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China is Going to Get Wealthier: That’s a Good Thing
China may be having a hiccup in the economic rise it has been experiencing over the past decades. But should China wind up as comparable in economic status to the United States, it might be a good thing all around.
China has had it rough economically for a long time. It was defeated in the two Opium Wars with Great Britain and split between the Spheres of Influence of the Great Powers. The disastrous Taiping Rebellion further disgraced the Qing Empire in the Victorian Era. It was immediately followed by China’s humiliating loss of Korea to the Japanese Empire in the First Sino-Japanese War. This led to the collapse of the Qing Empire, the creation of a republic, and the outbreak of civil war between forces loyal to the Kuomintang-led government and forces loyal to the Communist Party of China. Meanwhile, decades-long Japanese imperial policies matured, prompting Japan to instigate the Second Sino-Japanese War in 1937 and hastening the onset of World War II. The Communists won the Civil War and Mao Zedong came to power, a series of catastrophes in itself.
This century-long period of political depravity clearly doomed the Chinese economy. But following Mao’s demise, China began to slowly to thaw. It began experimenting with free markets in such arenas as farming and businesses, leading to the expansion of its private sector economy. The Party didn’t interfere so long as it didn’t threaten the state sector. Ronald Coase and Ning Wang tell the story of China’s economic transformation in an essay based on their book, How China Became Capitalist.
http://www.solarfeeds.com/how-long-can-china-sustain-mega-growth/
The result of political stabilization and market reforms was an explosion of economic growth. China held a mere 2.42 percent of world GDP in 1980. Now it holds 17.24 percent.
This massive expansion caught the world off guard. Many in the United States have begun to think of China as our new rival.
Despite its recent stutter, China will continue to grow economically. I argue that a nationalist, tough-on-China stance predicated on fear of their vaulting economic growth would be the wrong approach.
There’s a widespread perception that China’s economic growth is bad for the United States, and amounts to them “winning” against us. But in truth, China is destined to be an economic superpower, and that’s fine. China is very large (slightly larger than the United States); it is very fertile, with the largest population in the world; and it is a fairly homogeneous, with an ancient history and culture. Together, this gives China the greatest economic potential of any country on the planet. China failed to expand until recently only because its potential was unmet. It was unmet because its political situation was dire. Recently, political stability and economic reforms have allowed China to begin reaching its potential.
Too often, Americans look at this growth and assume China will outpace the United States and make us poorer in the process. The reasoning is fallacious. It is grounded in the assumption that China’s success must come at the expense of the United States.
But it is simply foolish to assume that China won’t grow, given its huge economic potential. The failure to understand that some countries are destined to be large and powerful is one reason we were startled by Vladimir Putin: We saw the Soviet Union’s collapse and thought Russia would stay down. We failed to appreciate that it was still the biggest country in the world, with a population of nearly 150 million. If American leaders had accounted for this, they would have predicted that Russia would sooner or later become a major world player again — meeting its potential — and their brains wouldn’t have been so readily scrambled by Putin’s behavior.
China’s Economic Growth is Good for the United States
The argument that the success of a foreign nation can have a positive effect on every other nation contradicts the competitive, zero-sum view of most nationalists. But it’s just common sense.
When China grows, economically, it produces more. When it produces more, it can sell more goods abroad, specifically to the United States. Increased supply lowers prices, lowering our cost of living and reducing the amount of capital required to start certain businesses, too. This does not result in lost jobs. To the contrary, it frees up resources that previously would have been used to produce these goods and allows them to be spent on other industries, ones in which we have a competitive advantage. Increased Chinese production opens a new market from which Americans can choose to buy products. This means Americans can then use their saved resources to produce things Americans are better at producing than they are at producing the product they bought from China. Of course this helps China, too, because the same thing happens to them when we begin to produce in arenas where we have a comparative advantage and begin supplying more of China’s demand for those goods.
