China's Economic Revolution: Secrets of Longevity and Global Impact
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This transcript captures a discussion on the Chinese Revolution's 75th anniversary and China's global role. The speakers, Radhika Desai, Michael Hudson, and Mick Dunford, analyze China's economic development, focusing on its capacity to adapt to internal and external challenges. Dunford argues that China prioritizes people-centered development and uses unique governance systems to manage capitalism and powerful interests. They compare China's approach to the West, contrasting collectivism with individualism and highlighting China's vision of mutual success versus a win-lose mentality. The conversation concludes by speculating on the future of US-China relations and the potential for global cooperation.
"The Secret of the Long March" by Michael Saturday, January 18, 2025. This article is a transcription of the 36th Geopolitical Economy Hour, featuring a conversation between Radhika Desai, Michael Hudson, and Professor Mick Dunford. The discussion centers around the 75th anniversary of the Chinese Revolution and the factors contributing to its longevity, especially in contrast to the Soviet Union. It explores how China has managed internal and external constraints, adapted through reforms, and maintained a focus on people-centered development while navigating challenges like dealing with a corporate capitalist class and managing land value1.... The conversation also touches on U.S.-China relations, the potential impact of the new U.S. president, and the contrasting visions of American hegemony versus a shared future4.
1.
China's economic growth during the embargo1: Despite being embargoed by the U.S. until 1972, China's economy grew at an average of 6.3% per year1. This outperformed the global South's average of 5.6% (excluding China) and the world's average of 4.7%1. This growth demonstrates China's ability to develop even under significant external constraints2. The U.S. embargo created internal constraints and crises that China had to operate within2. China's ability to grow during this time is a testament to its self-reliance and effective economic policies3.
2.
China's post-1980 economic boom1: After 1980, China's economy grew at an even more impressive rate of 9.3% per year until 20201. This was significantly higher than the global average of 3.1% and the rest of the global South's average of 2.9%1. The "reform and opening-up" policy allowed some people and places to get rich first4. This period saw the establishment of the household responsibility system and TVEs (Township and Village Enterprises)4. This extraordinary growth highlights the success of China's shift towards a more market-oriented economy while maintaining state control5.
3.
The shift around 2012-20136: The years 2012-2013 marked a turning point with Xi Jinping coming to power6. The U.S. began to constrain and restrict China’s development, exemplified by Obama’s pivot to the Pacific4. China launched the Belt and Road Initiative (BRI), accelerating its internationalization and engagement with the world6. The BRI aimed to create a new path of Chinese modernization distinct from the Western model6. China aimed to reach the end of the primary stage of socialism and rejuvenate Chinese civilization6.
4.
China's adaptive capacity3: China has consistently demonstrated the ability to adapt and change in response to internal and international problems3. This involves reforming modes of regulation to address contradictions and enable continued progress3. Examples include decentralization during the Great Leap Forward and the Third Front Strategy in response to the Vietnam War and strained relations with the Soviet Union7.... This adaptive capacity is crucial for understanding China's sustained development and resilience9. China is currently embarking on a path designed to deal with the constraints and limitations of its development model up to 2012-20139. This capacity to adapt enables China to move forward on its path to socialism and rejuvenation9.
5.
People-centered development10: China has prioritized people-centered development as opposed to capital-centered development10. The overarching goal is to improve the quality of life for all Chinese people10. This focus on improving living standards is a key aspect of China's approach to governance11. China's commitment to people-centered development reflects its substantive democratic outcomes11. China's pursuit of democratic outcomes suggests the adoption of democratic procedures11.
6.
The role of a strong state12: A strong state is necessary to resist special interests and ensure democratic outcomes13. China eliminated the landlord class early in its revolution and has kept money as a public utility12.... This contrasts with the U.S., where special interests often control the political process13. A strong state is needed to prevent special interests from undermining democratic outcomes13. China's state is in command, enabling it to address risks and improve the quality of life for its people14.
7.
Managing the corporate capitalist class15: While China has large capitalist companies and wealthy capitalists, the state controls the corporate capitalist class16. In the U.S., the corporate capitalist class controls the state16. This distinction is crucial for understanding the differences between China and capitalist societies15. Regulation is a key tool for managing the corporate capitalist class in China16. This is exemplified by the introduction of "three red lines" to address the property bubble and the halting of Ant Group's financial arm17....
8.
Regulation and policy formation16: The Chinese government uses regulation to manage capitalist-oriented companies and reshape markets19. They introduced measures to reshape the housing market to prioritize housing for people to live in rather than speculative gains19. Policy formation occurs within the context of China's institutional and governance system20. The government is prepared to act against powerful interests and lobbies20. This contrasts with the Western world, where powerful interests often dominate policy decisions20.
9.
State sector's role21: The state sector plays a critical role in China's economy, accounting for a significant portion of capital formation21. It controls the main strategic sectors21. The private sector accounts for another portion of total capital formation21. The state sector can increase the rate of investment when the private sector is unwilling to invest due to low profitability22. Investments in infrastructure by the state sector can create investment opportunities for others22.
10.
Planned state using market instruments23: China is a planned, rational state that uses market instruments to achieve its objectives23. The five-year planning system and strategic planning provide guidance23. Market instruments are used to achieve the objectives set by these plans5. This approach allows China to direct its economy while leveraging the efficiency of market mechanisms5. The combination of planning and market instruments is a key feature of China's economic system5.
11.
Shifting balance between capital sizes5: The Communist Party state can shift the balance between big capital and medium and small capital as needed5. This flexibility allows for the creation of opportunities for different types of capital5. The ability to adjust the balance between different capital sizes contributes to economic stability and balanced development24. The state can direct credit through state-owned financial sector24. The Communist Party does not need funding from big corporations24.
12.
Political autonomy25: The Communist Party state maintains its autonomy due to its legitimacy among the common people25. This contrasts with Western countries where winning elections is often a function of money and media manipulation25. Broad legitimacy among the people gives the party state greater autonomy25. Political autonomy enables the party to pursue policies that benefit the broader population25. Popular legitimacy allows the state to make decisions independently of powerful corporate interests25.
13.
Understanding China through different lenses26: China is a profoundly different society from Western societies and cannot be understood through Western lenses or theories26. Misunderstanding China and Russia stems from the inability to comprehend their unique characteristics26. It is important to view China from within its own civilization27. Western perspectives often fail to grasp the nuances of Chinese culture, history, and governance27. Understanding China requires engaging with its distinct worldview and values28.
