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China Thinks Strategically and We Don’t

2017 November 9
by Ian Welsh

In the West, we have not lived in rich states for over two generations.

This statement will strike most readers as nonsense, and should, but it’s true.

We think of ourselves as rich because we have a lot of consumer goods. Cars, electronic devices, and so on.

But the states we live in–the governments–have been poor. Their money is tied down and large projects do not get mobilized–things like the moon shots, interstate highways, and so on.

Our states are poor. Their ideology, with a few exceptions (smaller countries, all) is to let the rich get richer and have the rich spend money. So instead of NASA leading a huge space program, we have a variety of private companies like SpaceX building technology which a rich state would have created 20 years ago.

China doesn’t think this way. Chinese citizens may not be as rich as the average westerner (though there are plenty of rich Chinese as every world-class city that allows foreigners to buy its real-estate has found out, much to the sorrow of its ordinary citizens), but the state is rich, and the state and the companies it controls and influences are rich.

Most of our companies are not driven by the bottom line. Rather, they are driven by how much money they can create for those who control them. This is often not the case for Chinese companies.

Case in point: The global shipping industry is in grave trouble. Who is buying up those shipping companies in trouble? China. And they’re also buying up control of ports all over the world. China has majority control over many European ports, but no outsiders have majority control over any Chinese ports.

These are strategic assets. With control of shipping and ports, China is sure to be always able to move products and commodities wherever it wants, and its navy also has places to dock.

This simple strategy was understood for centuries. Countries went far out of their way to create large merchant marines, to protect ports and to retain control of them. Some assets are worth more than their market price in a slump, because everything else relies on them when things go bad. (Imagine Britain and the US without strong merchant marines in WWII.)

This is the way China thinks: They are buying up vast quantities of northern land in preparation for global warming, creating entire new waterways, deciding to build entire green cities.

China’s state is rich. The Chinese companies the state considers important are rich. They can do big things because China recognizes that those big things will matter in ten or twenty or forty years.

Chinese leadership still thinks strategically, and they can afford to do so.

Whether this will continue to be the case is unclear. The next generation of Chinese leadership will draw heavily on the princelings, who have never known real adversity. The economy is still suffering from the mercantalist trap, and widespread corruption and lack of a quality ethic causes huge issues. Aquifers are being drained ferociously, and climate change will hit China hard.

But unlike most of the rest of the world, China is actually trying to tackle problems, to think decades ahead, to plan, and to do big important things.

Some of what China considers important, I don’t like–for example, its expansion of a truly oppressive surveillance citizen which will include a public score for every citizen. However, this doesn’t change the fact that China does big things, good, bad, or flawed, while we watch approaching catastrophes and gently hum to ourselves, then check our phones.


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39 Responses leave one →
  1. November 9, 2017

    We think about how old and rich people can sock away money – and transfer it to the ones the want. Different goals – the Chinese want to run the world.

  2. Emma permalink
    November 9, 2017

    while we watch approaching catastrophes and gently hum to ourselves, then check our phones

    And entertain ourselves by bickering about “politics” the way our grandmothers gossiped about their stories on teevee.

    Not that you can’t do more than one thing at a time, of course; but when 60% of your fellow citizens can’t even agree on what constitutes a catastrophe, or are delighted to help usher forth various catastrophes because they erroneously believe the consequences will target their (mostly imaginary) enemies exclusively, then you might as well put a hanzi app on that phone and enjoy yourself.

  3. peonista permalink
    November 9, 2017

    Rich corporate interests have captured the media , the government, and the intellectual class . The US doesn’t have anyone telling the story of what is happening to the non-rich. When media was more localized many doing the “story-telling” were living the lives of the average person. Now the “story-tellers” from Fox News to NPR are part of the rich man culture.
    Things that would make our lives better do not make money for the rich and that is the central consideration for the wealthy who are running the show.
    The “every- four- year-election- circus” just confuses people into thinking that someone, somewhere is working for change:; the change everyone can see is sorely needed. But it is all an illusion and whichever party gets the presidential trophy governs for the rich.