You understand this principle if you shop at a supermarket. You could produce your own silverware by going into the woods and spending a week sharpening stones. But the silverware manufacturer has a comparative advantage at producing silverware because he has a factory. So it’s better for you to concentrate on your own work, instead — your work being the area of your own competitive advantage. You trade your hour of work for the silverware — and this is a better deal for you than spending a week in the woods. The mechanism by which this happens is money and a vendor at the market, but it’s still the same concept when we trade overseas. You benefit if the silverware manufacturer gets rich by inventing a new machine that produces silverware twice as fast, because it means you can now buy the same silverware at a much lower cost. And more people will be able to afford silverware.
This means that China’s recent economic growth should be welcomed. Not only is it lifting more than a billion people out of poverty in East Asia, but it makes our lives better in the United States, too.
But What About their Military?
The only potential downside to China’s increased economic power it also funds the People’s Liberation Army. This raises the odds that they could be successfully aggressive. This threat is real. It is wise for the United States to remain in East and Southeast Asia to defend the region militarily.
But to maintain peace in the region, it might well be shrewd to encourage the transformation China’s seen since the death of Mao Zedong. China’s shift toward market freedom has led to massive economic growth. If China continues to discover the benefits of capitalism and continues to prosper as a result, history suggests that economic opening will result in political opening, too. Capitalist countries are much less likely to go to war with each other than socialist countries.
The best way to make this happen is to trade more with China without reducing our military defenses, and to accept all economic opportunities cordially. This will benefit both countries and make China less hostile to the West.
More Chinese prosperity means more Chinese liberty and freer Chinese markets. Free people and free markets mean a less hostile China, making Western fears of a Red Blitz across Asia less acute.
One such fear is that in 2047, Hong Kong’s “One Country, Two Systems” agreement with the mainland will expire, allowing the CCP to foist a communist system upon Hong Kong. But by that point, if the West is wise and economically open to China, we may well see Hong Kong conquer the mainland for capitalism instead.
Published in Foreign Policy, General
I am not prepared to take that as a given.
But (1) America had peace, (2) capitalism & free trade advanced, if not in these hellish places, & (3) liberal democracy & capitalist free trade made possible the insane diplomacy while your people was protected by non-capitalist armies willing to do & suffer horor!
Let’s also remember Eisenhower threatening to destroy France’s & England’s economies for daring to help the Jews fight against one of the original patrons of Muslim terrorism in ’56. The Obama of his time, except Mr. Obama is a gentleman. Would you say he was about as tough on communism when the Hungarians were getting slaughtered as Mr. Obama is on the Iranians?
I think you need to accept the destiny of Chinese greatness that’s great for America as your personal lord & savior-
Mr. Naudious,
my point is that you first exterminate your enemies, then turn their children to merchants so they don’t get arms. But whoever has arms has to be exterminated at one point or another. It’s only a matter of choosing when.
Trade will never overcome war. The ideology of liberalism–or classical liberalism or libertarianism or even the Whig theory of history!–only makes liberals blind to horror. Then the liberals fail; then other men must come, who walk enshrouded in murder & who are never loved or tolerated by liberals in peacetime. These other men must deal with the unpreparedness for war that is typical of liberalism. They speak to their men or their nations differently. It’s not money & trade with them; it’s blood, toil, tears, & sweat. It’s reminding people of honor that remembers infamy eternally.
Do you know how Patton thought he should wage war & how to persuade his men to obey? Do you know how Lord Nelson talked about the revelation of glory in serving his crown that gave his life meaning? Those men know more about human nature & politics than you do & there are able to deal with the consequences, if it happens that your predictions are as wrong as the previous ones. 1789 & 1914 were peak years of globalization. So was 1860! & it was tariff-loving Republicans who talked into hell & through it to the end-
Titus your arrogance and snide remarks aside you are just empirically wrong. It is not just America that enjoys peace but the entire world. There are fewer wars and fewer people dying in them than at any time in history and this is supported by empirical data.
http://www.slate.com/articles/news_and_politics/foreigners/2014/12/the_world_is_not_falling_apart_the_trend_lines_reveal_an_increasingly_peaceful.html
Mr. Lockett, I am answering talk about predicting the future & throwing away all fear or harshness that you call excellent–but think I am arrogant? Come on, now, am I really any more arrogant than you are?
