Your Guide to Dispelling Every Western Myth About China

From 1945 to the present day, the US and its close European allies have developed a geopolitical narrative which in the minds of its authors, offered a blueprint for international peace and prosperity. According to this narrative, confrontational multi-party democracy, a rejection of constitutional secularism, an internally de-regulated market, an adversarial press and geopolitical alliances based on ideological values and similar social structures rather than pragmatic international relations, were the proverbial tickets to economic paradise. China has proved this formula to be largely untrue, as China is set to become the largest economy in modern history. China has achieved its present day greatness by following a very different political, social and economic model.

Here are some of the western myths of the 20th century that have been shattered by China’s success:

1. ‘We must primarily do business with country’s that share our values’ 

There is not a country on earth whose homes, shops and even infrastructure do not have at least some Chinese products. The ubiquity of Chinese goods is the result of a powerhouse economy that has excelled in efficient production techniques that create reliable goods and in more recent years, goods that are of top quality by international standards.

China cannot be ignored, for the same reason that in the 20th century, the US couldn’t be ignored, in the 19th Britain couldn’t be ignored and before that Holland, Spain, Portugal, Venice, The Ottoman Empire, Byzantine Empire, Roman Empire, Chinese empire etc.

China is today’s economic centre of gravity and it hasn’t even reached its peak potential by a wide margin. In the 20th century, the main market economies of the world had the deceptive luxury of doing business with countries that had similar so-called values, because it was these countries where much of the world’s wealth continued to lie.

This is no longer the case. China has consequently shattered the myth that the leading economies would always be those that revolved around a North American-European, Anglo-Saxon axis and all of the world has now had to come to terms with this. If one wants to do business with the world, this means that one has to do business with, in and around China.

2. Communism cannot produce wealth 

Just as the ‘non-communist world’ of the Cold War era was not a monolith with a singular form of government or geopolitical objectives, so too was the communist world highly diverse. Based on the rivalries which sprung up around the Sino-Soviet split, one could make the argument that the global communist world was far more fractious than the non-communist world. Even today, the legacy of the Sino-Soviet split (along with prior historical precedents) continues to strain Sino-Vietnamese relations, in spite of both countries retaining a communist system in the post-Cold War era.

In spite of this, the western narrative that became ever more solidified after the 1980s, stated that communism in any form cannot produce wealth, as though the presence of a hammer and sickle was to prosperity what a cross is to a vampire.

In reality, China has maintained its communist system and built upon it in order to create the wealth that China produces today. The great market socialist reformer Deng Xiaoping never painted himself as the anti-Mao and nor do Chinese scholars see him this way. Instead, Deng felt that by the late 70s, the time was right to build on both the successes and missteps of previous epoch in order to transform a well organised and centrally controlled agrarian society into a well organised and centrally controlled industrial society.

The wealth that Deng Xiaoping’s industrial society created has led today’s Chinese President Xi Jinping to call for the building of a “moderately prosperous society” where China will be known not only for its effective and efficient production methods but for its ability to produce original inventions, entrepreneurial measures and items that are not just “made in China” but “created in China”. This will be accomplished through following Xi Jinping thought on Socialism With Chinese Characteristics For A New Era. The clue is in the name.

The presence of Chinese entrepreneurs on the world stage, including Jack Ma, is a testament to the fact that already, China is not just making but is creating new innovations that have become popular throughout the world. To recap, all of this has happened under the leadership of a Communist party that according to the west, wasn’t supposed to understand, let alone value prosperity.

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3. Free trade is contingent of liberal domestic politics 

For western countries, the concept of free trade has often gone hand-in-hand with ideological demands that free trading partners must have similar liberally governed societies in order for free trading to commence. This blurring of political and economic lines has been a defining feature of western free trading initiatives ranging from the European Union to the North American Free Trade Agreement (NAFTA).

China has taken an opposite approach, prioritising infrastructure and pragmatic economic needs over any political considerations. China is willing to conduct a variety of trade agreements, including those encompassing free trade, with any nation in the world, based on the mutual needs of any given set of partners.

