Rise of China: Views from an Optimist and a Skeptic

The rise of China from a developing country to a global economic, political, and military power is one of the most consequential geopolitical phenomena of the past century. But will the rise of China continue? And should it? Joe Schuman and Felipe Lozano provide differing perspectives on the the issue as part of our Political Pen Pals debate series. 

Felipe —

I am excited to continue our ongoing conversation on China. The rise (return, really) of China as a great power is without a doubt one of the most important geopolitical phenomena of our lifetime. In this essay, I will attempt to outline reasons for my China “skepticism.”

As you already know, I am a China hawk. I recognize that China is a regional power in Asia politically and militarily; that their economy is currently larger than that of the United States at purchasing power parity and on pace to surpass our economy in real terms; and that they have become a leader in many emerging technology areas such as artificial intelligence, autonomy, and quantum computing to name a few. Nonetheless, I believe the China bubble will pop. And indeed, I want it to.

At its core, this is a debate of political philosophy. The rise of China represents the greatest threat to the Enlightenment values since the Soviet Union. Values like individual liberty and civil rights that we take for granted in the United States, such as the freedoms of speech and assembly, freedoms of the press and to petition the government, and freedoms of privacy and religion. Values such as rule of law, which prevents the artbitrary exercise of power and under which the government fears the people, as opposed to rule by law, where the people fear the government. And values such as representative government, the basic but revolutionary idea that a country belongs to its people; that the government exists to serve them, not the other way around. These Enlightenment values and the systems of government and economics that embody them—democracy and capitalism—have given birth to an era of unprecedented liberty, prosperity, and security. They are ideas, however imperfect at times, that must be defended.

The Chinese Communist Party (CCP) represents the antithesis of the Enlightenment values. There is no such thing as civil liberties in China. There is no freedom of speech. If you speak out against the government, you can be arrested. There will be no trial. Nor is there rule of law. The highest law in China is the Chairman of the Chinese Communist Party. Term limits? No problem. Xi Jinping can single handedly change the Constitution. Now he is president for life. And there are no elections in China, so forget representative government. I could go on. The list is too long, but here are some of their worst transgressions:

Economically

• China’s booming technology sector has been underwritten by economic espionage and theft, including forced technology transfers, predatory investment and acquisition, and cyber theft. Estimates place the costs to the United States at $200-600 billion annually.
• China’s One Belt One Road initiative, aimed to better connect China to Europe and Africa, has resulted in extensive “debt trap diplomacy,” extending loans for infrastructure at exorbitant prices and at usurious rates. Countries like Malaysia, Sri Lanka, Pakistan and Laos are now facing crippling debt to China after various infrastructure projects, many of which remain unfinished due to their inability to pay. Montenegro is facing debts of more than 80% their GDP. Sri Lanka could not pay their debts and has now been forced to lease a port to China for 99 years. The list of “imperialism with Chinese characteristics” goes on.

Politically

• China’s closest allies are a coterie of rogue states including Russia, Pakistan, Venezuela, and Iran. China is North Korea’s closest ally, a key source of trade and aid to the country, and is most responsible for the continuation of the murderous and tyrannical regime in Pyongyang.
• China continues to pursue an expansionist policy in the South China Sea, disregarding international maritime laws by manufacturing “islands” on atolls and making maritime claims in the water around these islands, in an attempt to gain fishing rights, access to resources such as crude oil and natural gas, as well as control of strategic shipping lanes.
• China continues to discriminate against the Muslim Uighur population, including the alleged detention and “reeducation” of up to one million Uighurs right now as we speak.
• China punishes Buddism in Tibet, resulting in over 130 self immolations in protest over the past four years. In an effort to stamp out these pesky dissidents, China claims to have the ability to select the next incarnation of the Dalai Lama after Tenzin Gyatso dies, contrary to Buddhist tradition and desires.

Socially

• Civil rights do not exist in China. Dissidents are arrested. The freedom of speech is curtailed. There is no free press. The internet is censored. Searches about the Tiananmen Square protests are blocked. Pro-Democracy activism is blocked. Even Winnie the Pooh is blocked because the holy chairman Xi happens to bear a slight resemblance to the character.
• China has developed an Orwellian social credit score which uses mass surveillance (including facial recognition in street cameras) to judge citizens on financial behaviors, such as “frivolous spending,” and social behaviors, such as smoking in smoke-free zones. Punishments for poor scores can result in loss of employment and travel restrictions. If you walk your dog off leash, your pet could be confiscated.

The list of transgressions is much, much longer than this. I am curious to learn how you can reconcile your China optimism with what I consider to be egregious affronts to the basic humanity of the Chinese citizens. (I would note, here, that while I wish the Chinese Communist Party ill, I have nothing against the Chinese people. Indeed, it is because of my desire to see them live freely that I am so hawkish towards the CCP.)