As for the peace–the question is not whether there is now peace. The question is how was it bought & if it will last. There is always peace before war starts. Some wars are small; others are chaos gigantic. It’s hard to tell in advance. Maybe impossible. Which kind of man are you? Do you believe there will never again be war? Or that a great war is inevitable?
Er, how was Africa in any way contributory to protecting America during the Cold War?
In any case you are far too willing to ascribe blame to America for the proclivities of the locals, and are ignoring how most of the weaponry came right from the USSR.
A move which Eisenhower later regretted deeply.
You are engaging in a non-sequitir by comparing two entirely different situations.
Skip, sorry, I’m just writing faster than I can think! I mean, there was no free-trade thinking in the armies that protected America & saved civilization. You know how Patton talked. That’s how he thought armies work. Or remember MacArthur’s speech at West Point. Nothing about liberalism there!
That’s what I was thinking: Super-liberal–old & new liberal–policies decolonize with an enthusiasm describable only by an orgy of Beethoven’s Ode to joy music played double-quick while serious people have to deal with the consequences or just ignore them, however bloody it gets.
I do not blame America for doing the evil. I blame Americans of various kinds–in the ruling classes–for forcing Britain as FDR & others did. Coolidge is not innocent either. There’s lots of blame. But of course, there is more blame in Britain for its decolonization. & as for the main blame–that’s with the people woh actually plotted & executed untold murders. You’re right to add, lots of blame for Soviet abettors, too.
Thanks for the clarification. The decolonization push was, IMHO, an utter disaster for Africa. Foreseeable and foreseen.
Blame here, though, is thorny. FDR was clearly a chump when it came to Stalin. And Truman went on to compound the error in the rapid demob following WWII (I’m not sure he could, politically, done anything different though).
But then, defeating the Soviets right after defeating the Nazis would have cost an uncountable number of additional lives. We can only count our blessings that Stalin died when he did, as the intelligence revealed in the collapse of the USSR (as well as in Khrushchev’s own memoirs), Stalin was in the early stages of building up to fight WWIII, thereby forcing the confrontation we avoided from 1945-49.
Your complaint is that we have to wage economic warfare with China so they remain poor and destitute, just in case there is a war with China, so we can be sure we win. It doesn’t matter that it will hurt us economically, it doesn’t matter that it hurts them. But we must pretend that war is on the horizon, and be prepared; with no consideration of the probabilities of war, and the dynamics of those probabilities.
Should we end trade with the United Kingdom and prepare for an Atlantic war? They are still a theocratic monarchy. Sure, they’ve moved far to the democratic liberal side, BUT WHAT IF!?
What if the Monarchy reasserts itself! What if they use the power of Capitalism to reconquer the Empire!
I propose the best way to secure stability with the UK is to blockade the British Isles and make sure they don’t get any funny ideas about reclaiming France (they are probably still angry about the Hundred Years War).
If you disagree with me, naive fool, you fail to recognize the real danger that the United Kingdom could return to absolutism. And we will all be loyalists again!
And I assure you, blockading the British Isles will in no way make them more isolated from the rest of the world, and more open to military options and radicalism. They will just capitulate and become an American state.
And it doesn’t matter if it increases the chances of war.
It’s two of us, & one of us ain’t humble at all. Curses on all their liberal houses.
Curses on the mad hatters in London who were writing up constitutions more complicated than their own for peoples who had not the time to try them before new ones were made!
Curses upon the UN & Dag Hamarskjold for applauding themselves while MCing war declarations between tribes with a taste for blood.
Curses upon all the liberalism-is-the-future crowds. They could see injustice in South Africa & nowhere else!
I don’t think that Titus is necessarily arguing that point, more that increasing trade with China is no guarantee of their becoming more peaceful or democratic – there is a reasonably high probability that it will merely allow them to wage a more effective war.