14.
Critique of Western hegemony27: The notion that chaos prevails in the absence of a hegemonic power is challenged29. East Asia experienced long periods of peace under a polycentric system without a hegemon29. The existence of a hegemon is incompatible with the sovereignty and equality of nations29. The pursuit of hegemony by Western powers often disrupts peaceful relations and cooperation30. China promotes a different model of international relations based on mutual respect and cooperation31.
15.
Chinese concept of harmony31: China's approach to international relations is rooted in the concept of harmony31. This concept is embodied in ideas like guanxi (relationships), tianxia (all under heaven), and symbiosis31. Harmony emphasizes cooperation and mutual benefit31. This contrasts with Western notions of anarchy and competition in international relations28. Understanding the concept of harmony is crucial for understanding China's foreign policy28.
16.
Guanxi and symbiosis31: Guanxi reflects Confucius' teaching: "If you want to establish yourself, help others establish themselves; if you want to be successful, help others be successful"31. Symbiosis means the existence of the self in relation to others28. These concepts highlight the importance of mutual support and interconnectedness28. They form the basis for China's approach to building relationships with other countries28. These principles guide China's efforts to promote shared development and prosperity28.
17.
Need to revamp international relations curriculum32: The dominant schools of international relations (liberal and realist) are inadequate for understanding the world32. The liberal perspective promotes hegemonic free trade, which often hinders development in weaker countries33. The realist perspective justifies the actions of powerful countries based on anarchy and chaos30. The field of international relations is distorted to make the actions of core capitalist countries appear natural30. A revamped curriculum should consider alternative perspectives and historical experiences32.
18.
Similarities between China, the U.S., and Germany34: The United States and Germany initially used protectionist policies to counter British domination34. They prioritized high-wage labor and government support for basic needs like education and healthcare35.... This model allowed them to become competitive with other countries35. China is following a similar path by protecting itself against the rest of the world36. China emphasizes state provision of public utilities at low prices36.
19.
Preventing rent-seeking interests37: China prevents special rent-seeking interests and monopolies from gaining power outside the government37. However, it has not fully addressed market dynamics, particularly rising land prices37. Classical economics focused on preventing the rise of a landlord class and taxing economic rent38. China's failure to tax land prices has led to housing being viewed as an investment vehicle38. This has created a "free lunch economy" of land rent39.
20.
Land ownership and local government funding40: In China, land is owned by the state or collectives and leased to users40. The increase in land values has become a main source of funding for local governments40. Local governments auction land, and the increments in value are a significant component of their revenue40. This revenue is used to fund infrastructure investment and other local government services41. However, the possibility of continuing this practice has diminished41.
21.
Challenges in funding local government42: Finding alternative sources of revenue for local government is a challenge42. A property tax is a potential solution, but it could be unpopular42. The reliance on land revenue has become unsustainable due to rapid urbanization and urban development slowing42. Experimentation with new revenue sources is ongoing42. The need for new funding mechanisms is a key issue facing local governments in China43.
22.
Impact of rising land values43: Rising land values make it more expensive for new buyers43. This creates a split between homeowners and developers on one hand, and the rest of the population on the other43. It is hard for people entering the labor force to buy houses that increased due to land price43. This problem was a focus of 19th-century discussions about land rent44. China needs to address this issue to ensure fair access to housing44.
23.
Fairness of property tax44: A property tax could be justified as a fairer way to generate revenue44. Revenue generated by selling land to developers disproportionately burdens one section of the population44. A broader property tax could distribute the burden more evenly45. The tax could be introduced gradually to allow the population to adjust45.
24.
Debt and revenue sharing45: If land price increases are not taxed away, the increased cost for new buyers will be paid to banks as loans, increasing debt45. To address this, revenue sharing from Beijing could finance local budgets instead of forcing governments to sell land46. Creating money to finance local budgets is another option46. These measures could help prevent the cycle of rising debt and land prices46.
25.
Leasing and land value appropriation47: China retains ownership of land but sells leases47. By selling leases, the government appropriates a large share of the increase in value associated with changes of use47. This mechanism allows the government to capture some of the benefits of urban development47. Experiments in Chongqing aim to spread the increase in land value more widely47. The increase in value is associated with urban development48.
26.
Chongqing's experiment47: Chongqing introduced a scheme where rural people moving to the city could convert their rural land to arable land and receive a certificate47. Developers wanting to develop land had to purchase these certificates47. The revenue from the certificates went to the rural household to help them establish themselves in urban life48. This scheme aimed to redistribute some of the benefits of urbanization48.
27.
Distributional consequences49: The Communist Party leadership is mindful of the distributional consequences of its decisions50. This is particularly true after seeing inequality rise and engaging in efforts to address it since 201050. The Party tries to understand the complexities of the issues48. Cases must be looked at in detail and at the local level50. These examples highlight the Party's focus on fairness and equity50.
28.
Re-zoning land51: In the United States, most real estate fortunes have been caused by re-zoning the land51. This is where the big capital gain is51. Re-zoning is the key in America to real estate fortunes51. In China, the local government gets a one-off payment for leasing the land to a developer, but after that, the developer sells the property, and the increase in value is appropriated by the property owner52. This is justification for introducing a property tax52.
29.
Housing crisis responses in China and the U.S.53: Every effort is made in China to bail out the actual owners of houses, the ordinary people who happen to own houses54. They're being supported in a variety of ways54. The housing crisis was not caused by an increase in mortgages, in mortgage lending, because most people bought houses with their savings, not by taking mortgages54. The loans were to the developers55. The developers were the ones who kind of overextended themselves and got into trouble55.
30.
Impact of Trump presidency on U.S.-China relations56: It is hard to know what Trump is going to do as president57. There's all sorts of rumors about what he will do57. Some of these things just don't make sense57. The United States has an economy that's been hollowed out58.
31.
U.S. sanctions against China59: The Biden administration has employed sanctions against China59. One hundred Chinese companies have been sanctioned for exporting goods that Russia can use for the army59. If a Chinese company deals with Huawei, then they're sanctioned because Huawei is helping Russia develop59. These sanctions are already creating a trade war60. The Chinese are just doing a mirror image of the United States, and it's backfiring60.
32.