Based on the above, it should hopefully be clear why I am a cynic. But why am I a skeptic? There are, again, a handful of reasons. I am confident that the Chinese economic miracle is going to end. No country can sustain indefinite GDP growth at 5-10% (if the number that are put out by Chinese state media are to be trusted, which they shouldn’t be). Debt pressures, along with an aging population with over 300 million retirees (and a dependency ratio (ie. the number of citizens over 65 divided by the total working population) that is estimated to jump from 14% in 2015 to 44% in 2050 (approximately one retiree per two workers), will exacerbate this inevitability. China is transitioning from a developing to a developed country and economic growth will slow as a result. When this happens, I suspect that the citizens will be less happy with the authoritarian regime they live under (which they already aren’t happy with now). Francis Fukuyama showed convincingly in his book Political Order and Political Decay how economic growth leads to social mobilization and finally to political development, including accountability and rule of law. In this sense, Chinese economic growth may actually be moving the country closer to democracy, although there is a long way to go.

With all this being said, I think there is a more fundamental reason for my China skepticism. It is because I believe that Communism is a fundamentally flawed system. The only correct unit of analysis of a governing system is the individual. Democracy and capitalism recognize this truth and they have unleashed the power and creativity of individuals in governance and the economy to produce a freer, safer, and richer world than in any other time in human history. Communism, including Communism with “Chinese Characteristics,” is destined to fail like every time this discredited system of governance has been tried in the past (Soviet Union, Yugoslavia, Cuba, North Korea, etc.). Communism appears authoritative on the outside but it is inherently fragile. Once the cracks show, the wall falls quickly. Democracy and capitalism are anti-fragile, to borrow a phrase from Nicholas Nassim Taleb. Our mistakes are public. Our processes are hard to watch at times. The people speak out and protest against the government to redress their grievances. The economy sputters. But those stressors and shocks produce, in the long run, resilience and robustness. And why? Because they recognize the inherent value and rights of the individual.

I could say much more, but I will leave it here for now. Over to you, sir!

Joe,

I am excited to continue our discussion. Let me begin by acknowledging that we start on common ground as I agree with you that China’s role in the modern world is a matter of utmost importance. What we are essentially debating is (1) will China succeed and (2) should China succeed.

My understanding of your position is that you would answer “no” to both of these questions,  anchored in the idea that China’s approach is inherently flawed because it doesn’t “recognize the inherent value and rights of the individual”. You think that China will not succeed because its economy is fragile and, when it takes a hit, the current system will come under withering scrutiny. And that China should not succeed because it doesn’t play by fair rules (economic espionage and debt traps), enables situations that violate international law (North Korea, South China Sea, Muslim Uighurs, Tibet), and acts in an authoritarian manner towards its citizens (ignoring civil rights, social credit score). In short, the Chinese system today has a weak foundation and is not a role model for how the world should evolve.

This is obviously a very complex conversation. In my view, nations and their systems of government are ever-changing “package deals” and few (if any) are considered ideal. You and I have our biases inherent to our personal experiences as well as our unique cultural and political lenses. And it should be acknowledged that neither of us are Chinese or even of Asian descent and have been raised in a primarily Western world. This means that we have many blind spots when it comes to analyzing China (even if I have lived in Shanghai for a few months), its motivations, and its actions. Regardless, I think this is a fruitful conversation. As we agreed, this is a matter of utmost importance.

So, to the first question: will the current Chinese system succeed? To answer this, I would like to use the lens of a cost-benefit analysis. What are the costs of the current political system? You mention many, ranging from things like the social credit score to reduced information flow. Fair enough. But there are benefits. Over the past ~30 years, the Chinese state has raised more than 800 million people out of poverty and catapulted Chinese companies onto the international stage. The social contract that exists today is as follows: If you follow a set of rules, we will continue to provide increasing prosperity. I believe this social contract will continue to hold.

China is a civilization state, which means that relative to the Western world Chinese society focuses less on individualism and more on unity. As a result, it is not so averse to government engagement in “personal” affairs. This means that the “cost” that the Chinese people bear may be lower than the cost we perceive that they are taking on. An example of this is the social credit score system. Your view reflects the portrayal of many in the Western world, but a more nuanced look from both American and Chinese media outlets provides a view into the “on-the-ground” reality of a complex and contextual endeavor to use technology to continue the Chinese tradition of promoting “good moral behavior”. Other “costs” the West perceives are massively misrepresented or misunderstood. Many people like to highlight the fact that “Google and Facebook are not available in China” as apparent affronts to technology access. However, these critics fail to mention the fact that Baidu and WeChat exist (and that WeChat is arguably a much more capable application than anything present in the Western world). Yes, there are individuals and communities who incur a much larger “cost” than the average Chinese citizen but in the big picture the cost on the Chinese people, as defined by them, is not nearly as large as what we make it out to be in the West.

