China is shaping the world-What the West should do

By Franco Malio

The most influential living American investors or economists live in the U.S., there are only very few, who permanently moved to Asia or China. Jim Rogers is one of them, and he had the biggest impact on my life. He said, Mandarin will be an important language, and I thought he's right. So I went to my boss, and explained him, that I'll have to quit and go to China, for a long time. That was a few years ago, in 2011 exactly. Many things changed since then, China's economy became stronger and the country is now a high paced, high technology leader - with a powerful and successful China foreign diplomacy. At the same time, Russia also changed, and became stronger. All that happened, while the West by force tried to restrain these two emerging powers. 

The crowd strolls on a pedestrian street in Shanghai, China, Monday, April 29, 2013.[Photo: AP/Eugene Hoshiko]

China's diplomatic answer to ease the tensions was the "New model of relations between major countries", or growing the economy while sharing the payoff. It's a model about partnership, not competition. It's sad, that on December 18, 2017 the American President announced: "America will use all of the tools of statecraft in a new era of strategic COMPETITION". 

That's what happened in the last three months, potentially a historical change in the global political landscape:

(1) The U.S. was first. On December 18, 2017 the "National Security Strategy" announced that China and Russia are using technology, media and force to shape the world, against the interests of America. Therefore: America will reject partnership: "We will rebuild America's military strength to ensure it remains second to none. America will use all of the tools of statecraft in a new era of strategic competition." The American President put the cards on the table, shifting from political correctness and quiet diplomacy to something louder. 

(2) Then, Russia was second. On March 1st, 2018 in the "Address to the Federal Assembly", the President of Russia put his cards on the table too, announced that the western defense systems couldn’t keep up with the development of the new weapon categories built in Russia: "We started to develop new types of strategic arms ... missile defence systems are useless against them, absolutely pointless." That's a clear message too. 

(3) And third, China. On March 3, 2018 The CPPCC National Committee and on March 5, the National People's Congress took place. The CEO's of various PRC Unicorns and technology companies were invited to the National Committee. The focus on research, development, innovation and technology was impressive, but not just on a corporate level. It's about system innovation, changing how the economy works. And it looks like the scale effects and scale efficiencies will be higher. 

China is shaping the world, here's what the West shouldn't do.

The latest U.S. administration relies on experts with distorted perspective on China. Peter Navarro, an American economist, serves as the Assistant to the President or the "China-expert to the President", he wrote books on China, lived in Thailand, never learned a word Chinese. That's not an expert, maybe an apprentice, but is directly advising the president. He wrote nonscientific books like "Death by China".

China is shaping the world, what should the West do? 

I think cooperation and partnership is better than confrontation. The diplomatic offer to build a "New model of relations between major countries" looks better than trade war, financial war or any kind of war. It's dangerous to deny the reality, start wars that won't be won. I had the luck to study Mandarin at the right time, and am able now to read first-hand information in Chinese, understand what's happening from both perspectives. Language is a bridge, but can also be a barrier. Mutual understanding is easily lost in translation, especially between Chinese-language and English. Therefore it's crucial for the corporate and political decision-makers in the West to get a first-hand understanding of China, ASEAN countries and the "One Road One Belt"-economic model. That's where the growth and future is coming from.

(Franco Malio is an independent Mandarin-speaking economist from Switzerland)