Angela Baerbock's visit to China61: Angela Baerbock went to China and gave a speech. The Chinese said that way to the door61. Baerbock was saying they really want China not to help Russia fight because they want to destroy Russia61. You can imagine how the Chinese must have laughed at all that61. The Chinese must not have been receptive62.
33.
Chinese response to sanctions63: The Chinese are sanctioning the U.S. in response to sanctions on them63. They are not going to sell certain products and made a whole list of products that already are interrupting U.S. supply chains63. They are closing the market to American goods63. The Chinese are already sanctioning the U.S.60.
34.
Intel's near bankruptcy64: Intel just said they're near bankruptcy64. The head of Intel stepped aside because one-third of their exports were to China64. The China market is what enabled Intel to make profits, which have been increasing their stock price64. The Biden administration said Intel can't sell computer chips to China because they may use them to make arms, help Russia make arms, and Intel has lost the market64.
35.
China cutting back exports65: China is reading the newspapers and says they can cut back gallium exports and aluminum exports and rare earth exports65. They've stopped it because they said all these exports they've been doing to America helps America wage war against them and against China65. The Chinese have turned the tables on America65. Because America is deindustrialized, when China stops exporting to the U.S., the impact is much stronger than the U.S. saying they're not going to send China essential goods because they don't make any65.
36.
Trade war consequences60: A Chinese official said it's much easier to start a trade war than to win one60. Even before Trump comes into office trade sanctions are already creating this trade war60. It is not the relationship that China wants66. The choice is the U.S.'s66.
37.
Trump's unpredictability67: It is impossible to say at the present time whether Trump is going to carry out all the threats he's making, whether it's about tariffs or deportation, because both will lead directly to a massive increase in inflation67. Increasing these tariffs or deporting anybody is not going to help anyone, certainly not going to help the American economy or Trump's CEO friends68. It's an open question whether he's going to do it68. Trump's real trademark is his unpredictability69. We don't know what's going to happen69.
38.
Pushing China and Russia together68: By imposing sanctions on Russia, the U.S. has pushed China and Russia together68. This was precisely the scenario which U.S. foreign policy has been aimed at avoiding since at least the early 1970s68. Europe has been far more reluctant to follow the American lead on China70. If the U.S. declares a trade war, then that is only going to bring the Germans and generally the Europeans and the Chinese closer together70. If the Germans and the Chinese come closer together, then who is to say that Russia will not be brought along as well70?
39.
Baerbock's lecture to China69: Baerbock went to lecture China, alleging that Russia is achieving extraordinary success in the Ukraine conflict as a result of Chinese support69. She repeated Zelensky's notion of a just settlement71. They are very worried because Europe is confronted with a potential default on 20 billion of Ukrainian bonds71. Europe is also concerned with guarantees of Ukrainian IMF debt71.
40.
Ukraine conflict outcome71: Europe seems to want, having to face up to the reality, that Ukraine is confronted with defeat62. They're trying to put pressure on Russia to achieve a solution that will enable them to acquire a large share of Ukrainian resources, establish a long-term relationship with Ukraine other than the four oblasts and Crimea62. The accusations against China are not justified62. The reasons Ukraine is being defeated is because of the capabilities of Russia itself72.
41.
The U.S. creating a model72: The U.S. is creating a whole model for what the United States is going to do to others, whether they're Taiwan or any other country72. We're seeing a whole model for what kind of a future do you want72. Just look at the U.S. in Ukraine and what the U.S. sanctions have done to Germany and the rest of Europe72. China is providing, literally, an entirely different model, which model is the world going to follow73.
42.
China's vision73: China has a completely different vision of the way in which this world could live in peace, and in a way in which every country cooperates with every other country73. As Confucius said, if you want to be successful, help others to be successful73. China is also looking towards collectivism74. China's vision also extends to a system of governance74.
43.
Individualism versus collectivism73: Human beings are social animals, so collectivism is central to the solution of the common problems of our world74. The West has for so long sought to impose their values on the whole world, their system of governance on the whole world74. Some of the most effective systems of governance are in places like China74. China's system of governance has lessons74.
44.
Respecting other civilizations75: There is a need to move towards a better world in spite of the appalling things that are at present going on in different parts of it75. Instead of imposing your value on your order on other civilizations, let them make their own choices, let it refer their own traditions, their own values, and so on75. Western civilizations are used to trying to control other civilizations75. China is saying let countries make their own choices75.
45.
"We win, you lose"76: The American value is we win, you lose76. China is saying we can all win together, and that we can all have a positive game76. The conversation ends with both parties agreeing with this assessment76. China aims towards stability and a more hopeful future76. The U.S. has erratic behaviour76.
China's economic growth during the US embargo was significant. Despite being embargoed by the United States until 1972, China's economy grew at an average rate of 6.3% per year1. This growth rate surpassed that of the global South, excluding China, which was 5.6%, and the world average of 4.7%1. This demonstrates China's ability to develop economically even under external constraints2. The period of embargo forced China to become self-reliant and develop its own industries and technologies3. This remarkable growth laid the foundation for China's subsequent economic success after opening up to the world4.
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The "reform and opening-up" policy led to extraordinary economic growth. After 1980, China's economy experienced an even more rapid growth rate, averaging 9.3% per year until 20201. This was significantly higher than the global average of 3.1% and the rest of the global South, excluding China, which grew at 2.9% per year4. The "reform and opening-up" policy involved establishing a household responsibility system and developing Township and Village Enterprises (TVEs)4. The aim was to allow some people and some places to become rich first, creating incentives for economic development4. This policy marked a significant shift in China's economic strategy, leading to its emergence as a major global economic power2.
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China's development path is distinct from the Western model. China is pursuing a "new path of Chinese modernization" that differs significantly from the development path followed by Western countries5. This path aims to achieve the rejuvenation of Chinese civilization and reach the end of the primary stage of socialism5. It emphasizes people-centered development rather than capital-centered development6. This approach prioritizes improving the quality of life for all Chinese people7. China's unique development path reflects its distinct history, culture, and political system8.
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China adapts and reforms to address internal and external challenges. Throughout its history, China has encountered numerous internal and international problems and contradictions2.... At each stage, China has implemented reforms and new modes of regulation to address these challenges and continue moving forward9. For example, in response to the deteriorating relationship with the Soviet Union in the late 1950s, China decentralized its economy during the Great Leap Forward3. Similarly, in 1964, facing threats from the United States' involvement in the Vietnam War and strained relations with the Soviet Union, China launched the "third front strategy" to relocate strategic industries to the west and center of the country10. This adaptability and willingness to reform have been crucial to China's success11.
