Can Semi-Capitalist China Supplant Semi-Socialist America?

Send to Kindle

By Walter Donway

February 12, 2018



Xi Jinping is a triumphantly successful power seeker. He is President of the People’s Republic of China; but he also is head of  the Communist Party of China (the only political party, of course, allowed to “represent” 1.5 billion Chinese), and Chairman of the Central Military Commission (the country’s armed forces). He is sometimes referred to in China as “paramount leader,” and, in 2016, the party officially gave him the title of “core” leader. (Translation: we like to say we have a “collective” leadership, but it’s really a dictatorship.)

Xi rose to power as absolute as any since Mao Zedong—the totalitarian dictator who led the Chinese communist revolution that killed some 100 million of his countrymen–out of personal tragedy and hardship. Born a Chinese communist “princeling,” son of a close comrade of Mao, his family was caught up in one of the murderous, paranoid Maoist purges. His father was imprisoned, and the boy spent years in forced “agricultural work” and outright labor camps, where his sister, in despair, hanged herself.

Xi survived by becoming the “reddest red,” the ultimate comrade, rising over decades through the world’s largest totalitarian bureaucracy to achieve, after a penultimate skirmish that sidelined his chief rivals, the supreme leadership. Since 2012, Xi Jinping has been for America and the world the only man to deal with in China.


The Thucydides Trap

Xi is the star of a recent “must read” book on geopolitics and America’s place—now and in the future—in the world. Destined for War: Can America and China Escape Thucydides’s Trap by Harvard University Professor Graham Allison confronts the compelling evidence that the Chinese economic juggernaut is rolling over America toward world supremacy.

Xi is the star of a recent “must read” book on geopolitics and America’s place—now and in the future—in the world. Destined for War: Can America and China Escape Thucydides’s Trap by Harvard University Professor Graham Allison (for many years, dean of Harvard’s Kennedy School of Government) confronts the compelling evidence that the Chinese economic juggernaut is rolling over America toward world supremacy. Military supremacy is driven by economic supremacy. Cultural supremacy takes longer, but it, too, comes.

If there is a single descriptor for Xi’s vision, passion, and policy it is “Make China Great Again.” In the drive for acknowledgment of its geopolitical and cultural supremacy, of course, China—and Xi—come up against the United States. America, today, has written the rules of the post-WWII international order and Americans bear the burden of taxation and massive debt incurred in attempting to enforce them. Destined for War makes a case that Xi and his party are focused not on worldwide Marxist-Leninist revolution, as was Soviet Union before and during the Cold War, but on how a 5,000-year-old civilization, the “Middle Kingdom” literally below heaven but above earth—can reclaim its historic hegemony as “the son of Heaven”—above all other, tributary nations.

The healthy response of the American sense of life might be a rude raspberry of derision–if the recent historical record were not so overwhelming. The Chinese economy in 2014 surpassed the U.S. economy in size as measured by purchasing power parity; China’s growth rate far exceeds that of America’s and the gap is widening; by 2040, China’s economy will be three times as large as America’s. Reading the roster of China’s economic achievements has the “wow” impact Ripley’s Believe It or Not. In a few decades, China has surpassed America both in the manufacture and purchase of automobiles. China’s increment of growth every two years since 2008 has been larger than the entire economy of India. It consumes more energy than any other nation. It is the largest producer of ships, steel, aluminum, textiles, computers… Since the 2008 financial crisis, China has been primary engine of world economic growth. Between 1980 and 2015, China’s trade with the outside world increased one hundredfold. In just three years, China produced and used more cement than the United States did in the entire Twentieth Century. Its road system is now larger than America’s. So is its high-speed train system. For chapter and verse of comparison and its basis check out Prof. Allison’s book.

I advocate the superiority of laissez faire capitalism, the market economy, the irresistible productive power of the free mind in a free market.  I am aware that claims about the communist centralized economy overtaking America release a storm of critical protest. But the reality of China’s economic productivity rests not on one or two statistics but on observation over decades. Check out Destined for War for the statistics, but for now recall that China became the overwhelmingly largest purchaser of trillions of U.S debt—our biggest creditor. Contemplate the “Made in China” labels are ubiquitous in American stores. Read repeated reports of Chinese skyscrapers built in a few weeks, bridges and high-speed train systems completed in timeframes that make American infrastructure projects seem to crawl.

