Summary: US borrows trillions to wage war in foreign lands. China helps build other nations’ transportation infrastructure to connect them for mutual trade. Which program will work better? Their secret advantage over America is seen in every day’s news headlines.
This is how great nations rise, reported by the NYT: “Behind China’s $1 Trillion Plan to Shake Up the Economic Order” by Jane Perlez and Yufan Huangay. Excerpt…
“Chinese engineers are drilling hundreds of tunnels and bridges to support a 260-mile railway, a $6 billion project that will eventually connect eight Asian countries. Chinese money is building power plants in Pakistan to address chronic electricity shortages, part of an expected $46 billion worth of investment. Chinese planners are mapping out train lines from Budapest to Belgrade, Serbia, providing another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece.
“The massive infrastructure projects, along with hundreds of others across Asia, Africa and Europe, form the backbone of China’s ambitious economic and geopolitical agenda. President Xi Jinping of China is literally and figuratively forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development in a quest to create deep economic connections and strong diplomatic relationships.
“The initiative, called ‘One Belt, One Road’ looms on a scope and scale with little precedent in modern history, promising more than $1 trillion in infrastructure and spanning more than 60 countries. …
“Mr. Xi is aiming to use China’s wealth and industrial know-how to create a new kind of globalization that will dispense with the rules of the aging Western-dominated institutions. The goal is to refashion the global economic order, drawing countries and companies more tightly into China’s orbit. …
“‘President Xi believes this is a long-term plan that will involve the current and future generations to propel Chinese and global economic growth,’ said Cao Wenlian, director general of the International Cooperation Center of the National Development and Reform Commission, a group dedicated to the initiative. ‘The plan is to lead the new globalization 2.0.’
“Mr. Xi is rolling out a more audacious version of the Marshall Plan, America’s postwar reconstruction effort. Back then, the United States extended vast amounts of aid to secure alliances in Europe. China is deploying hundreds of billions of dollars of state-backed loans in the hope of winning new friends around the world, this time without requiring military obligations.
“Mr. Xi’s plan stands in stark contrast to President Trump and his “America First” mantra. …”
Contrast China’s ambitious global infrastructure construction program with America. We’re investing in global war while our infrastructure rots (getting a D- in this year’s report by the American Society of Civil Engineers.
Picture of the new railroad station in Wuhan (central China).
China’s advantage over America
The center of world’s economic power moved during the past few centuries from East to West. Poor leadership drove China’s decline, while the major western nations had strong (ruthless, greedy) leadership. Now the reverse is true. Bet on brains, spirit and social cohesion rather than the West’s greater wealth and military power.
China has advantages ignored in most tallies of its condition. First, economic growth makes most problems easier to solve. It creates new wealth to be shared, reduces social stress, and facilitating building a consensus about national policy. It produces new income with which to solve problems. Success boosts morale and strengthen the bonds between leaders and citizens. Unfortunately, these dynamics work equally well in reverse. Economic stagnation breeds disunity and dissension. It saps national morale.
But it has a far larger advantage: good leadership. Wise and far-sighted decisions are the largest force-multiplier. Weak leaders delay key decisions, and then make short-sighted — even foolish — choices.
America vs. China
China is reducing pollution, increase energy efficiency with cutting-edge power systems, and building state-of-the-art transportation systems. They have successfully reduced population growth (avoiding the crowded dystopia India has created). They are building a network of partners around the world, linked by loans and trade agreements.
We’re doing the opposite. Our economy is locked into slow growth, with decaying infrastructure, discredited foreign policies (endless discord, mad wars), and no rational energy policy. We have spent 15 years tearing down the international regime the Greatest Generation built after WWII. Who is the exceptional nation in today’s world?
Every two years we vote. The results reveal who we are. Is our true nature a nation of good leaders and active citizens, working together to build a great future? Or are we a rodeo clown show, at which the world laughs?
