater problems with Philippines and Vietnam over the Nansha and other archipelagoes in the S. China Sea. This hostile act against China is deliberate and felt intensely by the Chinese people with great resentment and alarm. All Chinese people except a small proportion who are the compradors dependent on exports for their wealth are calling for faster deployment of modern arms to defend China under the new and increasingly hostile international environment.
At the same time Russia which was one of the biggest reason for China’s getting on the American hegemony ship has grown closer to China. Especially now that Putin is expected to be reelected again as the next Russian president the relationship between China and Russia will continue to grow closer. China and Russia are members of the Shanghai Cooperation Organization with increasingly close military cooperation in the north and west of China.
Economically, China has figuratively smacked into a brick wall at the end of the exports street. The economies of the West in general and America in particular have all gone into serious recession if not outright depression. It is only through the cheap imports from China that the American consumers can afford to buy any consumer products. But as America foolishly forces China to increase the value of its RMB, the profits of the Chinese exporters are decreasing in terms of yuan. For example, 1 million shirts that cost $10 each would have fetched $10 million in 2005. At the then exchange rate of 8.27 yuan per dollar the $10 million would have changed into 82.7 million yuan. But now the same 1 million shirts selling for the same $10 million can be changed into only 63 million yuan at the current exchange rate of 6.3 yuan per dollar. If the Chinese exporters want to continue to receive 82.7 million yuan for the 1 million shirts then each shirt would have to cost $13 which would make them too expensive for the American consumers to afford. So if the dollar price went up the physical volume of export will go down. In the end, the Chinese exporters can no longer make as much profit as before in terms of yuan. And indeed many Chinese manufacturers have gone bankrupt in the last several years. This means American market is no longer such a good place for the Chinese exporters to make a lot of profits. And China has no choice but to turn to the development of its internal domestic economy to continue to provide jobs for its workers and profits for its manufacturers and investors.
So far the CCP government has done a very bad job keeping the Chinese economy growing. In the last several years it had tried to keep the Chinese economy growing in terms of GDP by stimulating the housing market. The predictable result is the rapid inflation of the housing market that threatens to turn into a housing bubble the bursting of which will inevitably collapse the entire Chinese economy. I had called for the urbanization of the farmers as the main mechanism for keeping the Chinese economy growing. As of the last year the Chinese government has begun to implement a new policy to build tens of millions of affordable housing that will obviously contribute to the efforts of urbanizing the farmers. But it is obvious that by itself the building of affordable housings will not sustainably keep the Chinese economy developing. If migrant workers buy houses in the urban area but don’t have jobs that sell the goods and services they produce into the domestic market then it will create a serious danger. That is, if the new urbanites continued to depend on exports to provide them with jobs and incomes, then with exports declining they will soon be out of jobs and lose their incomes. If a large number of these urbanites become unemployed they will become a threat to social security. Therefore, the government must also implement policies to create jobs that will produce goods and services for the domestic market so that the Chinese domestic economy can continue to develop and expand no matter what happened to the outside world. In other words, in order for China’s economy to continue to expand it must reduce foreign trade.
As part of increasing domestic economy, the Chinese government must ban foreign investment inside China. Foreign producers of goods and services will only take profits away from Chinese investors and drain wealth out of China. For example, if Walmart built a big supermarket in China then it will cause hundreds of Chinese shops to go bankrupt thus harming the Chinese economy. Currently, some 80% of all cars made in China are made by foreign car companies. This means trillions of yuan of profit are being drained out of China. It also act as a suppressant on China’s domestic car technologies. Therefore, China must ban all foreign investment in China in order to protect its domestic economy and sustain growth.