China’s One Belt–One Road looks to create a global infrastructure and logistical network which makes trade between countries more profitable for all parties involved, thus lessening the need for future trade barriers. China’s model is based on multi-lateral investment in the service of mutual prosperity and crucially, unlike the western model, China is equally at ease trading with theocracies, communist states, autocracies, democracies, mixed systems and any combination thereof. Thus, one sees a Chinese model of peace through prosperity that does not involve any preconditional demands among potential partners.

4. China is not exporting its system 

Ironically, it is the US that for clear economic and monetary concerns, is keen to export its political system to other countries, both through intimidation and through the use of force. It is no coincidence that as the most successful mixed economic system in modern Europe, Yugoslavia became a target of NATO aggression in 1999. Nor is it a coincidence that Iraq was invaded by the US and UK in 2003, shortly after it began trading oil futures contracts in Euros rather than Dollars. Likewise, when Libya was destroyed by NATO in 2011, this came shortly after Libya’s revolutionary leader Muammar Gaddafi was in the midst of creating a pan-African gold backed Dinar that could have challenged the US Dollar hegemony across the continent.

It is incredibly ironic then that these same western powers that destroyed Yugoslavia, Iraq and Libya and are now at war with Syria while meddling with Iran and Venezuela, are the countries that accuse China of attempting to export its system abroad. As seen in the previous section, China continues to build partnerships with countries that have vastly different political and ideological systems. China’s respectful attitude has been a further incentive for many countries to do business with China. This has been expressed by Philippine President Rodrigo Duterte who praised China for doing business without any strings attached while saying that there is always a catch when working with the United States.

5. Individual freedom can only occur in western style political systems 

Today’s China is not only a free society, but it is becoming freer. Chinese have taken to the world of social media, online news forums and high level discussions far more readily than many others. Foreign journalists operate in China and are free to interview men and women in the street in the same manner as is now commonplace in most countries. As one can see, Chinese are happy to freely express their views in peace and comfort, even when these views are critical of some aspects of their society that they wish to see improved.

What’s more is that while western countries are working to retard internet freedom, in China these kinds of freedoms continue to grow. While certain western social media outlets remain blocked in China, it is only a matter of time that in-line with China’s overall policy of economic openness, that these too will become available on the Chinese internet. When they are, they will likely be less popular than domestically produced social media outlets in any case, but it seems to be only a matter of time before Chinese will have ever more options, just as those in the west are losing many of their options through censorship and increased bureaucratic red tape.

5. China only became rich because of currency manipulation 

This argument is a classic example of “be careful what you wish for”. The Chinese Yuan has indeed been pegged to the Dollar in the same way that prior to the creation of the Euro, the European Exchange Rate Mechanism pegged multiple European currencies to the Deutsche Mark. For China, western consumers and manufacturers who rely on Chinese products, this has been a win-win as it has kept Chinese products affordable vis-a-vis the Dollar, while it has allowed China’s companies to engage in successful transactions with the world’s formerly largest consumer base in the US. This has also made it attractive for China to purchase vast sums of US Treasury Bonds, which has helped inject much needed cash into a deficit strapped US economy.

The combination of China outpacing the US in terms of being the largest domestic consumer base, combined with the opening up of new developing markets in Asia, along with the recent US turn away from free trade to protectionist principles, has led China to take steps which are clearly preparations for a free floating Yuan.

Ever since 2015, China officially detached the Yuan from the Dollar and instead pegged the Yuan to the currency basket known as Special Drawing Rights (SDRs). This currency basket is an aggregate value of the Dollar, Japanese Yen, Euro, British Pound and beginning in 2016, also the Yuan.

Today, the governor of the People’s Bank of China made the following announcement,

“In the process of internationalization of the yuan we have taken sufficient measures that from now on will allow the yuan to be used in trade and investment. Moreover, the yuan has been included in the SDR currency basket. The key procedures have already been carried out… As for the future role of the government or the Central Bank in the internationalization of the yuan, to my mind, it is still possible to do something to establish communication between domestic and international capital markets.