We have enough time to do better starting in 2020, if we begin now. We will be what we want to be.
For More Information
See Wednesday’s post: Stratfor explains how China’s Belt and Roads Initiative might reshape Europe.
If you liked this post, like us on Facebook and follow us on Twitter. See all posts about China, and especially these…
- Will China’s Asian Infrastructure Investment Bank begin a new world order? It’s more important than the skeptics believe, less threatening than the doomsters say.
- China takes the lead in supercomputing while America sleeps.
- Stratfor: China builds a new Silk Road for the 21st century.
- Good news from China about climate change! — Weaning China off coal.
- Stratfor gives us the good news: Red China Goes Green.
- Stratfor: Trump risks a trade war with China that cannot be won.
To learn more about China’s new Silk Road…
See China’s Asian Dream: empire building along the New Silk Road
“Under Xi, China is pursuing an increasingly ambitious foreign policy with the aim of restoring its historical status as the dominant power in Asia. From the Mekong Basin to the Central Asian steppe, the country is wooing its neighbors with promises of new roads, railways, dams, and power grids. Chinese trade and investment presents huge opportunities for China’s neighbors, and its ability to build much-needed infrastructure could assist in the development of some of the world’s poorest countries.
“Yet China’s rise also threatens to reduce its neighbours to the status of exploited vassals. In Vietnam and Myanmar, resentment of Chinese encroachment has already incited anti-Chinese protests, and many countries in the region are seeking to counterbalance its influence by turning to the US and Japan. Combining a concise overview of the situation with on-the-ground reportage from over seven countries, China’s Asian Dream offers a fresh perspective on one of the most important questions of our time: what does China’s rise mean for the future of Asia and of the world?”
“Every two years we vote. The results show who we are. Is our true nature a nation of good leaders and citizens, working together? Or are we a rodeo clown show, at which the world laughs”
……
I doubt if the answer to these Questions is really to be found in either of these concise choices. Although I do agree with the way the problem is stated by the wording of each of them, this Belt and Road idea has been known about and planned for many years. The response of the US leadership is a tell, so far. Did the US send anyone, even a DOS undersecretary, to the Summit? Hubris and arrogance are a volatile mixture. Is it fair to add…a continuing tradition?
Agreed. I’m learning.
The post Fabius put up recently about the film “Great Wall” was interesting. I would never watch it until he mentioned it. Now I’ll have to.
As a young European boy I overheard an adult conversation about world affairs in 1959. They were discussing WWII and future conflicts with Communism. Their conclusion was Russia would allign with the West. Thinking back I realize they had war still fresh in their minds like their American counterparts has with the Dust Bowl.
Now thinking how their history affected Chinese.
You are correct in your observation of our country seeming like a land of rodeo clowns but it may be our advantage. We’re collectively nuts, we’re unpredictable and nobody knows what we look like! Our disadvantage is not thinking ahead, unifying and organizing.
We are often referred to as Ugly Americans, Stupid Americans. I was told Stupid hurts once when I was hurting. Perhaps our fools need to suffer to wise up.
Longtail,
Belief that the US would ally with the USSR was common in the 1960s and 1970s. Jerry Pournelle is a rock-hard right-winger, but his “Codominium” sci-fi stories assume their alliance runs the world in the next century or so.
As for America’s future, our politics are in a slump. But that’s easily changed. It requires only an act of will. History overflows with examples of this happening.
I was wrong!
Stand corrected:
“There was a significant US delegation in Beijing, led by Matt Pottinger. He is a Michael Flynn appointee to the NSC who is fluent in Mandarin Chinese. His position is the equivalent to an Undersecretary of State. Apparently, the Chinese were very pleased with the importance of the US delegation. Mr. Pottinger immediately flew from attending the Beijing Summit to South Korea to meet with their new President Moon Jae-in, who will then be meeting with President Trump in June in Washington, DC. By the way, little noted is the presence of a high level delegation to the BRI Summit from North Korea”
More…Reuters back a bit.
http://www.reuters.com/article/us-china-silkroad-usa-idUSKBN18816Q
India and Japan are responding with their own development program: “Pushing back against China’s ‘One Belt, One Road’, India, Japan build ‘Great Wall’” in the Economic Times, 16 May 2017.