These are not the breathless rumors that leaked out of Soviet Russia in the 1930’s and 1940’s. Like it or not, China is an economic colossus on the international landscape.

Prof. Allison’s book frames this in terms of a Kennedy School research project on “the Thucydides Trap,” named for the dilemma chronicled by the ancient Greek historian in his history of the Peloponnesian Wars among Greek city states. As Athens rose to hegemony among the states, the formerly supreme power, Sparta, was engulfed in a great debate: How to respond to the power rising to displace it? In the end, despite all the efforts and warnings of diplomats about the stakes and odds of victory, Spartan fears and political calculations led to war. In this case, Athens was defeated and never recovered. Greece itself was to be conquered and incorporated into the Roman empire.

The “Thucydides Project” has delved into cases from the past five centuries where a rising world power at first threatened the existing power—and either was successful or repulsed.  Of 16 cases, 12 led to war; four were difficult, stressed, but ultimately peaceful transitions.

America and China today are in the “Thucydides Trap.” A rising China is economically larger than America and able to devote to its military build-up the kind of decisive investment that has made America paramount in the post-WWII world. Will America, now riveted upon the slogan “Make America Great Again,” resolve the mounting conflict with China without resorting to war, likely to be with nuclear weapons that both nations have created as the ultimate guarantors that they shall prevail?

Destined for War presents and analyzes all the options for American policy and strategy–and all the hideous calculus of nuclear powers facing off. To his credit, Prof. Allison, in weighing American strategies for containing a regnant China, does not omit the option of an American attack on the morally and politically indefensible Chinese dictatorship. He asks by what conceivable right does the Communist Party keep 1.5 billion Chinese subjected to the rule of the gun, the fist, the secret police, the forced labor camps? By what right or morality does a communist elite rule without the consent, choice, or political opposition of the Chinese people? The Communist Party of China has no legitimacy by the standard of human rights of the freely expressed will of the Chinese people.
Are Chinese incapable of living under freedom and democracy?  Well, some 23 million in Taiwan, today, who escaped the soul-crushing horror of Mao’s communist revolution, have created a free, vibrant republic, liberal and prosperous. The mainland communist Chinese want nothing more than to incorporate them into communist China.

Pinned down by the vast “security” apparatus that protects one-party rule, 1.5 billion Chinese send their sons and daughters to schools for ideological indoctrination in Marxist dogma. But Xi Jinping and his wife sent their only child, a daughter, to study at Harvard University. She graduated in 2014. Some 800,000 young Communist Party-connected Chinese study abroad, including 300,000 in America. Xi himself, during his education, spent some time living with a family in Iowa; on his most recent visit, he went to say hello to them.


Well … Why NOT China?

So, what is wrong with hard-working China, after decades of poverty, surging toward a prosperity that is lifting literally a billion Chinese out of grinding poverty into the middleclass? Especially if China leaves behind Marxist-Leninist ideology for a Chinese nationalism evolved over millennia, what is wrong with China displacing America as the new world superpower? No empire’s or nation’s hegemony lasts forever. If China is richer, even richer per capita—and it far from that—how does that hurt America?

So, what is wrong with hard-working China, after decades of poverty, surging toward a prosperity that is lifting literally a billion Chinese out of grinding poverty into the middleclass? Especially if China leaves behind Marxist-Leninist ideology for a Chinese nationalism evolved over millennia, what is wrong with China displacing America as the new world superpower? No empire’s or nation’s hegemony lasts forever. If China is richer, even richer per capita—and it far from that—how does that hurt America?

In trying to address this question, The Thucydides Trap may be at its best. Prof. Allison’s China network—academic, governmental, and personal (all those Chinese students with whom he keeps in touch)—is incomparable. It includes, for example, a long relationship with Lee Kuna Yew, the Chinese founding father of the economic miracle of modern Singapore, who was for decades the mentor of Xi Jinping as he rose to power. Through Lee, Prof. Allison takes us into the mind of Xi Jinping and the deepest sense of life—implicit worldview and philosophical premises—of China.  The contrast with the America sense of life brings us at last to the frontline of the emerging struggle with China.

