Charlie Popper,

While the West seems to be slowly repeating the fall of the Roman Empire, albeit at an accelerated pace, China is the new emerging Empire located in the East, at least when viewed from the West. Those who regularly visit China, primarily business people, will see the opposite here. The landscape literally changes visibly and people constantly experience contradictions. Poor housing blocks are still there, but less and less. Bicycles have long since ceased to be on the road, the occasional electric scooter is still used, but mostly quiet cars that are increasingly electric and match the level of Western models without any problems. That is just a detail illustrating that China does care about the environment and is slowly but steadily bringing out its blue skies again. Of course, things don’t go at the same speed everywhere. A technopolis such as Shenzhen is at the forefront, the countryside is lagging behind.

What makes the difference in China in particular is the speed with which innovation and renewal are being done. Like it or not, digitization is a fact here. Those who cannot afford a smartphone live virtually outside society. Even the rare beggars get their alms on the street. Those who arrive late at the airport as a foreigner cannot get a drink from the vending machine, because it only works with facial recognition, for which you must have an Alipay or WeChat wallet. And that is de facto not possible as a foreigner. Restaurants, shops, hotels and so much more are de facto paperless, even your declaration to customs is done via WeChat. Cameras on every corner monitor everything digitally. We are shocked by that; it is therefore safe on the street. The Chinese themselves mainly complain about cyber criminals who empty their WeChat wallets. But don’t you speak Chinese? No problem, start the translation App, speak to the phone for a while and the thing translates almost flawlessly. Also useful for the stranger in the two directions.

What is particularly eye-opening, however, is the speed at which new technology is developed, improved, and applied in China. And that becomes clear when one visits the “factories”. The innovation happens in what is called skunkworks in the US. No bureaucratic hassle, no fancy buildings. No, on the contrary. It often seems disorganized. Don’t expect the floor to be scrubbed either. But there are weeks, not years, between a question or an idea and a functionally working prototype. For that reason, China is now often at the forefront of battery technology, for example. The battery of the future is already being tested here and will soon be used. Just as it takes us decades in the West to have fast train connections, China has achieved this in a few years (based on European technology that they have redeveloped and improved). Meanwhile, those trains are traveling at 350 km/hr and they have a maglev in the works that can reach 600 km/hr.

Not them against us story

As often happens, the West sees China as a threat and indeed if we let it run its course in the West, then it will be. The Wesy talks a lot about development aid, but if such a country succeeds in pulling itself out of the poverty swamp very competitively, then it is suddenly their fault that the West’s position is deteriorating. Not to mention that it is our own structural weakness that has made China the factory of the world. We import en masse because it is no longer affordable here. China has entered the world market almost from scratch, continues to work hard for it, and is working hard to become a first-rate player. Can they be blamed for that? It seems a bit hypocritical to me. Rather, the West should ask itself why it is lagging behind and instead of lamenting think about how to ride the same wave. The reality is that we need them as much as China needs the West. Well, it’s fair to say that this opportunity won’t last forever. Today, the West is still a very large market for China, at least as long as the credit tap remains open, but the rest of the world has a much greater potential. The West is apparently rich, but only one-eighth of the world’s population lives there. To stay on that train, there is only one solution: maintain trust and pursue a win-win situation. That’s just how it works in the business world. Does that mean that everything is allowed? No, trust must be guarded and it is a delicate game. But it’s not a them against us story. That only results in a loose-loose situation. How is it possible? China is and certainly used to be a demanding party for technology. Things are now reversed in many areas, even in consumer goods. China produces and supplies what the market wants and therefore wants to be able to be self-sufficient. The land of tea now even grows its own coffee. Above all, the West must address its own structural weaknesses. The “cost of doing business” is sky-high due to high taxes and regulitis . The speed leaves much to be desired. The infrastructure leaves much to be desired, and none of this is helped by the unwieldy bureaucratic Europe that sometimes resembles a neo-Soviet-style central planning rather than a market-stimulating policy. The Chinese approach differs fundamentally in this respect. The central authority works with 12 five-year plans and tries to look 60 years ahead. Guidelines emerge, but the implementation is largely entrusted to a hyper-competitive market. There is therefore much less micro-management than in the West. This translates into rapid innovation and quick adjustments if necessary.

Is China less democratic than the West?