Duncan,
Thanks for posting this. However, do you see the difference between articles about China’s program and those of India and Japan described in the ET article? The NYT article described China’s massive projects already underway. The ET article article does not give a single specific about funds committed or projects confirmed.
This is vaporware. It mentions Japan’s “Partnership for Quality Infrastructure” launched in May 2015 — but does not mention anything it has accomplished or even started.
Perhaps the India and Japanese programs will become large and real. Perhaps not.
Indeed it may be vaporware.
But it is the sort of thing one wants to monitor.
It will be great if all of the infrastructure is built and used but I suspect “One Belt, One Road” is the equivalent of the Japanese buying the Rockefeller Center.
Andrew,
Why do you say that? China is building infrastructure in foreign lands that meets their immediate needs. This is the exact opposite of Japan’s real estate speculation in America in the late 1980s.
Also, Japan’s mad gambling was driven largely by their overvalued Yen. The Yuan is fairly priced, perhaps slightly undervalued.
I see it more as a sign of peak relative economic strength before the end of the demographic bonus and also as a bit of foreign investment naivite/bubble exuberance. The Chinese government will likely not get much in the way of loan repayments for these projects and the idea that the Chinese government will make the money off the operation or maintenance of them also seems unlikely. Chinese individuals and firms will make lots of money, the country and government as a whole will have to write off the loans. The Laotians, Pakistanis, etc. may benefit from the infrastructure but are unlikely to be able to pay for it and the Chinese have less leverage to collect from them than the Germans do to collect from the Greeks.
Andrew,
Perhaps you are correct. However, I suspect the commonplace skepticism about China’s foreign investment (see in comments here) reflects westerners’ experience. After all, how could those Chinese folks do better than us (but readers of The Bell Curve learned that they have higher IQs, so …)
However these are the kind of plants from which it is easy even for foreigners to extract payments. The ports and such are de facto controlled by the Chinese, and will service their trade. Mines and farms produce products that they will buy. Core infrastructure, like electric utilities, are simple to manage and extract rents from.
Time will tell who is correct.
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Chinese are doing EU a favor by increasing connectivity. EU is aging and so trade will diminish within the Union. Actually America is aging and becoming impoverished even quicker-because most common age of white Americans was 55 by 2015. Minorities are younger and poorer. For EU by 2013 it was 45. US needs to increase connectivity in its neighborhood and through it, but that requires foresight US lacks.
Winston,
(1) “Chinese are doing EU a favor by increasing connectivity.”
That’s a powerful and seldom recognized point. Trade is usually (not always) win-win.
(2) “EU is aging and so trade will diminish within the Union.”
That’s often said by economists. I doubt that is true due to automation (a new industrial revolution has begun). See Must our population grow to ensure prosperity?
(3) “America is aging and becoming impoverished even quicker-because most common age of white Americans was 55 by 2015. Minorities are younger and poorer. For EU by 2013 it was 45.”
(a) Standard economic theory does not say that aging = impoverishment. It says that aging increases growth until a tipping point when a large group (e.g., the boomers) reach peak income growth, then retire) — after which growth slows. We don’t become poor.
(b) The EU is aging faster than America due to America’s higher rate of fertility and high rate of immigration (although the EU’s open borders might change that, until its people revolt).
(c) Comparing average age of white Americans with the average age of all Europeans is daft, perhaps racist. Non-white Americans are full Americans– and on their way to becoming the majority.
(4) “US needs to increase connectivity in its neighborhood and through it, but that requires foresight US lacks.”
Sad but true. Our rich elites prefer tax cuts and slower economic growth.