  4. realitychecker permalink
    November 9, 2017

    @ peonista

    You’ve summed up the situation exactly as it is, IMO.

    I’m on the way out, relatively speaking, but I am saddest to think that the young don’t even seem to be bothered by it. Maybe the next phase of our evolution will be about other things than were the ideals of the Enlightenment? More of an “efficient herd” kind of mindset, perhaps?

    If so, I’ll be glad not to be part of it.

    .but I really wonder

  5. realitychecker permalink
    November 9, 2017

    Strike “.but I really wonder” last line. (Edit function, where is thy sting?)

  6. Willy permalink
    November 9, 2017

    I remind my evangie wingnut relatives that China is less than 4% Christian, and that the policies they’re kind is all angrily marching in synch for, are empowering communist China to become the next great global leader. What the hell kind of strategy is that? If you want to convert somebody from tribal evangie wingnut to corruption fighter, ask them that.

  7. Willy permalink
    November 9, 2017

    their

  8. StewartM permalink
    November 9, 2017

    Now, now Ian. Haven’t you learned that the only True (TM) economic path to prosperity is not based on any carefully thought-out, long-term central planning heeding the advice of the relevant experts, but instead on the selfish decision-making of numerous individuals all thinking of next quarter’s profit margin and assessing their individual death bets? /s

    (And yeah, when you put it thusly, our prevailing economic ideology does sound absolutely nuts).

  9. alyosha permalink
    November 9, 2017

    About ten years ago, Sara Robinson wrote about how America used to be a nation that planned. This was a skill, honed to perfection during WW2, when it was planning and logistics that made large operations like D-Day a success.

    Much of this has been lost, because of the belief that gummint is evil.

    And so not only are we immobile while a protectorate, Puerto Rico gets leveled by a hurricane, but we can’t be bothered to prepare for the future. Like little children, we turn to supermen like Elon Musk, who is capable of bringing about some sort of future, or at least the one that he wants. We’re not capable of doing it ourselves any more.

  10. Peter permalink
    November 9, 2017

    The Chinese commies have used their state and corporate capitalism to bring a third world nation into the 21st century and approach first world status. Their strategy now seems to be about projecting their capitalist penetration around the world. Their buying port facilities is a good investment because they will gather the profits and fees from their own and other’s shipping. I don’t think this guarantees access necessarily because we control the seas and during any real conflict those ports could be easily denied to them.

    If they are successful and the US collapses as some people predict they along with India would be the countries leading the world to catastrophe with their massive, growing pollution and CO2 emissions.

    Perhaps then we could find a use for all those empty containers we return to them. We could load them up with CAGW snowflake alarmists that we no longer need and send them off to tell the Chinese how to destroy their economy.

  11. StewartM permalink
    November 9, 2017

    Peter

    If they are successful and the US collapses as some people predict they along with India would be the countries leading the world to catastrophe with their massive, growing pollution and CO2 emissions.

    You neglected Ian saying this:

    “This is the way China thinks: buying up vast quantities of northern land in preparation for global warming; creating entire new waterways, deciding to build entire green cities.”

    Unlike us, cheered on by people of your persuasion, China appears to be *doing something* about the upcoming crises. Whether what they do is sufficient remains to be seen (likely not) but they’re doing a lot more than us, mired in the worshipful ‘capitalists are gods on earth’ mental rut.

  12. EmilianoZ permalink
    November 9, 2017

    The US are in such a sorry state now, I’ve been wondering: was it ever a great or just lucky? Lucky to have so much land, lucky to be filled with valuable natural resources. Lucky that Europe auto-destructed twice in the 20th century. Was all the greatness just propaganda, Hollywood movies?

  13. Willy permalink
    November 9, 2017

    Maybe making America great again will involve being more like China, and less like America.

  14. Willy permalink
    November 9, 2017

    China is far and away the top wind power. Of course, that’s a bit like saying they’re also far and away the top apple producer. They’ve gotta lotta people over there and do whatever it takes. We should probably learn a thing or two about managing such large populations, before they’re doing it all for us.