It goes (for me anyway) to this. Yes, let us trade with them, but let us also be very wary. Your analogy to Britain doesn’t hold because Britain is not attempting to reclaim Normandy, or assert sovereignty over Calais under some ancient racial right to their old empire. China, OTOH, is making such claims at the expense of its own neighbors, and is able to make such claims because its military is now large and technologically modern. Its military is the way it is because of the money and technology China has received through trade (as well as subterfuge disguised as trade). China’s leadership is acting in a bellicose manner, Britain’s is not.
That’s the thing–could wiser men have done differently without forcing really big trouble in American politics? & FDR made our world! True, had terrible judgment–oops, there goes China!–but obviously got the big things right!
Or untrammeled nuclear war. No American could do or stomach that.
True. Nobody remembers how weak Americans seemed from Berlin to Cuba, encouraging recklessness…
It’s like you can read my mind, Skip, & leave out the evil stuff brewin’-
You neglect to ask WHY Great Britain isn’t making those claims. It is because Britain is Liberal, Capitalist, and as a result has a cordial, Free Trade relationship with France.
If France continued to antagonize Great Britain out of fear of a cross-channel invasion; and engaged in trade wars up to now. The UK probably wouldn’t have dropped its Normandy aspirations.
I should think the reasons are obvious:
@Naudious- “My point is that the Victorian Era could have been riddled with wars between Great Powers, the way the 20th Century had WW2, Korea, Vietnam, the Soviets invasions of Poland, Finland, Hungary and Afghanistan, the 2nd Sino-Japanese War; not to mention nationalist-led genocides, wars in Africa and conflicts between South-East Asian Communists. All of these wars in the 20th Century involved illiberal nations who did not trade with each-other.”
Afaik, pre-WWII France and Germany conducted a lot of trade, which obviously did not prevent WWII.
@Titus Tehera- While my views are much closer to yours than to Naudious’, I don’t think you strengthen your argument by making snide remarks. Please just use reason, facts, logic and history.
Mr. TeamAmerica, snide won over outraged. I think you will find enough arguments if that’s your preference–in fact, if you like to discuss the matter, now that I’m good & mad, we can have as reasonable a discussion as you like.
But I believe that people who make claims about what will be but refuse to discuss causation must face ridicule or silence & this was not deemed fit for silence. You might see how our basic humanity requires ridiculing someone who talks up free trade as an alternative to war & lack of free trade as a cause of war by mentioning trade barriers erected during The Great War! We do not usually talk about causation going back in time…
You & I may have a fundamental disagreement of our own: History is not to be used; one is supposed to learn, consider, discuss or debate events–but it is not to be picked up or put down, so to speak–it is not a dispassionate matter or an abstract speculation. That kind of thinking encourages people to cook up theories that conceal the real lives of real human beings, & the fate of nations, too. Is that humanity?
I would concede that it were better to be polite & dispassionate for the most part; I do not believe that is always the case. The best I’ve got, at any rate, is pretty good thinking with my jokes or indignation. It were all of politeness to say, not everyone loves that.
Actually, you had to say stupid things because your argument that we have to prevent anybody from improving their lives because there might be more violence is completely absurd. It is like the computer that is tasked with finding a way to secure world peace, and determines that exterminating humanity is the only way.
Too often people who don’t understand Economics and Human Action are left in charge of the engines of war, and left with their outdated assumptions of siege and plunder being inevitable, only know to resort to siege and plunder.
PS. I never said to lower our military defenses. This is a discussion of international trade, and of how the connections of trade lower the threat of war. I never said Trade will always create Peace, but if one thing is for certain, conflict will only create more conflict.
Explain to me how economic antagonism will create peace?
I did not advertise economic antagonism. Remind yourself you should be able to read what I say not what you fantasize: I said, war is inevitable. The real deal. We should be thinking–& Americans should be learning–about how best to prepare & prosecute it.
Conflict can generate conflict forever without me crying about it: It has not made America any the worse for fighting two World Wars & so civilization is still alive. But war sometimes breaks civilization. That is what worries me. I’d rather destroy China than let civilization be destroyed.
