"As you can see, for most of that time China was one of the world’s most powerful empires, with the notable exception from around 1840 until around 1950 when it went into a steep decline. As shown, around 1950 it started to rise again, at first slowly and then very rapidly, to regain its position as one of the two most powerful empires in the world."
"For example, to Americans 300 years is a very long time. For the Chinese it is very recent. While having a revolution or a war that will overturn our systems is unimaginable to an American, it is inevitable to a Chinese person (because the Chinese have seen that they have always happened and the Chinese have studied the patterns of why they have happened). While most Americans focus on particular events, especially those that are now happening, most Chinese, especially their leaders, see evolutions over time and put what is happening in the context of them. While Americans fight for what they want in the present, most Chinese strategize how to get what they want in the future. As a result of these different perspectives the Chinese are typically more thoughtful and strategic than Americans, who are more impulsive and tactical. I also found Chinese leaders to be much more philosophical (literally readers of philosophy) than Americans leaders. If you read their writings and their speeches, you will find this to be true. Philosophies of how reality works and how to deal with it well are woven into their thinking, which is expressed in their writings."
" Their history and the philosophies that have come from them, most importantly their Confucian-Taoist-Legalist-Marxist philosophies, have a much bigger effect on how Chinese people, and especially Chinese leaders, think than America’s history and its Judeo-Christian-European philosophical roots have on Americans’ thinking. That is because the Chinese, especially their leaders, pay so much attention to history to learn from it. For example, Mao, like most other Chinese leaders, was a voracious reader of history and philosophy, wrote poetry, and practiced calligraphy—e.g., I was told by an esteemed Chinese historian that Mao read Comprehensive Mirror in Aid of Governance, the mammoth 294-volume-long chronicle of China’s history that covers around 16 dynasties and 1,400 years of Chinese history, from around 400 BC to 960 AD, and the even more mammoth Twenty-Four Histories several times as well as numerous other volumes about Chinese history and writings of non-Chinese philosophers, most importantly Marx. I’m told that his favorite book was Zuo Tradition, which focuses on political, diplomatic, and military affairs in a “relentlessly realistic style” 2 in the period from 722 BC to 468 BC, because the lessons it offered were so relevant to what he was encountering."
"In 1995 I had my 11-year-old son, Matt, go to China to live with Madame Gu and her husband and go to what was then a poor local school (Shi Jia Hu Tong Xiao Xue).24 Matt had been to China with me many times over the years since he was 3 years old. He would tag along to meetings in which the kind Chinese people I was meeting with would give him cookies and milk while we met. He attended lunches and dinners that were fun banquets and had gotten to know Madame Gu well, who was very loving with him so they had a wonderful relationship. So he fell in love with the Chinese people and China. Madame Gu knew that I (and my somewhat hesitant wife) would love for Matt to live in China and have the life of a local Chinese child. We all knew that it would be very tough for him, but good tough. His living conditions would be basic (e.g., there was typically hot water only two days a week). Schools in China then, like most everything else, were poor. He didn’t speak the language so he would have to learn through immersion, which he did. Though his school was poor (e.g., there wasn’t heat until late November so students wore their coats in classes), I saw how they had smart and caring teachers who provided the children with an excellent, complete education that included character development."
Wow!
"Without the US disrupting China’s currency and capital markets they will likely develop quickly and increasingly compete with the US currency and credit markets. You won’t see this all at once, but you will see it evolve that way at a shockingly fast pace over the next 5-10 years. As shown in the Dutch, British, and US cases that development is consistent with the natural arc of things. Also, the fundamentals are in place for that to happen if the Chinese continue to run sound policies and develop their markets well. There is a lot of potential for Chinese capital markets, the RMB, and RMB-denominated debt to grow in importance because it is so underinvested in relative to its fundamentals. For example:
China and the US are the largest trading countries, both accounting for about 13% of global trade (including exports and imports), yet the RMB accounts for only about 2% of world trade financing while the dollar accounts for over 50%. It would be pretty easy to increase the share of trade financing in RMB.
While China accounts for around 19% of world GDP9 (and is growing at a faster rate than the US) and has around 15% of global equity market capitalization, it has only about 5% weight currently in MSCI equity indices and its assets represent only about 2% of foreign assets in portfolios. In contrast while the United States on the whole accounts for around 20% of world GDP and is growing slower, it now accounts for over 50% weight in MSCI equity indices and has around 48% of non-American money in it. My point is that Chinese markets are underinvested in because the investment has lagged the development, especially for foreign investors.
As previously explained and shown in the development of the Dutch, British, and American empires, the development of the world’s leading capital markets and the world’s capital market centers of Amsterdam, London, and New York was an essential step in each empire’s development to become the leading empire and has traditionally lagged the country’s fundamentals the way the Chinese capital markets and Shanghai as a financial center (and to a lesser extent Hong Kong and Shenzhen) have lagged China’s developments.
The development of Chinese currency and capital markets would be detrimental for the United States and beneficial for China. So once again it seems likely that American policy makers will be forced to choose between a) trying to disrupt this evolutionary path by becoming more aggressive with their wars (in this case via a more aggressive capital war) and b) accepting that evolution will likely lead to China becoming relatively stronger, more self-sufficient, and less vulnerable to being squeezed by the US at the expense of US leadership in this area, especially over the next 5-10 years. We are seeing some early signs of US moves to curtail Americans’ investments in Chinese markets and to possibly delist Chinese companies from American stock exchanges. These are double-edged swords because while being marginally harmful to Chinese markets and listed companies they also weaken American investors’ and American stock exchanges’ abilities to be competitive, which will support the development of those in China and elsewhere. For example, the Ant Group’s choice to list on the Hong Kong and Shanghai exchanges gives investors the choice of investing on those Chinese exchanges or missing out on those investments, which are listed there and not on other exchanges."
"For example, one should accept the fact that when choosing leaders most Chinese believe that having capable, wise leaders make the choices is preferable to having the general population make the choice on a “one person one vote” basis because they believe that the general population is less informed and less capable. Most believe that the general population will choose the leaders on whims and based on what those seeking to be elected will give them in order to buy their support rather than what’s best for them—e.g., the general voting population will choose those who will give them more money without caring where the money comes from. Also, they believe—like Plato believed and as happened in a number of countries that turned from democracies to autocracies through the millennia (most recently in the 1930-45 period)—that democracies are prone to slip into dysfunctional anarchies during very bad times while people fight over what should be done rather than support the strong, capable leader who will tell them what they should do. They also believe that their system of choosing leaders lends itself to better multigenerational strategic decision making because any one leader’s term is only a small percentage of the time that is required to progress along that developmental arc.10 They believe that what is best for the collective is most important and best for the country and is best determined by those at the top. Their system of governance is more like the governance that is typical in big companies, especially multigenerational companies, so they wonder why it is hard for Americans and other Westerners to understand the rationale for the Chinese system following this approach and to see the challenges of the democratic decision-making process as they see them."