Is China on the way to becoming the new role model for the world, supplanting the US? Not so fast. Yes, China has been on a roll for forty years. And the US can’t seem to solve its biggest problems. But China, with per capita GDP roughly one-fourth of America, has a long, long way to go and many obstacles in its path. Plus, if it does succeed, it will do so because it is becomes more like the US, not less like it. China might become the new standard bearer, but that standard will be familiar to Americans and everyone else.
The Wall Street Journal had an excellent piece (title and link below) that described how Chinese people are increasingly inclined to defend China and the Chinese way, even suggesting China is already outperforming the US.
New Challenge to U.S. Power: Chinese Exceptionalism
Is China demonstrating a new societal model? Are the Chinese right to be so satisfied with their country? These are main issues suggested by the article. The short answers are no and yes, for now. Below I’ll elaborate.
China’s prosperity: A unique path but the same old principles
China’s development path over the last forty years has been counterintuitive to many people. Starting in 1980 with a communist system in which the government owned 100% of the economy and no political freedom existed, China has gradually introduced the free market into its economy while neglecting political reform almost completely. The economy, which now stands at about 60% private and 40% government controlled, responded brilliantly, with four decades of tremendous growth. But this growth stands as a testament to the free market, not government control. It is China’s private sector that is developing technology, increasing living standards, and driving growth. China has grown because it is embracing the free market, not because it has found a way around it. If China stops moving toward the free market, it will stop growing. China’s path to the free market might be new, but a prosperous economy built on the free market, which is what China is becoming, is not only NOT new, it’s down right American!
Democracy in China: Following a familiar path
China’s path to democracy isn’t new either. If we define “effective democracy” as free and competitive elections plus the rule of law, then we can say that there are virtually no poor countries that are effective democracies and no advanced, prosperous countries that are not effective democracies. (Hong Kong is the exception because of its unique relationship with China.) History and research has shown there is a clear link between economic development and democracy. China is moving in that direction, following a similar path as Taiwan, South Korea, Singapore, and Hong Kong, i.e., the “economics first” path, in which economic liberalization produces growth, increases education, strengthens the rule of law, and spreads a sense of empowerment that leads the people to demand elections and full democracy. Democracy might be hard to envision in China now. But Taiwan was ruled under martial law for decades. It didn’t look very democratic, either. As always happens, economic freedom led to political freedom.
Success breeds pride
Given China’s success, it is natural that Chinese people feel an increase in pride and confidence. Since attention to China from the outside tends to focus on the negative (human rights, the environment, counterfeiting) instead of the positive (lifting hundreds of millions from poverty, the spread of economic freedom and empowerment, rising quality of education, health care, etc.), it isn’t surprising that those who travel abroad share that pride. The Chinese should be proud. Rising from the ashes of the Cultural Revolution, China’s progress has been remarkable.
Obstacles ahead could lead to disappointment
However, since 2008, China has added an incredible amount of debt to its economy, with debt to GDP rising from 120% to almost 300%. Growth has slowed. A stock market bubble burst. Capital outflows have surged. Over capacity and ghost towns are real problems. Corruption remains a huge problem despite recent efforts to fight it. Air quality is awful and usable water is increasingly scarce. The point is that China has plenty of challenges ahead which will give the government plenty of opportunity to disappoint its people, as all governments eventually do. So the pride the Chinese feel today, reasonable as it is, won’t necessarily last without interruption. That’s not to say the Chinese will turn on their country. However, as countries develop, the standards of the people rise. They want more out of life and their government. What is acceptable today will become intolerable tomorrow. People might not demand democracy now. But their children likely will. That’s the nature of development.
America is not following the American model
Among non-college educated Americans, almost 50% of white children and 70% of African-American children are born to unwed mothers. (The number is only 7% among college educated Americans, reflecting a dramatic cultural chasm in America.) Statistics clearly show that this family breakdown leads to negative outcomes relative to education, drugs, work, and crime, which is the major reason parts of American society have become so dysfunctional. This is NOT the American model. America has always been flawed, with racism being the best example. America itself can only strive to the American Model. Perfection is not possible. Between family breakdown and stratospheric debt levels, it increasingly seems America can’t fix its biggest problems. If that continues, the America of the future will be less like the American Model. But that will be a failure of America, not the American Model. Put the family back together and fix the national balance sheet and you’ll find that the American Model still works better than any other. In the end, it might be the Chinese that prove this to be true.