We cannot force anyone, decisions are made based on their own logic, that is why it is a gradual process. We will continue gradual internationalization of the yuan”.

In simple terminology this means that China is making preparations to float the Yuan on the open market, a decision that has almost certainly been sped up due to Donald Trump’s love of tariffs, which are designed to take away any remaining Chinese competitive advantage.

When the Yuan eventually floats, not only will it come to replace the Dollar as the international reserve currency, but it will also become the de-facto petro-currency, thus replacing the petro-Dollar that has been America’s de-facto currency stabilising mechanism ever since Richard Nixon took the US Dollar off the gold standard in 1971.

At such a time, China will almost certainly begin to sell off some of its US Treasury bonds in anticipation of a falling Dollar and rising Yuan. The result for the US will be a limitation of purchasing power among both consumers and businesses, as well as the bloated US public sector. This process will also lead to reduced US influence among energy producing nations whose transactions will begin to use the Yuan rather than Dollars.

At the same time, Chinese goods will likely still be more affordable than those made in the US, because as a more efficient producer, China can always do what Japan did in the 1980s and artificially lower the price of its goods in certain foreign markets (including the US) in order to make gains on overall volume and market share, rather than in terms of a dollar-for-dollar profit. One mustn’t forget that many in the US said about Japan what they currently say about China, even though the Japanese Yen was incredibly strong in the 1980s vis-a-vis the Dollar.

Thus, when China does float the Yuan and allow its value to skyrocket, the US might find itself regretting pushing China to this decision which is now all but inevitable in due course.

6. China’s bubble will burst 

For decades, many western leaning experts have said that China’s ‘bubble’ will burst and not once has it come to fruition. China’s economy continues to expand in terms of output, but crucially it is also expanding in terms of diversity. Apart from the fact that it shows no signs of slowing down in any significant way, one must remember that the market socialist model upon which the Chinese economy is based, has built-in safety nets that the US economy and many other European and Anglo-Saxon style economies simply do not have.

In China, while enterprise and entrepreneurial endeavours are encouraged, the profits of such activities are still largely re-invested back into the state. This means that even in an economic downturn, national wealth is still recycled back into the economy in areas ranging from housing, education, domestic infrastructure, healthcare and the environment. Even if world trade were to somehow collapse tomorrow (which isn’t going to happen in any case), China’s economy is capable of self-sufficient readjustments which mean that while no country is fully immune to the peaks and troughs of international markets, China is better equipped to avoid a great depression style collapse than any western economy because of its strong market socialist public safety net that avoids the extremes of a credit happy market place that has no centrally controlled safety structure.

One way or another, things in China will not only survive but will thrive even if there is a major global economic collapse.

7. Secularism is immoral 

As the US remains hostage to a politically strong extremist Evangelical movement, the US has seen its educational standards drop, its literacy rates decrease and its willingness to invest in cutting edge medical science decrease. The Evangelical movement has also retarded the ability of US diplomats to take a rational and objective view of the world. All of this was predicted by US Senator Barry Goldwater beginning in the late 1970s. In the 1990s, Goldwater also predicted that in 20 years, China would be the leading economic and military power in the world.

Since then, the US political establishment has become ever more beholden to Evangelical extremists who seek to take the country in the direction of religious fundamentalism. By contrast, not only does China have a lower crime rate than the United States, thus dispelling the notion that a religious fundamentalist society is a safe one, China also continues to pioneer medical technology that will save the lives of future generations, not least because as a constitutionally secular country, China is not restrained by artificial limitations on research which are derived from an extremist interpretation of ancient religious doctrine.

Conclusion

Cynicism regarding China is becoming a western cottage industry in the political, journalistic, academic and even cultural spheres. Ironically, if western countries spent more time trying to apply certain Chinese methods to their own economies, rather than try to undermine China, predict China’s demise or accuse China of being unfair, the more the world would be closer to the kind of win-win environment that China advocates.

Sadly, while many in the west complain, China continues to dream big and thus far, every major Chinese dream has come true. It seems that there is little that the Chinese nation is not capable of accomplishing.

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