I cannot believe that conservatives have come around to the opinion that conflict generating conflict is somehow a shocker or to be avoided. I thought we were the people who know war always returns & there is no future of perpetual peace! Maybe that’s just me-
That’s overstating his point, and slightly misleading. Of whom are we speaking of enriching? China as a whole, or Chinese individuals? When it comes to doing business with or in China, that distinction is decidedly blurry. The regime maintains ownership stakes and control of practically any business of scale.
But you do imply that economic opening will lead to China becoming both more capitalist, and less war-like. The verdict is out on this.
And this is the source of contention throughout much of this post. Prosperity does not necessarily lead to freedom, usually it is the other way around. Wealth, if it mostly only accrues to the government and its scions, only encourages the bad behavior of the government.
It is poverty that leads people to follow demagogues like Hitler. It is prosperity that allows people to follow rational movements like Abolition. Free Trade make the people of China wealthier, and yes their government too. But their government is more likely to be calmer the richer it is. It is destitute nations like Nirth Korea and Iran that terrorize.
You start by saying you don’t support antagonizing, then go on to back up antagonist policies.
Your whole argument is that we should just prepare for some inevitable World War III at all costs. That’s not Conservatism, it’s Nihilism.
Disagree. The British had to be free themselves (though not yet fully enfranchised), then achieve prosperity, to even have a concept that slavery was antithetical to the concept of freedom, and only then to be willing to trade existing their immorally-gained slave wealth for the freedom of their slaves. They were free first, then prosperous, then sought abolition.
Abolition here came to blows before it was achieved.
As for Germany, it was not merely poverty, but enforced poverty (i.e., they were not free to seek prosperity for themselves) and the wounding of national pride that allowed Hitler to be heard. Had their economy been free (under a less punishing Versailles), they would have been prosperous as their industrial base was unmolested by the war.
They are destitute because they are not free.
I know you don’t mean it this way, but a rich Chinese government has little to do with rich Chinese citizens. Who is being enriched?
I have an objection: First, the people of Magna Carta were never really slaves. Secondly, the common law really does mean people are to some extent self-governing, therefore free. That was only possible in a limited way under monarchy, but it is something most other European nations sorely lacked or even now lack…
Because constitutional equality ran up against political equality at the time. It was democrat vs. democrat pure hate!
Before Germany was poor & humiliated, it was still warlike & full of dark passions. The historicism that infected her educated classes is really very similar to the one infecting yours–but in a regime with lots of inequalities exaggerated by habits of obedience & military authority. It’s easy to go from we’ll get a great future through war to we have no future but war–it’s what you get for betting on the future & losing. Nationalism is the reverse of nation: Like History is the reverse of history: All about the future, not the past!
I’m not attempting to go all the way back to Magna Carta. England of 1600 was closer to the mark, or England of 1700. By that point you could talk of a free people.
And the monarchy wasn’t brought to heel really until Civil War and the “Glorious Revolution”.
Agreed.
The British people never really had one event them liberated them. But I think you would hardly call them “free” by modern standards in 1800. The upper classes were becoming enlightened and gentler, but the first inclinations of liberty and political participation of the lower classes didn’t come until deep in the Victorian Era, when Disraeli and Gladestone began competing for better rights enhancement. However, the push for free trade began in 1776 with Adam Smith. The people didn’t get significant political rights until well after the Corn Laws were repealed.
Yes: Chinese Wage are raising as well:
http://www.tradingeconomics.com/china/wages
Understand my whole thesis here is that Freedom –> Wealth –> Freedom; and that Free Trade generates more wealth, which generates more freedom. Of course you can say that Free Trade didn’t stop World War I; but my thesis is not that Free Trade creates world peace, but rather more peace than if trade is not Free.
It would be one thing if China were marching into other countries, or hardening its grip on power, or nationalizing the economy. But rather it is the Chinese Government itself which is adopting these Market changes, and our response to positive developments shouldn’t be to strike them down for it. But rather to cooperate with their new private sector and growth.