Nothing, writes Prof. Allison, expresses the Chinese view of the individual’s role more aptly than the phrase: “Know your place.” That is the culture of deference to status that caused the Chinese to demand of Nineteenth Century Western visitors that they bow their foreheads to the floor (“kowtow”) nine times before the emperor, the “Son of Heaven.” This was the standard, accepted view in China at a time when millions of immigrants to America were brashly, assertively claiming their place in the sun, “as good as anyone else.”

For millennia, the Han Chinese viewed themselves as civilization; all else was barbarian. China expected and received, as its due, tribute from all other nations in its orbit. When events of the late Nineteenth and early Twentieth Century displaced the three-century-old Qing dynasty, and China was “opened” at gunpoint, forced to accept the opium trade, foreign colonies, and Christian missionaries—and then invaded and occupied by the Japanese with such horrors as the rape of Nanking—it became a nation longing to regain “its place,” to “make China great again,” and avenge itself on its oppressors. The Communist Revolution seemed to offer that; the world again feared (and respected?) China. During the Nixon administration, America arrived to romance China into a relationship that could offset the military power of Soviet Russia.

Almost certainly, its deep culture and sense of national destiny enabled China to assert a Chinese variation of communism and avoid drowning with the anchor of socialism around its neck. The Chinese “variant” on Marxism-Leninism is to free capital, entrepreneurship, trade, and investment; there are more billionaires being created in China today than anywhere in the world.

And so, a culture of “status,” racial superiority, conformity to the collective, and conviction of its historical destiny to rule and guide all nations rises to economic superiority in a world America has dominated.

Despite their many differences, the United States and China are alike in at least one respect: both have extreme superiority complexes. Each sees itself as exceptional—literally without peers. While Muhammad Ali’s boast “I am the greatest” rightly captures American swagger, China’s conception of itself as the unique link between humans and the heavens might be even more immodest. (Page 140)

Two nuclear powers, now economically richly interdependent, and cordial in their relationship, are in the Thucydides trap. Is America going to accept gracefully the new international hegemon?  Accept the Renminbi as the world unit of trade; accept a dominant Chinese financial center and stock markets; accept Chinese as the international language of trade and diplomacy; accept international organizations originated by China to manage international investment; accept Chinese alliances with other nations to ensure Chinese security and dominance; accept the spread of Chinese culture through education, cinema, and cultural programs as American culture once spread? With the caveat that all of this arises from a profoundly different philosophical worldview than America’s? This is not America gradually displacing Great Britain at the close of the Nineteenth Century—a potential Thucydides trap gracefully managed by Britain not least because, like sons, Americans carried forward British ideas, values, culture, and language?


Could it really happen?

Scenarios today in which emboldened China scrapes up against America’s assertion of power have potential for escalating into warfare, including nuclear war, even though neither country wants it. These potential ignition, acceleration, and explosion points include competing claims for the South China Sea, disputed views of freedom of the seas off China, periodic cyber-attacks, China’s huge leverage in the U.S. debt market, increasingly face-to-face military competition, China’s claim to Taiwan as part of China, China’s guarantees to Hong Kong… Prof. Allison has had a role in every recent U.S. administration as such “scenarios” have been worked out in fatal detail.

Xi Jinping constantly reminds his colleagues that the future of their party—acceptance of the legitimacy of perpetual rule—depends upon the continued massive movement from poverty to prosperity, but, at least as much, in giving the Chinese at taking their rightful place in the world after a century of “humiliation.” China cannot back down (or at least be perceived to back down) when its “rightful place” is challenged. Likewise, American public opinion punishes politicians who permit perceived insults to America’s special role in the international order and, it appears, reward politicians who vow to “Make America Great Again.”

And yet, if you view, as I do, recognition of human rights (including property), constitutionally limited government power, the rule of objective law, and free minds in free markets as the royal road—indeed, the only road—to the wealth of nations, then you are muttering: there’s something wrong with this whole picture.