    Good God, could I have ever imagined saying that? Could I have ever imagined that a quasi-commie country would be able to so quickly pass the Great Bastion of Capitalism? It’s not like we turned commie. I remember reading history books back in the day that had pictures of Chinese wearing the only suit they had, and a cap with a red star on it, building a dam by carrying buckets of mud and rocks on their heads. More recently, my neighbor the dam expert said they hardly bothered getting much US expertise when they built their Three Gorges dam.

    I still await Peter’s schooling me about what a conservative really is.

  15. Peter permalink
    November 9, 2017

    I didn’t realize how busy the Chinese have been leasing and buying up much of Siberia and now they are demanding an open border so their people can flood in and develop this land. This is the Chinese ‘doing something’ but it appears more about taking advantage of moderate GW and rising CO2 than about controling or reducing it.

    I can’t wait to see one of their Potemkin green cities built specially to impress the Green Blob rubes while coal and gas powers their developement.

  16. Kfish permalink
    November 9, 2017

    Hello from sunny Australia, where the Chinese govt has just signed a 20-year lease on the Darwin port and is buying about as much fertile farmland as it can afford! The money also appears to be buying a few politicians, Sam Dastayiri being the first one to actually get caught at it. They are thinking very strategically; one of the more recent purchases was a massive cotton farm called Cubbie Station – not so much for the cotton but for the significant water rights that go with the farm.

    Will China’s attempts to turn Northern Australia into its food basket fare any better than the British attempts to do ditto after World War 2? Who knows.

  17. drfrank permalink
    November 9, 2017

    I understand this post to be in part a comment on the spectacle of Trump in China.

    I want to add a few points to Ian’s remarks.

    If you look at a list of the largest engineering/construction firms in the world, eight of the top ten are Chinese firms, and with state sponsorship they are doing big projects everywhere and beating out US firms. If you look at the economies of so-called emerging nations, an lot of them are dependent on selling commodities to China and to a great extent so does the US agricultural sector sell to China. If you look at the economies of certain export-driven industrialized nations, South Korea, for example, an important portion of their exports are components sent to China.

    I think the great leap forward of China as an international power took root during the time of G. W. Bush while all attention was on Iraq and Afghanistan. That’s when domestic manufacturing went to China in a definitive way. One might put some of the blame for that on Wall Street.

    Before that time, there was usually some kind of small factory in just about every town in the US, including towns in the farm belt where these small factories provided steady jobs. It was not just that technology was transferred to, or perhaps stolen by, China; essential know-how, and the opportunity to develop manufacturing know-how in the process of producing things, was lost to the US.

    The news reports say that Trump is talking to Xi about N. Korea and trade. As regards the first, I want to say how remarkable it is that the US military over decades has developed no viable options against N. Korea, meaning options that do not cause destruction S. Korea and Japan, despite high levels of military expenditure.

    As regards trade, we will soon see Chinese made commercial aircraft and armaments, in large part reverse-engineered. Otherwise, I guess they will invest in port facilities in the US to facilitate export of combustibles.

  18. Peter permalink
    November 9, 2017

    @Drfrank

    I don’t think there has ever been a viable offensive military option with NK not with Seoul so close to the heavily militarized NK border. The only option was a robust defense posture and retaliation guarantees that may have kept NK from more aggression.

    The appeasment agreements were ignored by NK and now they have the bomb which they threaten to use. Trump has repeated the promised guaranteed retaliations if NK attacks but the message is directed at China and Russia because they are the only powers who could possibly help to dismantle this crazy timebomb before it blows up in their faces.

  19. Hugh permalink
    November 9, 2017

    Trump is a fucking moron so it’s not hard to think more strategically than he does. There are clods of earth I was turning over yesterday afternoon that do. American CEOs are out to loot their companies so their strategy is to grab the money as quickly as possible and run. The 2008 meltdown that blew up the world financial system barely slowed them down.