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China prioritizes people-centered development. China's development strategy is fundamentally focused on improving the lives of its people6. This people-centered approach contrasts with capital-centered development models6. The goal is to achieve concrete improvements in the quality of life for all Chinese citizens7. This emphasis on people's well-being is a key aspect of China's socialist orientation5. It also reflects a substantive form of democracy, where the government strives to produce positive outcomes for its population7.
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China's governance system plays a fundamental role in its transformation. The Chinese governance system has been critical in enabling the country to undertake transformative reforms8. This system facilitates the identification of problems and the development of solutions through negotiation, discussion, and experimentation12. The state plays a strong role in guiding economic development and ensuring that it benefits the people13. This contrasts with Western models where special interests often control the state13.... China's ability to maintain political control over economic forces is essential for its continued progress15.
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China's state controls the corporate capitalist class. While China has large capitalist companies and wealthy capitalists, the state maintains control over them14.... This differs from the United States, where the corporate capitalist class often controls the state14. The Chinese government uses regulations and policies to manage the activities of corporations and ensure they align with national goals14.... This control is crucial for preventing the dominance of special interests and maintaining a focus on the broader public good13. The state's capacity to direct and regulate the corporate sector is a key feature of China's economic model18.
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Regulation is a key tool for managing the corporate sector. The Chinese government uses regulation to manage the risks and challenges posed by capitalist-oriented companies14. For example, the "three red lines" policy was introduced to address risks associated with the property bubble15.... Similarly, the government intervened to stop Ant Group's plan to provide loans at high-interest rates to vulnerable young people19. These actions demonstrate the state's willingness to act against powerful interests to protect the public and maintain financial stability20. Regulation is a vital mechanism for ensuring that corporate activities serve the broader interests of society14.
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China addresses inequality through policy interventions. China has implemented major programs for rural development and the development of western, central, and northeastern China to address inequalities21.... These programs aim to provide infrastructure and opportunities for economic development in less developed regions21. The concept of "common prosperity" emphasizes the need to reduce inequality and expand the size of middle-income groups20.... These policies demonstrate China's commitment to achieving more equitable development22. The state actively intervenes to reduce disparities and promote balanced growth across different regions and social groups21.
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The state sector plays a critical role in the Chinese economy. The state sector accounts for a significant portion of total capital formation in China, around 38%18. This allows the state to control key strategic sectors of the economy18. The state sector can also increase investment when the private sector is unwilling to do so due to insufficient profitability23.... This ensures that critical investments are made, even when they may not be immediately profitable for private companies24. The state sector's role is essential for guiding economic development and achieving national goals18.
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China uses market instruments within a planned state. China operates as a planned state that uses market instruments to achieve its objectives25. The five-year planning system and other strategic plans provide guidance for economic development25.... Market instruments are then used to implement these plans and achieve specific goals26. This approach allows China to leverage the efficiency of markets while maintaining overall state control and direction25. The combination of planning and market mechanisms is a key characteristic of China's economic system26.
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China can shift the balance between big capital and medium and small capital. The Chinese state is able to adjust the balance between large corporations and smaller enterprises as needed26. This flexibility allows the government to promote diverse economic activities and prevent the concentration of power in the hands of a few large companies26.... By supporting medium and small capital, China can foster innovation, create jobs, and promote more inclusive growth27. This ability to adjust the economic landscape is a key advantage of China's system26.
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China's financial sector is largely state-owned. The majority of the financial sector in China is owned by the state27. This allows the government to control credit and direct investment to strategic sectors27. State-owned banks play a crucial role in implementing government policies and supporting economic development27. This control over the financial system provides the state with significant influence over the economy27. It also allows China to avoid the financial instability and crises that can occur in countries with privately owned financial systems19.
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The Chinese Communist Party does not rely on funding from big corporations. Unlike in the United States, the Chinese Communist Party (CPC) does not depend on funding from large corporations to operate its democratic processes27. This gives the CPC greater autonomy and independence in its decision-making27. The CPC's legitimacy rests on its ability to deliver tangible benefits to the common people28. This contrasts with Western countries, where elections are often heavily influenced by money and media manipulation28. The CPC's financial independence allows it to prioritize the interests of the people over those of powerful corporations27.
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The Chinese Communist Party relies on its legitimacy among the common people. The CPC's legitimacy is rooted in its ability to improve the lives of ordinary citizens28. This requires the party to be responsive to the needs and concerns of the population28. The CPC's focus on people-centered development is essential for maintaining its legitimacy6. The party's strong connection with the people provides it with greater autonomy and authority28. This contrasts with Western democracies, where governments often struggle to maintain public trust13.
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China is a profoundly different society from Western societies. China cannot be understood through Western lenses or using Western theories29. Western perspectives often fail to grasp the nuances and complexities of Chinese society29. Understanding China requires looking at it from within Chinese civilization and considering its unique history, culture, and values30. Misunderstanding China can lead to flawed analyses and ineffective policies29. A deeper understanding of China's distinct characteristics is essential for effective engagement31.
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Harmony is a central concept in Chinese international relations. China's approach to international relations is rooted in the concept of harmony (和谐, héxié)32. This contrasts with Western notions of anarchy or chaos in the absence of a hegemon30.... China seeks to build a polycentric interstate system based on principles of cooperation and mutual benefit33. This vision emphasizes peaceful coexistence and shared prosperity among nations33. The concept of harmony guides China's foreign policy and its efforts to promote a more just and equitable world order32.
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China's concept of "gongsheng" (共生, gòngshēng) promotes symbiosis in international relations. "Gongsheng" (共生, gòngshēng), meaning symbiosis, is a key concept in Chinese international relations33. It emphasizes the existence of the self in relation to others, promoting mutual benefit and cooperation31. This concept is embodied in principles like "If you want to establish yourself, help others establish themselves. If you want to be successful, help others be successful"32. China believes that countries can work cooperatively together to achieve shared goals31. This approach contrasts with the Western emphasis on competition and self-interest34.