Interesting enough, Robert Fogel who won the Nobel Prize for Economics in 1993 estimated that China will have a GDP of $123 trillion by 2040 on a per capita GDP of some $85,000 and a population of 1.45 billion. At the same time America would have a total GDP of $42 trillion on a per capita GDP of $107,000 based on a population of 392 million. Fogel based his estimate on the increased productivity derived from the increased quality of the Chinese education leading to the development and utilization of high technologies resulting in elevated productivity. Fogel’s basis for China’s economic development is the same as my own. In my 12-Guidelines for the Rapid Development of China I had listed higher education and R&D as the basis for producing the technologies and their utilization that will increase Chinese productivity. Ultimately, it is just common sense that people using the same tools and machines will be equally productive. And people producing the same amount of goods and services will be able to receive the same commensurate remunerations. Therefore, once China achieves the same technological advancement as the US and allows its people to be as productive as the Americans then China will be many times bigger economically than the US.
Link to Fogel’s article:
I have also given the reasons why Chinese people will be more productive than the Americans. Some 1/3 of the American people are blacks and Latinos who underperform the average by some 1/3 while Chinese Americans overperform the average by some 1/3. Therefore, China’s per capita GDP will be some 1/3 bigger than the American per capita GDP since Chinese people in China are the same as the Chinese in America. So if China’s population is some 3.7 times bigger than the US (1.45 billion to 0.39 billion) and Chinese workers are 1.33 times as productive as American workers then China’s ultimate economy will be some 5 times bigger than the American economy. So, if America’s GDP in 2040 is $42 trillion, then China’s GDP will be some $210 trillion. Of course, China’s military will be correspondingly bigger than the American military in quantity with even higher quality. It should also be obvious that China cannot develop a $210 trillion economy based on trade with a $42 trillion economy. In other words, if China wants to achieve a $210 trillion economy then it must rely on itself by maximizing the development of its domestic economy based on indigenous technologies. Continuing to trade disadvantageously with America by exporting labor intensive products will only suppress China’s growth and development.
It is therefore clear that the political and economic conditions have changed both for China and America over the last 30 years. Economically China is no longer deriving much benefits from America. On the contrary, continuing to trade by exporting labor intensive products to America will only constrain and suppress China’s growth and development. So economically speaking, America has turned from a benefit to a liability. Militarily America has become a renewed threat. America is again talking aggressively of encircling China and putting more pressure on China to conform to American policies to the detriment of China’s national interest and security. Therefore, all the reasons that had made it attractive for China to get on the American hegemony ship is no longer there. On the contrary the reasons for China to get off it is increasing every day.
As the value of the RMB rises, the purchasing power of the American consumers will drop. In other words the Americans are becoming too poor to afford Chinese products. On the other hand, as Chinese people’s incomes rise in terms of yuan on the back of higher productivity they will have more purchasing power than the Americans. Or effectively speaking, the Chinese are getting richer while the Americans are getting poorer. As Chinese get richer they will have contempt for the poor Americans and be less inclined to give them concessions either economically or politically. And as China’s military power grows stronger, it will be less intimidated by a weaker America.
Therefore, it is logically obvious that as America becomes a burden economically and a threat militarily it is inevitable that China will get off the American hegemony ship and board its own ship and form its own international armada of friendly nations for common security, justice and prosperity.
