THE RISE OF CHINA EMPIRE

“Be so subtle that you are invicible. Be so mysterious that you are intangible. Then you will control your rivals’ fate” – Sun Tzu The Art of War

In 1980, China was still very poor and backward. 90% of its people lived on $2 a day, what the World Bank considered “extreme poverty”. Gradually, its citizens began to earn more. Fast forward to 2020, less than 1% of Chinese people live below the poverty line.

In 1980, China had 10 percent of America’s GDP as measured by purchasing power parity and the foreign currency held by China was just one-sixth the size of America’s reserves. By 2020, those figures were 128% of GDP. China’s reserves today are more than 30 times larger than America’s.

Singapore’s late former Prime MInister, Lee Kuan Yew, who closely monitored China rise once said, “Everyone knows about the rise of China. Few of us realize its magnitude. Never before in history has a nation risen so far, so fast, on so many dimensions of power”. He also said that the odd of China continuing to grow at those impressive rates for the next decade and beyond as “four chances in five”.

Graham Allison, a professor at Harvard’s Kennedy School of Government, said “In a single generation, a nation that did not appear on any of the international league tables has vaulted into the top ranks. In 1980, China’s economy was smaller than that of the Netherlands. Last year, the increment of growth alone in China’s GDP was roughly equal to the entire Dutch economy”. Currently, China has already surpassed the U.S. and became number one in the world in the following 20 indicators:

• Manufacturer:
• Exporter:
• Trading nation:
• Saver:
• Holder of U.S. debt:
• Foreign-direct-investment destination:
• Energy consumer:
• Oil importer:
• Carbon emitter:
• Steel producer:
• Auto market:
• Smartphone market:
• E-commerce market:
• Luxury-goods market:  
• Internet user:
• Fastest supercomputer:
• Holder of foreign reserves:
• Source of initial public offerings:
• Primary engine of global growth:
• Economy:

Allison also pointed out that China never missed a year of growth, sustaining an average growth rate exceeding 8 percent. Indeed, since the financial crisis, nearly 40 percent of all growth in the global economy has occurred in just one country: China. He showed the chart below which illustrates China’s growth compared to growth among its peers in the BRICS group of emerging economies, advanced economies, and the world. From a common index of 100 in 2007, the divergence is dramatic.  

China growth is properly planned and not an accident

Would such an impressive growth happen naturally because of the shear size of China’s massive land mass and its large population? I don’t think so. That kind of impressive growth could never have happened without proper planning and careful execution. In fact, China has started planning for it seventy years ago since the founding of People’s Republic of China (PRC) in 1949.

As a result of their long history and their intensive studying of it, Chinese leaders plan for the development well over a hundred years in advance (because that’s how long good dynasties last). They understand that there are different stages of development, along with their respective dangers and pitfalls, and they plan for them.

For example, the first phase of China’s development, which occurred under chairman Mao, was to consolidated power and built China’s foundation of institutions, governance, and infrastructure. From history, there have been numerous violent wars inside of China over the dynasties and there haven’t been many from outside of China. Politics in China has traditionally been brutal. According to some Chinese scholars, more than a third of emperors died unnaturally. They were either killed by the people around them or killed by others during political struggles. Learning from their own history, Chinese leaders understood that it was critical for them to consolidate power and built strong foundations. They also understood that in order to stop foreign interference, especially after their own civil war between Communist and Capitalist and the loss of Taiwan, they needed to keep China in isolation from the rest of the world at that very early stage of developments.

China’s second phase of developments of building wealth, power, and cohesiveness under Deng Xiaoping and his successors Jiang Zemin and Hu Jintao were done in such a way that didn’t appear threatening to other countries, especially the dominant power (i.e., the United States). This policy was known as “hide and bide” which means to “bide our time and hide our capabilities”. Chinese leaders had learned from history that, when a rising power threatens to displace the dominant power, the dominant power will do whatever it can to stop it and war is almost always the result, and China wasn’t ready for that.

The third phase of developments, building on these accomplishments and moving China toward a modern socialist country that is prosperous, strong, culturally advanced, and harmonious, is occurring under Xi Jinping and his successors. When Xi Jinping came to power in 2013, the era of “hide and bide” was over. Domestically, he ended flirtations with democratization by reasserting the Communist Party’s monopoly on political power; and attempted to transform China’s engine of growth from an export-focused economy to one driven by domestic consumption. Overseas, he has pursued a more active Chinese foreign policy that is increasingly assertive in advancing the country’s interests.

Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, had numerous direct experiences with China over nearly four decades and had done extensive historical and economic research about China. He said: “Chinese leaders don’t just plan and try to implement their plans; they set out clear metrics to judge their performance by and they achieve most of their goals. Chinese leaders have much longer-term and historically based perspectives and planning horizons, they bring those down to shorter-terms plans and ways of operating, and they have done an excellent job of achieving what they set out to do by following this approach”.  

What Xi Jinping calls the “China Dream” expresses the deepest aspirations of over a billion of Chinese people, who wish to be not only rich but also powerful. At the core of China’s civilizational creed is the belief that China is the centre of the universe.

The “Century of Humiliation” by Western colonialists and Japan is still very fresh in the mind of Chinese leaders. They see their country as a lost empire that needs to be regained, respected, both loved and feared. They want China to assume its rightful place in the world, where its power commands recognition of and respect for China’s core interests. The rise of a 5,000-year-old civilization with 1.3 billion people shouldn’t surprise anyone.

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