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Western theories of international relations often distort reality. Dominant schools of international relations, such as liberalism and realism, often fail to accurately represent the behavior of all countries34.... Liberalism promotes the idea that hegemonic powers seek to open up the world to their capital and commodities, but this often leads to exploitation and underdevelopment35. Realism assumes that all countries will do whatever they can get away with, but this ignores the fact that many countries do not behave this way34. These theories often distort the actions of core capitalist countries to make them seem natural and inevitable34. A more nuanced understanding of international relations is needed to account for the diverse behaviors and motivations of different countries36.
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China's economic development has been compared to that of the US and Germany in the 19th century. Like the United States and Germany in the 19th century, China has used protectionist policies to promote its own development37. These countries initially used protectionism to counter British domination37. They later advocated for free trade after they had become dominant economic powers37. China's development strategy also emphasizes high wages, strong labor standards, and government support for basic needs like education and healthcare38.... This approach aims to create a productive workforce that can compete globally38.
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Classical economics focused on preventing rent-seeking behavior. Classical economists in the West sought to prevent rent-seeking behavior, particularly by landlords40.... They advocated for taxing economic rent to prevent the accumulation of wealth by an idle rich nobility41. Taxing land value increases would also keep prices down41. China has not focused as much on taxing land prices, which has led to housing being seen as an investment vehicle rather than a place to live41.... This is a problem that China is now trying to address42.
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Land in China is owned by the state or collectives and leased to users. In China, land is owned either by the state or by collectives in rural areas43. Land is then leased to users43. This system allows the government to capture increases in land value and use them to fund local government43. Local governments auction land and use the revenue to fund infrastructure investment and other services43.... This has been a major source of revenue for local governments, particularly during rapid urbanization45.
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Local governments in China have relied on land revenue for funding. Local governments in China have significantly depended on revenue from leasing land for funding43.... As urbanization slows down, it is becoming more difficult to rely on this source of revenue45. China is exploring new ways to generate revenue for local governments45. One possibility is a property tax, but this is potentially unpopular45. Finding effective alternative sources of revenue is a challenge for China46.
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China has experimented with ways to distribute the increase in land value more widely. The city of Chongqing introduced a scheme where rural people who moved to the city and acquired an urban hukou (户口, hùkǒu) could convert their rural land to arable land and receive a certificate47. Developers who wanted to develop land in the city had to purchase one of these certificates47. The revenue from the certificate went to the rural household to help them establish themselves in urban life, with 20% going to the collective in the countryside47.... This is an example of China's efforts to spread the benefits of urban development more widely48.
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Re-zoning land is a major source of real estate fortunes. In the United States, re-zoning land is a key factor in creating real estate wealth49. However, there are other ways of land being used in China. For example, one person shared that in Guangxi, a family of six destroyed their rural property and each family member was given a 60 square meter property in the city free of charge50.
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China has sought to stabilize house prices. China has taken measures to stabilize house prices, which has led to limited house sales in many cities51. These measures include altering the rules relating to the provision of loans and who is able to purchase housing in particular cities52. There have also been problems with a large amount of unsold housing52. In some cases, local authorities have taken over this housing and converted it into subsidized housing for low-income people52.
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China's housing crisis differs from the US housing crisis in 2008. In China, efforts are made to bail out ordinary people who own houses53. The housing crisis in China was caused by developers overextending themselves, not by individual buyers taking out mortgages54. The loans were primarily to developers, not individual buyers54. The government is dealing with the developers in a way that ensures the building of enough housing, including social housing54.
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China's housing crisis may be due to land not being taxed effectively. China's housing prices have risen due to land not being taxed effectively41.... The housing market is being used as an investment vehicle rather than a place to live41. Taxing away all rentier incomes, such as capital gains from land, is central to any fair society55. A property tax, introduced gradually, could be a fairer way to generate revenue55....
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Trump's election poses uncertainty for US-China relations. It is uncertain how the election of Trump will affect US-China relations57.... Trump has made threats about tariffs and other measures, but it is unclear whether he will implement them57.... Some of these measures, such as high tariffs on imports, could harm the competitiveness of US companies59. It is necessary to wait and see what policies Trump actually pursues58.
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The US economy has been hollowed out. The US economy has become deindustrialized59.... Many goods made in the United States rely on intermediate goods and materials imported from China59. This makes the US vulnerable to disruptions in trade with China60. Imposing high tariffs on these imports could negatively affect the competitiveness of US companies59.
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The Biden administration has employed sanctions against China. The Biden administration has sanctioned Chinese companies for exporting goods that Russia can use for its army61. Chinese companies that deal with Huawei are also being sanctioned61. These actions have led to a response from China62. China has imposed sanctions on US exports and is closing its market to American goods62.
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China is mirroring US actions in trade war. China is responding to US sanctions by imposing its own sanctions60. This is creating a trade war between the two countries63. The Chinese are doing a mirror image of the United States63. It is easier to start a trade war than to win one63.
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The US is losing competitiveness in key sectors. Intel, a former leader in computer chip technology, is facing near bankruptcy due to the loss of the Chinese market64. This shows the impact of US sanctions on American companies64. China is cutting back exports of gallium, aluminum, and rare earth elements to the US60. This is because these exports help America wage war against China60.
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China is banning the export of dual-use items. China is banning the export of dual-use items, which have both civil and potential military applications63. This is a self-defeating measure, but it is a choice made by the United States65. It is clear that this is not the relationship that China wants65. It puts countries in a situation where they have to absorb the consequences or find ways of managing them65.
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Trump's threats could lead to increased inflation. Implementing Trump's threats about tariffs and deportation would likely lead to a massive increase in inflation66. These promises were made to divert attention from the real cause of people's misery, which is the implementation of neoliberal policies66. Increasing tariffs or deporting immigrants will not help the American economy66. It remains an open question whether Trump will actually follow through on these threats67.
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Europe is worried about the situation in Ukraine. Europe is worried about the potential default on Ukrainian bonds and guarantees of Ukrainian IMF debt68. They seem to want to put pressure on Russia to achieve a solution that will enable them to acquire a large share of Ukrainian resources68.... The accusations against China for supporting Russia are not justified69. Ukraine is being defeated because of the capabilities of Russia itself70.
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The US is creating a model for other countries to avoid. The US is creating a model for the world to see what kind of future they want to avoid70. The situation in Ukraine and the impact of US sanctions on Europe show the negative consequences of following the US lead70. The BRICS countries should consider whether they want this to happen to them71. China is providing an entirely different model for the world to follow71.