    But do China and the Chinese, beyond these laughably low standards, think strategically? I don’t think so. After 2030, most of the world that most of us grew up and are familiar with will cease to exist due to overpopulation and climate change. Yet China continues to try to position itself as if the current world is not going to fall apart. That is about as myopic as it gets. If you follow Chinese history over the last few thousand years, when it is resurgent, it goes back to the an or protectorate system of power projection: the New Silk Road into Central Asia, the island building in the South China Sea, its manipulation of North Korea, etc.

    Economically, I would cautious about overestimating Chinese acumen. The Chinese economy has multiple large and unaddressed bubbles in banking, real estate, and commodities. It has largely failed to transition away from export/producer to more internal consumption. China also talks green but is either the number one or two polluter on the planet. And all those container ships sailing out of Chinese ports burn bunker fuel or something almost as bad creating pollution equal to hundreds of millions of cars.

    China has also been playing a double game over North Korea from the start. It uses North Korea to destabilize Northeast Asia because that weakens its competitors the US, Japan, and South Korea and their alliances. Personally, I would have told Xi that he can either close the border to North Korea or he can look forward to 15 million North Korean refugees camping out on his side of the border and 30 years of radioactive rain falling over Manchuria. If Xi said this was unacceptable, I would remind him that if China were faced with a similar threat, he Xi would already have acted.

    I know this sounds very harsh and warlike, because it is, but the world is going to fall apart, and we need to deal with the existental threats before they arise and learn to isolate and live with all the others. And that requires real strategic thinking.

  20. The Stephen Miller Band permalink
    November 10, 2017

    All very true, Ian, Well said, but China is one of the largest looming & impending catastrophes for this very reason. When nature reconciles the human impact to it, the largest elephants in the room will fall the hardest. China is one of those elephants and so tooares India and America.

    Hundreds of millions if not several billion Chinese and Indians will perish in the span of a decade or two in the not too distant future. Their slack and overhang will be eliminated rather quickly when the damn breaks if Trump & his Generals don’t blow the whole megillah to smithereens first.

    So, it’s a race. Will nature stop human before human destroys nature entirely? I don’t know for sure and unfortunately I may be around to witness what no one would or should want to witness.

    In the meantime, three cheers for the heroic Mossad for further victimizing Weinstein’s victims like the rapists they are. Make me POTUS and I will eliminate ALL special interest groups including AIPAC. The Mossad has gone from Nazi Hunting to victimizing rape victims further in a few short decades. How is it any different from the Nazis who sought to eliminate the Jewish people from the face of the Earth? The abused becomes the abuser. It’s a tried & true formula.

  21. realitychecker permalink
    November 10, 2017

    “The abused becomes the abuser. It’s a tried and true formula.”

    Ever think how that might be applicable to some of our favored oppressed victim groups?

  22. S Brennan permalink
    November 10, 2017

    Ian,
    I agree with your post.

    And Peonista;
    I concur with your point, as I used to say to MarkFI, propaganda, we are swimming in a sea of it…look how the NYTimes/WaPo calls for censorship of RT news. By comparison, Pravda & Izvestia were bigger supporters of the 1st Admendment than the NYTimes/WaPo.

    And Alyosha;
    Your point about how America used to be a nation that planned is well taken. Although, of all the billionaires, Elon Musk seems to be the only one operating under some constraint of morality.

  23. Peter permalink
    November 10, 2017

    The people who must work with our prophets of doom here must surely be chanting TGIF and those who must live with them are truly cursed.

  24. StewartM permalink
    November 10, 2017

    Peter

    The people who must work with our prophets of doom here must surely be chanting TGIF and those who must live with them are truly cursed.

    Peter, you remind me of the geezer being interviewed on local TV once, when questioned about a bridge that was slated to be closed for repair/replacement because (those know-it-all ‘alarmist’, dontyaknow) engineers concluded it was structurally unsound and at risk of collapse, griped “I don’t see why they are making such a fuss! Why, I’ve driven over that bridge some 40-some years and it’s not collapsed yet!!”