Can America Be Displaced? No, But Perhaps “America” Can

Although Prof. Allison is systematically open minded and broad in viewing competing perspectives, he misses—I believe never notices—that today “America” is not America. The core historical reality is that American laissez faire capitalism for a century has been in the tightening vice of the interventionist-welfare state. Pervasive regulation, engulfing taxation and debt, gross disincentives to work, a judicial system shaped by rent-seeking lawyers, crushing environmental controls, government-dominated schools, and vast lobbies of crony capitalists profiting from government legislation and the largesse of the Federal Reserve have transformed America. It is now a socialist economy not on the communistic model (public ownership of the means of production) but the German national socialist model of pervasive government control and direction of a nominally private economy. I advance this thesis in my book, Not Half Free: The Myth that America Is Capitalist.

If the quasi-market economy of “socialist” China is rolling over the quasi-socialist economy of “capitalist” America, then what we observe makes more sense. I did not expect a Harvard professor of public policy to call out Liberal-Leftist ideology as the chronic debilitating illness of the U.S. economy. He refers to the 2008 financial panic and stock-market crash as though they were a kind of natural phenomenon. During the long, painful recovery, China sustained a high rate of economic growth while America underwent a depression.  Prof. Allison does not ask why; he seems to imply that the Chinese economy is just stronger. There is no mention that the U.S. Federal Reserve’s decades of monetary inflation enabled the gigantic bubble by canceling out the self-regulating mechanisms of free markets until it was too late to avoid catastrophe.

Even so, there remains a yawning gap between America and China in the freedom to think, intellectually explore any question, disagree, challenge any dogma, innovate in any field, express any ideas in art and literature, and seek radically different kinds of education and ideas at a robust diversity of institutions. In China, the police-state apparatus is the final “authority” in whole disciplines and fields of thought such as political science, philosophy and religion, government affairs, economics, communications, and arts and literature—to name but a few. The inquiring mind does not function only in prescribed areas, “free” to think about engineering but never philosophy, free to challenge ideas for manufacturing cars but never ideas about the individual’s role vis-a-vis government. Censorship short-circuits the free flow of discovery.

Perhaps that is why China’s “economic miracle” rests on literally trillions of dollars of copied, expropriated, stolen, and espionage-obtained American patents, technology, and processes. President Trump has called it “history’s greatest rip-off” and few will dispute that. Prof. Allison does not ignore the dynamic and neither does Xi Jinping, who has many government programs for encouraging innovation in the right areas. That not only misses the problem; it is the problem.

We should not be surprised. Xi warns his colleagues of the historical lesson—and nightmare—they must not forget. Soviet Mikhail Gorbachev declared both reform of the party (“perestroika”) and open discussion of policy (“glasnost”). Incredibly, he told his countrymen “Don’t be afraid of KGB [secret police]” any longer. To China’s leaders, today, that is proof of insanity.


Competing for Capitalism and Freedom

Let me propose a new perspective. When nations compete for economic dominance, the nation where the human mind is freest in all spheres of life will prevail. The requirements of that freedom—strictly limited government, absolute property rights, absence of regulation, minimal taxation, and consistent rule of law—are everywhere under attack.

If competing nations both accept those principles, then the importance of who is #1 will be greatly reduced. No one’s personal freedom will be threatened; no cultural coercion will be in the offing; and the autonomous individual–not any race, ethnicity, or other collective—will be at center stage in both countries. I am born in Chicago, go to college in Shanghai, marry in Hong Kong, work in New York City, and retire in Yunnan Province. I glory in the diversity of particularity because the fundamentals required for human happiness are the same everywhere.

I do not mean that Prof. Allison downplays the priority for competing nations of “focusing on the domestic” to resolve internal problems and so release new energy, but he lists as America’s foremost problem distrust of politicians and inability of politicians to cooperate in passing the legislation we need. Americans have come to distrust politicians because government is doing all the wrong things, because increasing government power is now their sole focus, and economic survival has come to depend upon clout in Washington, DC, and state capitals. To quote former Sen. Barry Goldwater: “I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size.”

The utopia of the untrammeled mind and spirit was the liberal dream until, in the Twentieth Century, “liberalism” came to mean government planning of the interventionist-welfare state.

The utopia of the untrammeled mind and spirit was the liberal dream until, in the Twentieth Century, “liberalism” came to mean government planning of the interventionist-welfare state. That change signaled America’s decline into economic stagnation, usurpation of property rights by regulation and taxation, the squandering of capital in endless altruistic welfare schemes, American wealth sacrificed worldwide for altruistic projects, and supremacy of lobbies seeking contracts and competitive advantage. That is the unutterably squalid Washington we see, today.

