30 years of history in the making

The year of 1989 and the few years after that were arguably the most impactful times since World War II.

The vast impact of the outcome of the events during that time is not fading after the 30 years, but in fact just starting to deepen and spread wide now.

It was the 1989 Tiananmen events in China and the collapse of the Soviet Union (which also started in 1989 and was completed in 1991) that made China what it is today.

It could have turned out differently, but it did not. There are of course fundamental internal reasons, but the mistakes made by the West were catalytical.

With USSR, the West was overly optimistic about capitalism’s sudden replacement of a communism system, and failed to give Russia the much-needed support after the fall of USSR, mostly due to arrogance and self-centeredness.

With China, the West has been naïve about CCP’s potential to gradually transition to democracy and market economy, and as a result has given too much support too quickly to China. This was mostly due to the nearsightedness and selfishness of politicians and business people.

The result: the West lost not only the governments of Russia and China, but also the people.

To Russians and Chinese, who looked through much colored glasses tinted with their own self-centeredness and national pride, democracy and market economy are just pretexts for the West to overthrow other governments and conquer other nations.

Tiananmen 1989 was a disaster in every way. The Chinese Communist Party (CCP) was actually seriously considering reform prior to 1989 democracy movement. As a matter of fact, that the 1989 student movement became so bold and so big wasn’t only because of young people’s sincerity and braveness, but also because of the encouraging signs of serious reformation coming from CCP’s top itself.

The crash ending of the 1989 democracy movement was indeed a turning point for China, because it hardened the heart of CCP and forced it to come up with an alternative strategy. The subsequent collapse of USSR added another layer of solid conviction.

That alternative strategy is simply this: firmly keep the communism “steering” system, but use the capitalism “fuel” to benefit the vehicle. As to the “powertrain” and “engine”, adopt a pragmatic experimental approach.

The pragmatic experimental approach has resulted in a “hybrid” engine and powertrain for Chinese economy.

After 1989, CCP was not going to change China into a democracy. Quite the contrary. It had become clearer than ever to CCP that democracy was going to destroy their power. That was clear to most Chinese almost immediately after 1989.

But it took 30 years for the West to come to this realization.

What happened in the recent years is CCP’s strategy to gear up the “powertrain” and “engine” and steer it more toward a nationalism economy, which had been the case already since 1989, but only intensified recently.

But the “fuel” has been and still meant to be capitalism.

The result: a nationalism capitalism economy, or state-run capitalism (if you think this is an oxymoron, you do not have an adequate understanding of what is going on in China).

There has been no fundamental ideological change to the CCP resolution made after 1989. The only reason why the recent changes seem to be dramatic was because China under Xi made the overtures of the nationalism economy more overt due to China’s growing confidence.

To China, nationalism economy is simply natural. In Chinese, the word for “country” is “guojia” (国家, national family) and therefore the national economy is naturally a “family business”.

In fact, the idea of nationalism economy is so natural to Chinese that it is even hard for Chinese to believe other countries can be actually different.

Under CCP, nationalism economy is far more than the national sentiment, but an extremely well structured and well organized “war” machine.

The West has not worried about “state-owned economy”, because it has always viewed that model as a weakness in itself, the other man’s problem so to speak, until the recent years.

But China’s state-owned economy as a model is no longer clearly a weakness.

Even though most Western economists still believe in the American-style capitalism, more and more people start to worry about the China model.

Not the “rise of China” per se, but the rise of China model.

If China rose as a clean market economy, the West would be just facing a serious competitor, but would still have relatively healthy and manageable coexistence within the WTO framework and ecosystem; but if China rises as a nationalism economy, it would mean death of market economy, or at least the collapse of WTO framework.

The simple truth is that, with the nationalism economy model, when the Chinese government deems a certain industry or technology strategically important enough, that industry or technology could become a competition between “China Inc.” against any other companies of other countries. It would be a race between a national power, the largest one in the world for that matter, and private companies of other countries.

In other words, an industry or a specific enterprise can be systematically weaponized, not to compete on market economy basis, but to destroy others.

This threat is not what most people think it is. It is not like that of two basketball teams competing and there is a danger that Team China might win. If that were the case, let the best team win. Besides, there’s always a proper room for the second place, the third place etc.

The competition is more analogous to Olympic Games, in which Americans are competing on an individual basis, but China on a national basis.

You may ask, why is there anything wrong with competing on a national basis?

This is why: it is not about competition itself, but about the values, because in the end, the nature of the games is changed once the competition changed from the individual basis to the national basis.

Ask yourself, do you prefer a society that has overall healthier individuals with champions naturally emerging, or one that concentrates its resources to generate selected national champions at the expense of the general well-being, just for the sake of defeating others?

It is not even about fairness (as there can be fairness even in brutality) but fundamental values. And if you also take state-sponsored cheating into consideration, it is a matter of both fairness and values.

Despite the above analogy, the Olympic Games is of no significance compared to the struggle between market economy and state-run capitalism. The outcome of an international competition for economic and military powers has a different kind of consequences. And the particular one between US and China is an existential threat to a civilization, due to the diametrically different fundamental values attached to it.

The kind of national power that can be exerted by China is very much misunderstood and underestimated by others. It is not the kind of national power in a mere aggregate sense, but rather that over nationwide resources specifically vested on, and collectively applicable by, a central government that enjoys many advantages over all other governments.

That the Chinese government has significant advantages over all other governments is often not understood in the West, or even completely unknown to it. The Western dialogues usually analyze this from a political science viewpoint, but in doing this misses some simple yet big historical points.

One of the advantages enjoyed by the Chinese government is due to the fact that CCP took ownership of the entire country’s properties, especially land and real property, for free when it came to power in 1949. The Chinese government only started to monetize the nationalized properties in the recent decades.

This factor alone makes Chinese government far more resourceful and richer than any other government, including that of US.

All these unusual government resources augment and embolden the Chinese nationalism economy, making it far more threatening than what most people have perceived in the past.

This is something that other countries need to see clearly: the problem is not that China is rising, but that China insists on a model that is fundamentally incompatible with or even destructive to market economy.

Which model, market economy or China model, is better? The question needs to be approached both economically and morally. The present problem is that the most dialogues today are missing a proper level of awareness of the above factors. This is the case both in the US and in China.

Without this understanding, well-meaning Americans feel embarrassed by their government’s stance, while honest Chinese are outraged by the American unreasonableness and aggression.

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