    Your reasoning is not much different from that. And yeah, all those other bridges in the past might have collapsed, but they were different, and this one is special–because it just is.

  25. November 10, 2017

    Give China a generation and all the newly created millionaires and billionaires will have grown so powerful that all China’s government will be controlled by them and then let’s see what grand projects and expansive visions they retain or create anew. No economy is immune from the infection that is the oligarchy. And indeed, the inequality growing there and the burgeoning class unrest that is undoubtedly swelling there may be its ultimate undoing. In the US there’s only a few hundred million disenfranchised rabble. There? A billion? Wouldn’t want them to get organized and pissed… OB – Occupy Beijing!

  26. Peter permalink
    November 10, 2017

    @Stu

    Your attempt at argument from analogy was very weak. Perhaps if you rest up this weekend from boring and depressing your coworkers you could produce better logic.

  27. November 10, 2017

    Regardless Peter Pessimist’s pessimisms, the future will speak Chinese. To those paying attention it has been as obvious as anthropogenic atmospheric disruption for a good twenty years now.

    Pretty serious about cleaning up the air, just executed a bunch of polluters.

  28. Willy permalink
    November 10, 2017

    We’ve got our problems. Peter’s got his hash pipe.

  29. David permalink
    November 11, 2017

    “We think of ourselves as rich because we have a lot of consumer goods. Cars, electronic devices and so on …”

    Or to quote a future historian paraphrasing Tacitus:

    “They imported Ipods and called it paradise.”

  30. V. Arnold permalink
    November 11, 2017

    Ten Bears
    November 10, 2017

    Yep, ain’t it so. China is the only one demonstrably cleaning up it’s polluting industries.

    David
    November 11, 2017

    Exactly

  31. November 11, 2017

    I don’t know why;
    call someplace paradise,
    kiss it goodbye …

  32. StewartM permalink
    November 11, 2017

    Peter

    Your attempt at argument from analogy was very weak accurate

    Fixed that for you.

    Your argument, as it is, is that of the empiricist gone nuts–insofar as anything outside a very limited span of experience is not true or doesn’t count or is doubtful. World ethnography abounds with examples where hitting a resource wall/environmental depletion caused or contributed mightily to a collapse. You say nothing about these examples, and just make vague statements about “human ingenuity” fixing the problem (as in all those other place, there was no ‘human ingenuity”).

    This is exactly the bridge analogy–the geezer says because it’s always stood by his experience, even though other bridges elsewhere have collapsed, his won’t. And he steadfastly refuses to believe the experts looking at root causes who say his will collapse too.

    Funny thing is, while you insist that “human ingenuity” will fix this problem, you discount any potential that the same “human ingenuity” can find other energy sources than fossil fuels.
    Anytime someone mentions replacing oil, you say it just can’t be done. That’s even though the same Western civilization experience you only count as relevant has only been kept going by transitions in energy sources.

  33. Willy permalink
    November 11, 2017

    A great many trickle down technologies, daily life and economy enhancing, came from NASA. Few can be seen as some form of malinvestment.

  34. Hugh permalink
    November 11, 2017

    China is an aspiring player in a world that soon won’t exist. I am also reminded of how Japan was going to be the next coming power than stagflation hit in the 1990s and all that talk went away. So color me skeptical.

    And China is the largest emitter of carbon dioxide on the planet, some 10,357 million metric tons per year according to the Global Carbon Project. The idea that China is green or going green is hype, pure and simple. Look up a picture of Beijing’s air in the summer time, and it’s not even where most of the industry is.

  35. Peter permalink
    November 11, 2017

    @Stew

    You deserving an award for the lamest anlogies here is an easy observation to make. Your examples are meaningless because those civilizations you refer to were limited and low-tech while we are global and advancing.

    I don’t think human resourcefulness should be wasted on trying to replace oil because there isn’t anything else that we can produce thousands of products from including aspirin to roof tar. Bio-diesel isn’t a new development and its growth is anything but green.