If Americans who grew up in the 1950’s find it inconceivable that communist China is supplanting us on the world stage, well, we just haven’t grasped that America is no longer America. True, a certain awareness is evident in the election of Donald Trump, with his vow to “Make America Great Again,” but much of that impulse is directed at issues such as immigration and internal displacement of Americans by the politics of “identity.” Certainly, Pres. Trump ran on proposals to get government out of our lives, but they are not front and center. Neither President Trump nor his supporters, seem to understand the philosophical fundamentals of America’s greatness.

If we as a nation do not achieve that understanding in time, the “Thucydides Trap” awaits us with the options of nuclear war or the “Chinese Century.”



(Visited 338 times, 1 visits today)
  • Ray

    Excellent piece, Walter. I’d like to add a few points.

    1. If China continues on its current path, it may become the most dominant world economic and military power while America remains the most dominant cultural power, because it can remain the center of arts and literature, and science. If this happens, it will be a just outcome in a way. Each country will be most dominant in the spheres in which its most free.

    2. Immigration can be an important part of America remaining strong on the world stage. Immigration has the potential to increase our GDP significantly and quickly. But of course it has to be the right kind of immigration. And it requires a renewed focus on the ideals of America, so that immigrants can be absorbed into the culture.

  • Francis Paine

    I agree, Walter, that this is an excellent piece. I have not yet read the book that inspired it, but I do have a few other points about China. I have been following China since I was a college student (“Studies of the Communist System” at Stanford) in the 1960s, and among other things since, was for several years responsible for oversight of Chinese banks at the Federal Reserve Bank of New York.

    Here are my points. First, China’s financial system is a disaster, which means that the internally generated capital required for indefinitely continued growth is not there. Presently, its growth depends on manufacturing for export, and this can continue only as long as it can keep manufacturing costs more than competitive. Already, a good deal of manufacturing is beginning to move to other countries such as Vietnam and Indonesia. Do you remember when Japan was a manufacturing leader because of its low labor costs? Not so anymore, and China is on the way there eventually. Its explosive growth cannot continue forever without capital.

    My second point is both economic and political. It has to do with the huge disparity in wealth between the urban and rural parts of the country. Most of the wealth that has been created has been in the urban areas, with the rural areas being left way behind. The Chinese leadership is aware of this, but has yet to figure out what to do about it. China is not immune to revolution, and this disparity could well become a political threat.

    Last but not least, countries that have centralized so much power in a single person have an inherent vulnerability. What happens if and when something happens to that person? He gets sick, a sniper takes an effective shot, or simply the people below him get tired of him. History is full of examples of this problem. One of the strengths of the American system has been its ability to make political transitions without revolution.

    The bottom line here is that it’s dangerous to assume that present trends will continue indefinitely into the future. While I agree with your thought that America is no longer America in the sense that you have argued, I don’t see the Thucydides Trap necessarily working out as described. Think of what happened to the Soviet Union. That wasn’t a particularly happy solution to its weaknesses, but I suspect it’s a better model for what will eventually happen with China. It may take a long time to happen, though.

  • Great essay.
    It seems to me that the Hare (America) being so far ahead of the Tortoise (rest of world), decided to take a philosophical nap and is allowing that Tortoise to catch up and seemingly overtake the Hare. If the Hare doesn’t wake up and return to its strengths (political and economic freedom) it will lose. Is the rise of the Tea Parties leading to the Trump administration evidence of such an awakening? I certainly am tempted to wishful thinking.

    But any such awakening has to be a philosophical one not just political. Mr Trump is not very philosophical. He sees America’s problems as results of concrete bound, expediency of the moment, bad deals. He doesn’t get it that bad deals are almost always based on bad principles. But pragmatism–which dominates the educated class today–disdains principles. Its clarion call is to ‘do something,’ ‘take action,’ ‘movement for the sake of movement,’ absent any principled guidance. In other words, a world of appearances not substances.

    That is the world in which both American political parties live. My best hope is that the Trump administration will buy time for principled politicians to rise who understand that one cannot rest on the successes of the past as the Hare did and expect a successful future. One has to keep earning it and only principles will show one how.