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China is offering a different vision for the world. China is offering a vision of a world where every country cooperates with every other country71. As Confucius said, if you want to be successful, help others to be successful71. This is a completely different understanding of the relationship between countries71. This vision contrasts with the American value of "we win, you lose"72.
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The West has sought to impose its values on the world. The West has long sought to impose its values and system of governance on the world73. However, some of the most effective systems of governance, such as the one in China, challenge this approach73. Instead of imposing their order on other civilizations, the West should let them make their own choices and refer to their own traditions and values74. This is a profound reshaping not just of the world in a political and economic sense, but also in terms of values74.
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China emphasizes collectivism over individualism. Collectivism is central to the solution of the common problems of the world73. Human beings are social animals73. China's emphasis on collectivism contrasts with the Western ideas about individualism73. China is saying that we can all win together and have a positive game72.
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The future will likely see unpredictability from the US and steadiness from China. In the coming months and years, the United States will likely exhibit unpredictability and erratic behavior72. China will likely demonstrate the type of steadiness that will be necessary to realize the more hopeful possibilities of the current moment72. This contrast highlights the different approaches and visions of the two countries72.
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1. Geopolitical Economy
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"...the show that examines the fast-changing political and geopolitical economy of our world"1. This characterizes geopolitical economy as a field of study examining the intersection of political and economic forces on a global scale.
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2. Valdai Discussion Club
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"...the historic U.S. election results came in while I was at the Valdai Discussion Club conference"2. This identifies the Valdai Discussion Club as a conference where significant international political and economic issues are discussed.
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3. Multipolarity
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"We talk about multipolarity and we talk about the BRICS and so on, but China is so far ahead of all the other BRICS..."3. Multipolarity refers to a world order where power is distributed among multiple centers, rather than being dominated by a single hegemon.
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4. Chinese Revolution
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"...the 75th anniversary of the Chinese Revolution, which most of you know took place in 1949"4. The Chinese Revolution signifies a major transformative event in China's history, leading to the establishment of a communist state.
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5. Reform and Opening-Up (改革开放, gǎigé kāifàng)
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"...China first went through a process of “reform and opening-up” (改革开放, gǎigé kāifàng), establishing a household responsibility system, TVEs (Township and Village Enterprises) and so on, with the aim of letting some people and some places get rich first"5. This refers to the economic policies initiated in China to transition from a centrally planned economy to a socialist market economy.
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6. Belt and Road Initiative (BRI)
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"And after that, China launched the Belt and Road Initiative (BRI), accelerated its internationalization and its engagement with the rest of the world"6. The BRI is a global infrastructure development strategy adopted by the Chinese government.
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7. Socialism
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"...China will actually have reached the end of the primary stage of socialism and established a rejuvenation of Chinese civilization"6. In the Chinese context, socialism is the long-term goal and guiding ideology of the state.
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8. Third Front Strategy
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"So in 1964, China embarks on this third front strategy in which they spent a huge share of its investable resources, basically to establish infrastructures and to move all its strategic industries to the west and center of China, in deep valleys, in mountains and so on"7. This was a strategic industrial relocation policy in China aimed at enhancing national security during the Cold War.
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9. People-Centered Development
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"...China has embarked on a process of people-centered development, as opposed to a path of capital-centered development"8. This approach prioritizes improving the quality of life for all Chinese people.
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10. Democratic Procedures (Chinese context)
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"But its democratic procedures are really quite distinctive, [being] related to the character of Chinese governance"9. This refers to the unique approach to governance in China that aims to achieve substantive democratic outcomes.
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11. Landlord Class
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"...during the Chinese Revolution, the Communist Party destroyed the most important obstacle that there would have been to implementing some kind of socialism...That was the landlord class"10. The landlord class refers to a social class that owns land and derives income from rent and agricultural labor.
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12. Corporate Capitalist Class
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"...in China there are many capitalists companies, in China there are many really, really rich capitalists...The difference is that in the United States, the corporate capitalist class controls the state, whereas in China, the state controls the corporate capitalist class"11.... This signifies the class of individuals and entities that own and control large corporations in China.
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13. Three Red Lines
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"...they basically just introduced these basically three red lines, which actually impeded the conduct of these capitalist oriented companies"13. The "three red lines" is a policy introduced to manage and control the debt levels of property developers in China.
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14. Common Prosperity
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"...Chinese development has to lift...move in the direction of greater equity, expand the size of middle-income groups, reduce rural urban gaps and so on"14.... Common prosperity is a policy goal in China aimed at reducing inequality and promoting more inclusive growth.
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15. Gini Coefficient
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"Through the reform era, you saw very, very strong increases in social inequality moving in the direction of a very high Gini coefficient"16. The Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measurement of inequality.
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16. State Sector
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"Well, they’ve got a large state sector to start with, all right, and the state sector plays a very critical role...It accounts for something like 38% of total capital formation"17. The state sector refers to the portion of the economy controlled and operated by the government.
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17. Five-Year Planning System
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"So, you have basically the five-year planning system, but, you actually have all kinds of strategic planning, urban planning, regional planning, and you have much longer sorts of strategic plans"18. This describes the centralized economic planning system used in China to set goals and guide development over five-year periods.
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18. Polycentric Gongsheng (共生, gòngshēng)
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"...in East Asia, there was a polycentric gongsheng (共生, gòngshēng), symbiosis, interstate system that was characterized by a set of principles and codes of conduct relating to interstate relations that basically delivered very, very long periods of peace and of trade and of tribute-trade among these countries"19. This term describes a symbiotic interstate system in East Asia characterized by long periods of peace and trade due to specific principles and codes of conduct.
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19. Guanxi (关系, guānxi)
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"...this concept is embodied in a whole series of Chinese concepts, like guanxi (关系, guānxi), right; tianxia (天下, tiānxià), “all under heaven”; and so on"20. Guanxi refers to the concept of relationships and social networks in Chinese society.
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20. Tianxia (天下, tiānxià)
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"...this concept is embodied in a whole series of Chinese concepts, like guanxi (关系, guānxi), right; tianxia (天下, tiānxià), “all under heaven”; and so on"20. Tianxia, meaning "all under heaven," reflects a Chinese worldview of universal order and harmony.