  36. November 11, 2017

    The good thing, of course, about a nuclear conflagration is it will be quickly than suffocating in our own flatulence.

  37. Some Guy permalink
    November 12, 2017

    What you say is true Ian, but I think people underestimate how fast China is heading into the rich country wall. The working age population is shrinking, and the margin of prosperity that pays for the things you talk about is being quickly eroded.

    To build an airport and train line and whatever in a bunch of cities is an incredible boost to productivity, but now you have an ongoing maintenance bill and soon you are not building things, just rebuilding them – where once you spent $1bn to go from empty fields to state of the art infrastructure, now you spend $2bn just to tread water. And then the population gets used to greater material prosperity and this consumption has to be sustained and so on.

    Debt levels have risen, inequality has risen, demographics are against them (economically speaking), their sheer size means they face daunting environmental constraints every way they turn, there’s no more easy hanging fruit to pick economically, corruption remains endemic – it seems likely that we are seeing China at its peak dynamism, and that what Hugh said above about it being a repeat of Japan will be partly true – I say partly because you have to allow for size. A stagnating China is still 10 times the size of a stagnating Japan.

  38. Willy permalink
    November 12, 2017

    Big oil is no different from big tobacco or big guns in that they’ll use whatever means necessary to protect their profits. When legitimate concern over negative consequences gains traction, the pattern is usually the same. Excuses turns to lies turns to tarring well intentioned activists turns to government connections which disempowers the citizenry.

    In China that whole process doesn’t seem to exist. Don’t they just simply jail those with legitimate concerns? Now that’s strategic thinking.

  39. StewartM permalink
    November 13, 2017

    Peter

    Your examples are meaningless because those civilizations you refer to were limited and low-tech while we are global and advancing.

    “Low-tech?” Now you are introducing that qualifier? That seems meaningless, as technology per se is neutral, we can either use it to get out of this mess or we can use it to push the accelerator pedal. “High tech” might fix your problems, or it can get you into a deeper hole even faster. As of now, it’s mostly being used for the latter purpose.

    Nor is our technology ‘advancing’ as rapidly as you think. One of the reasons that Limits to Growth was criticized was its assumption that technological advances linearly, unlike the problems caused by population, pollution, and resource depletion which are considered to follow exponential curves. But I think our technological advances are *slowing*, not speeding up. They are slowly precisely *because*, as Ian says, Western governments have been made artificially poor and they don’t do much in the way big science anymore.

    Once, I was sitting in a lecture by a equipment vendor, and they made a mention that there hadn’t been much progress in material science since the 1960s and 1970s….and I thought “Apollo”. Yes, all that R&D sunk into Apollo went into uses not remotely connected to sending people to the moon. Moreover, it wasn’t just government R&D–because we actually taxed rich people back then at the proper rates (90 % nominal, 75 % effective) they couldn’t take all the loot so companies like Bell and Kodak ran *pure R&D labs* working on things not remotely connected to new products. Now, because we don’t tax rich people anymore, all the loot goes to Wall Street bubbles and we don’t do much real R&D (never mind the figures; R&D for most US companies nowadays involves mixing known materials A, B, and C together and calling it something ‘new’; really incremental stuff ). This also applies to drug research, as Ian has posted about Pfizer. But none of this will reverse unless we reverse our spending and tax priorities, and your boy Drumpf is more intent on doing all things that will make the problem worse and not better.

    Finally, you owe those ‘low-tech’ cultures a lot more respect. Paleolithic tools could be so sharp that until (maybe?) recently, their sharpness could not be reproduced instrumentally.

    I don’t think human resourcefulness should be wasted on trying to replace oil because there isn’t anything else that we can produce thousands of products from including aspirin to roof tar.

    One, we can recycle most of those petroleum products and reduce both disposal and drilling issues.

    Two, petroleum isn’t the only raw materials source that can be used to synthesize drugs and polymers (hint, some of these pre-date oil).

    Some of these are only cost-inefficient due to economies of scale. Maybe a little of that ‘human ingenuity’ you prattle about on a grand scale is called for?

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