12 guidelines for the rapid development of China’s economy:
1. China’s store of wealth should be in terms of the knowledge base of its people and in the productive facilities and infrastructures that are owned by the Chinese people;
2. Because of the first statement, China should implement specific programs to rapidly increase the education of its people especially in higher science and engineering education; special programs should be implemented to educate some 1 million science and engineering doctorates within 10 years and ultimately educate some 5 million science and engineering doctorates within 30 years. These special education programs should provide full scholarship to any qualifying student, especially those in the rural areas, who do not have the financial means to participate in the special advanced educational program;
3. Also because of the first statement, China should implement wide-ranging science and engineering R&D to advance China’s high tech knowledge so that it may quickly equal and ultimately surpass any foreign countries in terms of high tech products thus minimizing the need for China to import high tech products while at the same time enable Chinese companies to export high tech products of China’s own. Since the high tech products will be made with highly skilled and highly paid scientists and engineers and technicians, it will minimize the need to subsidize exports thus making foreign trade beneficial to China as a whole;
4. To raise the overall economic level of China, the rural farmers, that is the rural residents, must be relocated to the urban areas where they can be put to work more productively in manufacturing and service sectors;
5. Urbanization of the farmers or rural residents should be understood to be not the building of luxury office towers, luxury hotels, or luxury housings that only “rich” foreign investors with their over valued dollars or heavily subsidized “rich” Chinese manufacturers/exporters can afford. Urbanization should be understood to be putting the farmers or rural residents to work in the urban settings to build their own housings, manufacture their own consumer goods, and provide their own services. Only when urbanization can be done in a bootstrapping operation will it be self-sustaining and long lasting, unaffected by external forces or conditions such as recession or inflation or political turmoil in foreign countries;
6. With the understanding from the above, it is clear that China’s creation of wealth does not depend on foreign factors. Therefore, China should concentrate on the internal development and minimize the insidious “subsidized” export which is emasculating the Chinese economic development;
7. Specifically China should renegotiate the terms of its membership within the WTO or withdraw immediately from it. The terms under which China has joined it allow foreign companies to be very invasive of China’s domestic economy and by means of which the foreigners are taking over China’s economy and turning it into an economic colony. If China lost control of its economy, it will quickly lose control of its political sovereignty and military security as well;
8. China should ban all foreign direct investments (FDI) and allow foreign access to China’s market through joint ventures (JV) only which are predicated on real transfer of technologies and limited to 10% for the foreign partners. China must require all JV’s to have R&D to develop technologies independent of foreign partners. China should make a distinction between FDI which is foreign direct investment made by non-ethnic Chinese of foreign citizenship and OCI which is overseas Chinese investments made by ethnic-Chinese of foreign citizenship. Ethnic Chinese of foreign citizenship are no different from Chinese citizens who have never left China. They will not transfer their capital and accumulated profits overseas but will leave them inside China on a long term basis. Because of this there is no difference between OCI and domestic investments and should be encouraged by the Chinese government. Once China has reached full development economically and technologically then all protection can be removed and all foreigners can be allowed to have free trade with and free investment in China provided China can also have access to their markets on a full reciprocal manner;
9. China should trade by negotiating bilateral trade treaties and bilateral investment treaties that will allow China to implement an enlightened protective trade policies that would protect the fledgling high tech and farming industries while they consolidate and open those sectors that are already competitive to foreign competition on genuinely equal competitive rules;
10. China must continue to raise the value of the RMB steadily to full PPP value within 7 to 10 years. The convertibility of the RMB should be gradually liberalized depending on the state of China’s economic development. Ultimately when the Chinese economy has reached full development all but minimal control should be removed and the RMB should be fully convertible. At which time with the Chinese economy being bigger than all the rest of the world’s economies combined the RMB would become the most desired forex reserve for the world;
11. China must immediately implement an electric car transportation system based on batteries or fuel cells so as to make China totally free of oil imports within 10 years. China must also implement a program to build some 1,000 breeder reactor nuclear power plants as well as alternative renewable energy electricity generators within 30 years to supply electricity to the electric cars as well as to home and industrial uses to make China completely energy self-sufficient;
12. While the Chinese government must direct the overall development such as urbanization, education and science and technological R&D, etc., yet it must encourage the development of private enterprises so that eventually all the enterprises in China will be owned by the Chinese people. Only a privately owned economy will be motivated and dynamic to provide the most advanced goods and services.
With the implementation of the above policies, China’s economy will grow rapidly with rapid increases in the knowledge base of the Chinese people and the rapid increases in the productivity of the Chinese workers which will increase their incomes thus enabling them to afford the highest standard of living in the world. And with the largest economy with the most advanced technologies, China will be able to deploy the most powerful military to guarantee that the humiliation of the 19th and 20th centuries at the hands of the barbaric foreign aggressors will never be repeated again. With the traditional benevolence of the Chinese civilization, China will be able to lead the entire world to an unprecedented era of global peace and prosperity the like of which has never been seen before.