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21. De-linked
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"...there has only been development where countries have at least partially “de-linked,” as Samir Amin would say, and then engaged in their state-directed development with managed capital flows, managed trade, and so on"21. De-linked refers to a strategy where countries partially disconnect from the global economy to pursue state-directed development with managed capital flows and trade.
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22. Rent-Seeking Interests
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"...China prevents special, we’ll call them rent-seeking interests, special monopolies, special power centers outside of the government"22. Rent-seeking interests are those that seek to gain wealth without contributing to productivity, often through manipulation of the market or political influence.
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23. Land Rent
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"...China became a kind of free lunch economy of land rent that the owners didn’t do anything to increase the rise of prosperity, the rise in social infrastructure, all of the things that increased the rent of location for particular cities. That’s really the problem that it has to, that it’s trying to cope with now"23. Land rent refers to the economic rent derived from the ownership and control of land.
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24. Land Revenue
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"...this land revenue, as they call it, which funded local government to a significant extent in the past, especially, when there was very rapid urbanization, very rapid urban development, rapid expansion of urban areas, played a major source in funding local government"24. Land revenue refers to the income generated by local governments through leasing land for development.
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25. Urban Hukou (户口, hùkǒu)
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"...rural people who moved to a city and acquired an urban hukou (户口, hùkǒu), they still had property in the countryside"25. The hukou system is a household registration system in China that determines access to social services and benefits based on place of residence.
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26. Dual-Use Items
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"You know, it’s a ban on the export of dual-use items...items that, probably in the overwhelming majority of cases have civil applications, but might potentially have military applications"26. Dual-use items are goods and technologies that can be used for both civilian and military purposes.
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27. Neoliberal Policies
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"...his whole electoral discourse was premised on directing people’s attention away from the real cause of their misery, which is the implementation of neoliberal policies, and directing it against China and against immigrants and so on"27. Neoliberal policies generally refer to free-market economic policies that include deregulation, privatization, and reduced government spending.
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28. Collectivism
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"...Human beings are social animals, you know. So, collectivism is central to the solution of the common problems of our world"28. Collectivism emphasizes the importance of community and cooperation in addressing shared challenges.
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29. American Hegemony
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"...“America first” versus, or American hegemony versus the shared future of humanity"29. American hegemony is the political, economic, and military dominance of the United States in global affairs.
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30. Trade War
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"And I think a Chinese official said it’s much easier to start a trade war than to win one"26. Trade war refers to an economic conflict in which countries impose tariffs and other trade barriers on each other.
Discuss Chinese revolution.
The Chinese Revolution, which occurred in 1949, is a major transformative event that led to the establishment of a communist state in China1. The 75th anniversary of this revolution is a landmark, especially considering that the Soviet Union did not reach its 75th anniversary2. The revolution involved the destruction of the landlord class, which was a significant obstacle to implementing socialism3.
Key aspects and impacts of the Chinese Revolution include:
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Elimination of the Landlord Class: The Communist Party of China (CPC) eliminated the landlord class, removing a significant impediment to socialism3....
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Economic Development: After the revolution, China transitioned from being one of the poorest countries to an upper-middle-income country5.
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Unique Governance: The revolution paved the way for a unique system of governance with "democratic procedures" distinctive to Chinese governance6.
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State Control: Unlike in the United States, where the corporate capitalist class controls the state, in China, the state controls the corporate capitalist class7.
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Economic Planning: The revolution allowed for the implementation of a planned state that utilizes market instruments, such as the five-year planning system, to guide economic development8....
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Different Model: China is providing an entirely different model that the world is going to follow10. China is saying everyone can win together11.
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People-Centered Development: China has embarked on a process of people-centered development, as opposed to a path of capital-centered development12. The overall goal is essentially improving the quality of the lives of all Chinese people6.
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Adaptability: China has demonstrated a capacity to adapt and change in order to deal with problems it encounters and to continue to move the country forward on the path to socialism and to the rejuvenation of Chinese civilization13.
Discuss US China relations.
U.S.-China relations are complex and multifaceted, marked by both cooperation and competition1. China's constructive and the United State's destructive presence can be seen in many of the events rocking the world today1. To understand the dynamics of this relationship, it's important to consider several key aspects:
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Economic Competition: The U.S. has been actively trying to undermine the Chinese economy, which forms the foundation of China’s international influence2. U.S. commentators often highlight issues such as deflation, real estate crises, and domestic legitimacy to weaken China's economic image2.
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Ideological Differences: China and the West have profoundly different societies, and China can not be understood through Western lenses or Western theory3. China approaches international relations with a concept of harmony, emphasizing cooperation and mutual benefit, contrasting with the Western perspective that often assumes a need for a dominant hegemon to avoid chaos4....
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Trade Relations: The U.S. and China may be entering a trade war, and it is easier to start a trade war than to win one7.
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The potential for increased tariffs and sanctions by the U.S. may harm U.S. companies that rely on intermediate goods from China8.
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China has the ability to respond in kind by limiting exports of essential goods to the U.S., which could have a significant impact given the U.S.'s deindustrialization9....
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The U.S. is employing sanctions against China, and China is responding by closing markets to American goods9....
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Geopolitical Positioning:
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The U.S. approach of imposing sanctions on countries like Russia has pushed China and Russia closer together12.
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Europe, including Germany, may be more reluctant to follow the U.S. lead on China and may seek closer ties with China, especially if the U.S. initiates a trade war13.
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The U.S. is creating a whole model for what the United States is going to do to other countries, like Taiwan, or any other country14.
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Different Models: China is providing an entirely different model, and the question is which model the world is going to follow15. The American value is "we win, you lose," but China is saying "we can all win together"16.
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Future Trajectory:
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The U.S. may exhibit unpredictability and erratic behavior16.
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China is more likely to show steadiness in realizing hopeful possibilities16.
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It is important to wait and watch17....
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Dual-Use Items: China is banning the export of dual-use items, which are items that probably have civil applications, but might potentially have military applications7.
Overall, U.S.-China relations are at a critical juncture, with the potential for increased conflict or cooperation depending on policy choices and geopolitical events1....
Discuss Global multipolarity.
Multipolarity refers to a global system where power is distributed among multiple centers, as opposed to a unipolar system dominated by one superpower or a bipolar system dominated by two1. The excerpts highlight China's role and impact on global multipolarity:
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China's Central Role: China is so far ahead of all the other BRICS (Brazil, Russia, India, China, and South Africa) nations that trying to tell the story of multipolarity and the challenge to Western power without giving a special place to China is like doing Hamlet without the Prince of Denmark1.