I agree that China’s economic miracle is overdue for turbulence, which could come from many different factors, some of which you have highlighted. However, I think that these challenges will be weathered. Despite potential turbulence, China has all the ingredients for a continued economic boom. It is the manufacturing hub of the world, a leader in key areas of the “fourth industrial revolution”, and has significant investments and widespread collaborations in the two global regions with the highest growth potential (South Asia and Africa). Its political structure enables it to focus on making targeted investments at scale and implement initiatives with incredible speed (see minutes 7:30-9:30 of this video to get a small taste). You comment that a Communist system will have difficulty creating such a dynamic and innovative economy. In response, I would recommend this talk that emphasizes how the Chinese governance structure is actually both meritocratic and decentralized, allowing it to capture the benefits usually associated only with the incentives inherent to American-style capitalism. 

Although we disagree, let us assume that China will succeed for the sake of discussion. Is that a good thing? In other words: should China succeed? I think it should. While the Chinese “package deal” is not perfect China is, in my opinion, the only country with the influence, capability, and coordination required to make progress on huge intergenerational problems at the speed and scale necessary. (I am primarily thinking of climate change here, an issue which the US has failed miserably in addressing despite being the world’s superpower for over half a century). I believe that a multi-polar world is more effective than a uni-polar world in the long-term as long as peaceful co-existence is maintained. It creates international competition that incentivizes the public and private sectors to work together to drive innovation while also fostering diversity of thought through global interactions. China will continue to lift up the tide of Asia, a region that represents ~60% of the world population whose values, religions, cultures, cuisines, etc. have been severely under-represented on the global stage. Overall, China will play a leading and necessary role in creating a more sustainable, more innovative, and more empathetic multi-generational future.

While I agree with some of your criticisms of certain Chinese policies, I believe that these situations will improve over time. While the Chinese optimization for political stability and social “unity” is not perfect, I agree with Francis Fukuyama and thus think that as China becomes a more prosperous nation it should also adapt accordingly, in its own Chinese way, to the byproducts of its success. The journey of China becoming a role model on the world stage will asymptotically approach an end state where a society and its government live in increasing harmony (the former director of international communications for Baidu reaches a similar conclusion in this very thorough Quora post). Skeptics may frame this as a debate of whether allowing today’s China to rise is worth the risk of certain Chinese policies taking hold on a larger scale, but I simply do not think that is the case.

Just to be clear, I am not trying to justify any controversial Chinese actions or policies. However, we have to keep in mind that this “should” question is a privileged question for those in a position of power that is usually assumed to have “the right perspective”. Individuals asking this question must first understand and accept their own nation’s faults. Given that, I must highlight that there is a significant level of hypocrisy that cannot be ignored in these “Westerners judge China” discussions. From the era of imperialism, during which opioum was explicitly provided to China as a way to equilibrate a trade imbalance through direct or indirect involvement in 41 different government overthrows in Latin America in the 1900s to the Japanese internment camps during World War II significantly restricting liberties to 117,000 Americans, the United States has its own muddied history. Even today, with our current administration, our political gridlock, inability to address intergenerational challenges like climate change, and systemic racism, sexism, and economic inequality, we must ask the same “should” question of ourselves: should we wish for the US to succeed given its path today? I am not sure I can give a resounding yes.

I will close my response here. I believe that China will and should succeed. It is a nation poised for further economic prosperity and prominence that I believe will uphold its social contract to the Chinese people. It is a country that, if it succeeds, will play a significant role in advancing a better future for generations to come. Its “package deal” is not perfect but I trust that it will evolve positively as it continues to prosper. Despite the many shortcomings that the US has when we look at the arc of history, I agree with many people that it has been a very positive player on the world stage. And I believe that China should and will have a similar impact, in its own Chinese way.

Felipe Lozano Landinez is a consultant at Bain & Co based in San Francisco and a 2016 MIT alum most interested in the future of cities and geopolitics. His favorite activity is eating while being in a new city, which he did profusely while spending a summer in Shanghai. All views are expressed are those of the author and the author alone.

Joseph Schuman

Editor-in-Chief at Divided We Fall

Joe Schuman is the Founder and Editor-in-Chief of Divided We Fall. He works to set the vision of the organization and to build the team to meet that mission. Joe works as a civilian for the Department of Defense promoting innovation and emerging technology. Joe is also an Officer in the Air National Guard and a graduate of the Massachusetts Institute of Technology. In his spare time he can be found reading non-fiction, playing piano, and running triathlons.

Felipe Lozano