At Davos, China Offered Hope While Trump Scapegoated China for America’s Internal Decline

The World Economic Forum in Davos is increasingly becoming something of an old fashioned ‘boys club’, more intent on self-congratulatory statements than meaningful proposals and ideas which can move the world forward into the age of prosperity derived from respectful inter-connectivity. This may be one of the reasons why China’s President Xi Jinping skipped this year’s forum.

Nevertheless, the Chinese delegation offered the boldest vision for the future, based on the principles of Xi Jinping’s Thought on Socialism With Chinese Characteristics for A New Era.  China has a clear model whereby increased automation, technological advancement and new creative design across all fields of production can economically co-exist with rising living standards and an eradication of poverty. This is because while China continues to encourage individual invention, the wealth of the Chinese system retains a circular flow of both inward and outwards investment, the beneficiaries of which are ultimately the Chinese people themselves as well as those who seek to integrate their economies into China’s One Belt–One Road. The latter offers the potential to increase the flow of wealth throughout the world, based on some of the principles which have elevated China from the poverty of the early and mid 20th century, to the world’s leading society that it is today.

By contrast, Donald Trump’s speech was the stereotypical blame game that pinned America’s visible failures that he highlighted endlessly in his Presidential campaign on so-called “unfair trade deals”. In reality, it is not Chinese prosperity and innovation that has cost America its economic prestige. Long-term US economic decline can be traced to an inverse problem to that which created the wealth of the United States in the 20th century.

The two greatest things to happen to the US economy in the 20th century were the two World Wars. The fact that devastating wars lead to booming US economic epochs is not something to be proud of, but some of the methodology through which the US achieved its status in the aftermath of those wars must be examined.

The US entry into the First World War helped to ignite further domestic  revolutions in production and innovation which continued into the 1920s. The devastating effect that the war had on Britain, Germany, Austria, Turkey France and Russia, left the United States as the de-facto ‘safe deposit box’ and chief financier of the world after 1918.

By 1929, poor regulatory systems inherent in the unbridled capitalism of early 20th century America, led to the Great Depression. Likewise, Japan which found itself in a similar untarnished position after the First World War, responded to the need to expand its markets through the brutal occupation of almost much of East and South East Asia.

However, it was when Japan attacked Pearl Harbor in the United States, that the US got an economic blessing in disguise. While Japan brutalised the peoples of China, Korea, Philippines, Vietnam, Cambodia, Laos and elsewhere, the US mainland remained untouched by the horrors of the Second World War. This allowed the US to amend its capitalist system to allow heavy state investment across the industrial and agricultural sectors, leading the US to become the workhouse and breadbasket of western Europe during the war.

After the war, these cutting edge factories were in-part converted to the civilian industrial sector. The high levels of state investment during the war, combined with the destruction of almost every other major industrial economy in the world, meant that the US had little competition and all the newest technology.

However, as countries like West Germany, Japan, Singapore, China and others began re-industrialising after the war, the US found itself lagging behind because the US economic system which is driven by profit does not allow for the most efficient re-investment of funds into industrial infrastructure. Thus, the US gradually shifted from industrial capitalism, fuelled by the investments of the Second World War era, to a society based on financial capital where factories are left to rot while good jobs are replaced by nothing but destitution.

By contrast, the Market Socialism theory of Deng Xiapoing allows for a balance between innovation and the circulation of profits back into society. This means that Chinese factories can use the profits they generate to reinvest in the local economy and by extrapolation, in the age of automation, the wealth created by Chinese robots or even Chinese artificial intelligence, can still recirculate into the Chinese economy to the benefit of the people. Whatever is created in China can therefore generate wealth to be shared among the people. It is this simple concept which divides the circular Chinese model from the outgoing one-way street of the contemporary American model. Thus, while the US stock market has shot up to record highs to the benefit of the infamous so-called “1%”, this is not being felt in any meaningful way by the American people who are still not being invested in by their own government.

The United States is still capable of investing vast amounts of money into its economy. The defence sector remains handsomely funded in the US, more so than any other defence sector in the world. The amount of money the US puts into its war machine could easily be re-positioned into the civilian industrial economy. If the US government took even half of its defence budget and put it into building factories that make computers, household electronics, cars and trucks, finished household goods, power tools, finished construction supplies, ships and planes, the US might not think of China, which excels in all of the aforementioned areas, as having an “unfair advantage”, not least because most European markets still are more favourable to US imports than to Asian imports.

It is therefore not China which has an “unfair advantage”, it is the US which has unfairly disadvantaged itself due to poor economic management, a culture of chasing profits rather than looking to the long term goal of sustained development and innovation. Most importantly, while the US has been actively pursing unnecessary and illegal wars for decades, China’s economic growth is tied in to the concept of peace through prosperity.

It all amounts to a policy of Chinese “win-win” solutions versus an American policy of scapegoating others for America’s own internal decline, mismanagement and a total lack of imagination.

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