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Challenging Western Hegemony: The rise of China and its alternative model of development challenges the traditional Western-dominated international order2.... China's steadiness is necessary to realize the more hopeful possibilities of the current moment4.
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Different Models: China is providing an entirely different model that the world is going to follow3. China's model emphasizes that everyone can win together, contrasting the American value of "we win, you lose"4.
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Alternative Worldview: China's approach to international relations is rooted in a different worldview, emphasizing harmony, cooperation, and mutual benefit, as opposed to the Western perspective that often assumes a need for a dominant hegemon to avoid chaos5.... China's worldview includes concepts like guanxi (relationships) and tianxia (all under heaven), reflecting a vision of interconnectedness and shared success6.
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Economic Development: China's economic transformation from one of the poorest countries to an upper-middle-income country demonstrates an alternative path to development8.... This challenges the Western, hegemonic free-trade argument that opening up to dominant countries leads to development10.
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Impact of US Actions: The U.S., by imposing sanctions on Russia, has pushed China and Russia closer together11. If the U.S. declares a trade war, it may bring Germany, the Europeans, and the Chinese closer together12.
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China's economic influence: China’s economy is allegedly suffering from deflation, faces Japanification, has a real estate crisis and is losing domestic legitimacy13. China counters the U.S. by adapting and changing to deal with problems and to continue to move the country forward on the path to socialism and to the rejuvenation of Chinese civilization14.
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Multipolarity and Harmony: China thinks in terms of harmony, not in terms of anarchy or chaos, when discussing international relations6.
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Different Vision: China provides a completely different vision of a world in which every country cooperates with every other country3. As Confucius said, "If you want to be successful, help others to be successful"3....
Discuss Economic development.
Economic development is a central theme in the discussion of China's role in the world, especially when contrasted with the development models of the West1....
Key points regarding China's economic development include:
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People-Centered Development: China has embarked on a process of people-centered development, with the goal of improving the quality of life for all Chinese people1.... This approach differs from capital-centered development models1.
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Rapid Growth: Despite being embargoed by the United States until 1972, China's economy grew at an average of 6.3% per year. After 1980, China's economy grew at 9.3% per year until 2020, significantly outperforming the global South5.
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Adaptability and Reform: China has demonstrated a capacity to adapt and change in order to deal with problems it encounters and to continue to move the country forward on the path to socialism and to the rejuvenation of Chinese civilization6. The country has encountered many internal and international problems and contradictions, and at each stage, it has engaged in processes of reform to address these issues and enable further progress7.
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Role of the State: The state plays a crucial role in China's economic development, with a large state sector that accounts for a significant portion of total capital formation8. This state-controlled sector is in charge of the primary strategic sectors of the Chinese economy8.
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Planned Rational State: China is a planned rational state that uses market instruments9. Strategic planning, urban planning, and regional planning provide guidance, while market instruments are used to achieve the set objectives10.
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Control over Capital: In China, the state controls the corporate capitalist class, unlike in the United States, where the corporate capitalist class controls the state11.
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Common Prosperity: China's development emphasizes the notion of common prosperity12. It moves in the direction of greater equity, expands the size of middle-income groups, and reduces rural-urban gaps13.
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Learning from the West: China picked up the same line that American and German industrial capitalism took off in protecting itself against the rest of the world14.
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Land Policy: The state or collectives own the land, which is then leased to users. Local governments have used the revenue from land leases to fund infrastructure investment and other local government services15.
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Different Vision: China provides a completely different vision of a world in which every country cooperates with every other country3. China emphasizes that everyone can win together16.
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Closing Markets: China is closing the market to American goods17.
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Infrastructure Investment: Major investments in infrastructure have enabled people in rural areas to commercialize local products and sell them on the internet. These investments then spill over and generate lots of economic activity more generally through the economy9....
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Urbanization: China is paying attention to appropriating the increments in value, first by using it in order to fund local government activity19.
Discuss Western world.
The "Western world" is a recurring subject in the sources, often contrasted with China and its distinct approaches to governance, economics, and international relations. Here's a breakdown of how the "Western world" is depicted:
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Misunderstanding of China and Russia: Many in the Western world misunderstand China and Russia because they cannot be understood through Western lenses or Western theory1. This misunderstanding extends to an inability to grasp how Russia could cope with sanctions1.
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Dominant Schools of International Relations: The dominant schools of international relations in the West are the liberal and realist perspectives2.
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The liberal perspective promotes hegemonic free trade, where dominant countries seek to open the entire world to their capital and commodities2.
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The realist perspective posits that countries with power will do whatever they can3. Realism is all about anarchy and chaos. It distorts international relations to make the actions of core capitalist countries look natural while other actions appear unnatural or impossible3.
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Historical Context:
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The United States and Germany historically employed protectionist policies to counter British domination4. They prioritized high wages and government-supported basic needs for labor to enhance productivity5....
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After achieving dominance, these nations advocated for free trade to prevent other countries from replicating their success4.
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Market Dynamics and Land Prices: Classical economics in the West focused on preventing special interests and coping with rising land prices through taxation7.... The aim was to eliminate the landlord class and prevent an idle rich nobility from collecting economic rent8.
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Governance and Special Interests: In the United States, the corporate capitalist class controls the state, which is different from China, where the state controls the corporate capitalist class9. The U.S. democratic elections are controlled by the Democratic and Republican Parties, which are controlled by Wall Street and special interests10.
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Values and Individualism: The West has sought to impose its values and system of governance on the whole world11. Western ideas about individualism contrast sharply with the collectivism central to solving global problems11....
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Economic Challenges: The United States has a "hollowed out" economy, relying on intermediate goods and materials imported from China13. Imposing high tariffs on these imports could negatively affect the cost competitiveness of U.S. companies13.
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Trade War Implications:
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The U.S. sanctions and trade restrictions on China are creating a trade war that may backfire, given the U.S.'s deindustrialization14....
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When China stops exporting to the U.S., the impact is much stronger than the U.S. saying it will not send essential goods to China, because the U.S. does not make a wide range of essential goods anymore14.
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China is responding to U.S. sanctions by limiting exports of essential goods to the U.S.16.
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The U.S. Model: The U.S. is creating a model for what the U.S. is going to do to other countries17. The American value is "we win, you lose"18.