Whoever asks that question probably believes in the superiority of democracy in the West. Recently on a business trip in China, during the obligatory restaurant visit, I was suddenly asked what education the governing people had with us. The question was actually, how is it possible that people without the right education and training are allowed and able to determine your policy? Oops. In China, the policymakers are not elected by the citizens, but they have gone through a long cycle of training and selection in order to gradually occupy the higher offices. The West has so-called representatives of the people, but the majority of them appear to have only had legal training. Is that representative of our population and is it sufficient to become minister of health or energy, for example? The Chinese partners have a point there. Xi Jin Ping succeeded himself for a third term, which is a risk as quite a few dictatorships prove, but how many prime ministers and politicians does the West not have who already form a dynasty? Even landslides in midterm elections don’t bother them. In China there is officially only one party and no opposition, but there are as many factions within that party as there are minority coalition partners in our country who keep calling the shots. In China there is the dictatorship of the only party, in the West the dictatorship of the majority, even though it is formed by the losing parties. We have more extreme political currents that are expertly fenced off, but so does China. Just think of the military wing. Citizens are closely monitored. Cameras everywhere record every small crime. And dissidents are quickly branded as anti-social or even imprisoned. Part of the internet is behind a firewall (except for those who have a VPN) and the bias in the MSM gives everything a propagandistic tone. We see this kind of practice more and more in the West. The difference is that in the West, not only the government directs the MSM, but large economic players also pull the strings. The government subsidizes the MSM, the journalists write what needs to be written and the fact-checkers eat with them. People are no longer even afraid of robbing “deviant” academics of their income. In China, everything is justified with the statement that the well-being of the people comes first, in the West a new wave of fear is launched with the regularity of the clock. With the alleged climate crisis as a guideline, the covid crisis came, then the energy crisis, then the nitrogen crisis (which can provoke a food crisis), etc. Each time accompanied by draconian legislation for problems that usually disappear by themselves. But some industrialists benefit and citizens are getting poorer. Because of course, the government needs money to manage all this in the “good” direction. The tax burden here is 2 to 3 times higher than in China.

It is therefore far too simplistic to describe China as “communist” and the West as “democratic”. China’s long-term planning has a distinctly Confucian culture (which dates back several thousand years) under a contemporary and pragmatic communist umbrella while citizens are competitive in executing it. Even more than in the West, the goal is rather well-being, even though the importance of prosperity is not underestimated. The West thrives on the wisdom and pragmatic rationalism of the Enlightenment but seems to have forgotten that intellectual tradition. If you look deeper into this, you will discover a common way of thinking, but also similar dangers. Politics is about power, power is linked to economic benefits and potential. Power leads to abuse of power and undermines the rule of law. In the extreme case, this degenerates into war, and in the other case into the destruction of a civilization. Sometimes to both, as we see now in Russia. Corruption, the mixing of political and economic power, is the real enemy of the rule of law.

What now?

How can the current situation that tends towards a confrontation be turned into a win-win situation? The confrontation stems from a frustration that the West no longer calls the shots, not exactly a democratic idea. The West is on a downward flank of its civilization and power, China is on an ascending flank. That was perhaps inevitable. People work harder to improve their situation but rest on their laurels when they are too well of. That risk also exists for China. In the consumer society that is emerging, the Chinese middle class has access to anything it needs. On the contrary, shopping centers are springing up like mushrooms in the cities, and traffic with more and more electric luxury cars is increasingly queuing up. Top wages are just as high as with us, but there is also a layer of the population that has to make do with a lot less. Not so different from what we see in the West. One-third of our active members are living on benefits. The difference is that in the West the economic handicap has become structural. The “cost of doing business” translates into a government burden that absorbs 50 to 70% of the GDP. The result is excessive wage costs and inefficient use of available economic resources. The latter ultimately comes from export.
In China it is the other way around. The government burden is much lower and there is still a lot of investment at a pace that we do not believe is possible here. Exports are booming and are generating the necessary foreign exchange. In concrete terms, while many western cars were sold in China until recently, the Chinese now mostly drive in a fairly large Chinese middle class and if nothing happens the West will as well, because not only does China produce those cars cheaper, but they are also solid and soon the middle-class Western citizen will be happy if he can still afford it. The assignment is actually very simple and obvious: to reduce the “cost of doing business” to a reasonable level. Consider, for example, 1970 as a reference year, because after the oil crisis, the downturn set in. That oil crisis has resolved itself (like with so many crises) but the “measures” have remained (like with so many crises). These measures have been the starting signal for ever-growing government interference and whoever says this also says tax and regulitis, in which Europe plays a major role. The pushback of course, is less obvious. The majority of the electorate (one-third civil servants, one-third living of benefits) fear the worst. All citizens are equal before the law, but we do have an outspoken class system when we look at pay and pensions. People will resist under the guise of a Social Security crisis. However, the same situation provides all the assets to turn the tide. First, companies have become hyper-efficient in order to survive in the face of heavy payrolls and regulitis. In China, they usually have to work very hard and for a long time on low wages, even though they have hypermodern factories for the volume export products. We also have an army of inactive people who remain structurally inactive because work no longer pays.

What would China do with this situation?

They have experience with it after Mao. They have loosened the reins and the Chinese citizens have rebuilt the country without stopping and without much class struggle and inequality. The government has invested in the necessary infrastructure (which was their biggest handicap) without absorbing the bulk of the economy. That was possible because the private sector started to grow like crazy. They have also sent their people out to learn from others (and not all have returned to the homeland). The West can do just the same. With the necessary decisiveness, economic equivalence can be achieved relatively quickly. Political power rests on economic equality. It doesn’t take supremacy to be prosperous.
Let’s face it, equality between economic blocs also requires a commitment to equality among its citizens. After all, they are the engine of progress, as China has once again demonstrated. In the West, this balance has been broken under the guise (or short-sightedness?) of social equality. Restoring this balance is a moral task, otherwise, future generations will bear the consequences for a long time to come. This is ultimately the communist taboo that has been broken in China. And everyone is benefitting from it.

Is China het labo van de nieuwe wereld