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China, "The Land That Failed To Fail" - What's next for it -- and the world?

"China is a superpower and it may soon supass the United States... how it got there."

That's the "grabber" headline copy on the cover of The New York Times  new 20-page special edition, The Land That Failed to Fail 

Interesting as history, the story is even more compelling and timely as it examines the future of China's  -- and the world's --  economic, social and political prospects: "The pattern is familiar to historians, a rising power challenging a historic one."

It's quite timely, because U.S. and China leaders meet this week in Argentina at the G-20 conference with systemic trade, tariff and other issues hovering. From Foreign Affairs : "Trump ad Xi's talks in Buenos Aires will have enormous implications not just for the global economy but also for the future relationship that will shape the twenty-first century more than any other."

[And, on timing: Manifesting the Chinese system, it was learned this week that Jack Ma, super capitalist/executive chairman of the Alibaba Group, is a member of the Chinese Communist Party.]

In short, China and its economy, with, as the Times suggests, its un-paralleled "balance of freedom and authoritarianism, now stands as an alternative narrative to Western ideals ... They didn't like the West's playbook. So they wrote their own."

That system, having evolved since circa 1990 in bringing China back from the national abyss of its Mao-inspired "Great Revolution", now revolves (and evolves) around three adjoining societal pillars:

.  "Socialism 2.0" - One-party universal governance with many cut-outs for capitalists, especially entrepreneurs. It's been called the "bird cage economy" -- in which entrepreneurs are free to spread their wings, as long as they stay within the cage of government control. And state-owned companies have great advantages.

. Limitation of citizens' free-speech expression of liberal ideas coupled with near-total government transparency in matters of governance. 

. National pride in China's history, culture and its current progress domestically and internationally --  patriotism uniting the country in difficult times through the centuries. And all of this augmented by a historical high savings rate as a basis for capital formation. 

Some key excepts from the impressive Times report:

 

"[China] is the world's second largest economy. Hundreds of millions of people have been lifted out of poverty. It is the home of the world's biggest auto industry ... It has some the of richest and most powerful technology companies on the planet ... China succeeded  by creating its own model ... It freed its people to make and spend money, but it forbade them to ask for a better deal. Entrepreneurs built China, and the Communist Party kept them in line."

"Under the muscular leadership of President Xi Jinping, China has cast off all previous restraints, rejecting deference to the American-dominated global order as an impediment national revival. In matters of commerce and national security [read, military strength] China is competing with the United States, even in traditional spheres of influence."

"Beyond its backyard, China's ambitions are boundless. It celebrates its Belt and Road Initiative, a vast collection of infrastructure projects around the world."

"China's challenge to the Western-dominated order is amplified by the reality that its primary architect, the United States, is now led by an avowed nationalist. As president Trump wages a trade war and derides international cooperation, he has generated doubts about the perseverance of the liberal democratic philosophy the United States has long championed. Mr.Xi has sought to fill that vacuum."

"The legitimacy of the Communist Party rests on bolstering economic fortunes and international esteem ... [ignoring Western standards on protecting human rights and the rule of law] China's investments come with no such strictures. China bankrolls autocrats who control geopolitically valuable real estate. China demands only  that its companies gain a piece of the action while recipients eschew criticizing Beijing."

 

Nevertheless, history teaches many lessons of nations' overreach and gradual regression.

China is not immune to such history.

As the Times notes, "China's economy now stands as an alternate narrative to Western ideals. And yet the decisions the Communist Party made to secure its economic future have led Beijing to its biggest test since Tiananmen Square.

"Its goals -- a complicated mix of juicing the economy, cleaning up the country's air and water and meeting it's people's rising expectations -- have been harder to reach.

"Its efforts to spur growth have left the country staggering under trillions of dollars in debt, while the world is taking aim at China's industrial ambitions."

And world business and political leaders are pressuring the country on its alleged stealing of intellectual property, subsidizing state-owned companies, dumping products on world markets at unfairly low prices and currency manipulation.

Finally, as in many historical epochs, there is often the potential impact of a "black swan". In the case contemporary China, it could well be the unforeseeable fruition of the aphorism,"a little democracy is a dangerous thing".

It may be that Jack Ma best summarized the long-term "push-pull relationship between private companies [and by inference, the Chinese people]: "Fall in love, but don't marry.'

 

 

 

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