You have to imagine the scene. I’m on a satellite hookup to appear on China Global Television Network on a show with a viewership of 75 million. I’m there to comment on the exciting changes taking place in the beautiful Hainan Province, sometimes called China’s Hawaii. It’s already zoned for free enterprise, with low taxes and regulations.
Now the entire province is being named a free-trade zone, with massive encouragement of foreign investment, big plans for a free-market medical industry with an eye to tourism, (with foreign doctors, medicine, and equipment), new resorts, and even gaming to attract tourists from around the world. The point is to make this place a more attractive place for enterprise than Singapore and Hong Kong.
I’m pretty breathless about the whole project, which is all about globalization, commercial freedom, and wealth creation. To prepare for my 30-minute segment (China state television gives people far more time to speak than any US network would!), the interviewer played a clip from a recent announcement about Hainan from an official spokesman for the Chinese Communist Party. In this announcement, he celebrated wealth, deregulation, foreign investment, and the entertainment industry, touting growth and prosperity throughout.
This Is Communism?
A smile came across my face. What a long way we’ve come from Karl Marx and Mao! I see nothing communist about this at all, but that’s how it is in China today. Every radical departure from the unworkable (and essentially murderous) socialist orthodoxy is justified in the name of peculiar characteristics unique to China, all in the interest of keeping the existing ruling class in power. That’s what communism has defaulted to, which is fine because it could be much worse. For the Communist Party to become a leading champion of low to zero taxes, deregulation, enterprise and foreign investment is truly glorious.
And actually, this is not a crazy position. People don’t remember this but a main doctrine of communism was that it would be more productive than capitalism. In fact, the Soviet ruling party believed this would be true even in the 1950s. The sense we have now that communism leads to poverty is rather new. So when Deng Xiaoping said the following in 1984, he was speaking truth: “Socialism means eliminating poverty. Pauperism is not socialism, still less communism.”
In other words, in a strange and convoluted way, if you find the real means to mass prosperity, you have found communism in the 19th-century sense. This is how all the reforms in China have come to be justified.
China’s Incredible Growth
Words might be malleable but economic growth is undeniably real. China’s National Bureau of Statistics just reported an amazing 6.8% growth year of year from January to March. That is above the target growth rate of 6.5%. By comparison, US economic growth is anemic. You could say that GDP statistics are easy to manipulate but, in fact, this is backed up by the hard data as well. Consumer retail spending online in China has climbed 35% for the year, contributing fully 5.3% of the growth. Investment in real estate boomed 10.4%. Exports boomed 14% while imports grew 19%. Rather than regretting imports, President Xi Jinping is celebrating and hoping for more.
You want to know why? It’s precisely because of this dramatic, committed, courageous, and dedicated policy of freeing markets as much as possible wherever possible, while openly encouraging and embracing free trade. Based on the sense I got from my interview, the only real concern in China today is whether they can encourage enterprise and trade fast enough to compete with the freest economies in the world. The results have been a phenomenal transformation of the country since the 1990s and especially since the turn of the millennium..
Once you adjust for purchasing power parity, the Chinese economy is already larger than the US.
Even if you do not adjust for purchasing power, at a rate of 6.9% growth, China’s GDP will pass the US in dollar terms in exactly 9 years. Again, this has happened not because of some protectionist effort to “Make China Great Again” (actually, no one wants to go back) but rather through a dedicated effort to open markets, protect the right to make and accumulate private wealth, clear the way for investment and entrepreneurship, and celebrate the consumption habits and prosperity of average people.
Even as the US is pulling inward, demonizing foreign nations, calling everyone in the world a cheater, China is aggressively opening to the world, negotiating bilateral trade pacts with every nation it can and another 14 multilateral trade pacts. More goods and investment coming and going – this seems to be the Chinese credo. It is winning them wealth, prosperity, and good will the world over.
The strangest part of my interview on CGTN came when I several times mentioned the US and its growing list of tariffs against Chinese products. What I detected from the host and the other guests was not outrage at US policies but something even more alarming: a kind of eye-rolling indifference. What I took from this is pretty obvious: China is determined to grow wealthy even without economic cooperation from the US.
Look at this situation. China was an economic basketcase 50 years ago and now has the world’s largest economy and the fastest growth rate. Meanwhile, the US is still in a state of relative economic stagnation and is pursuing economic policies that are isolating it from the rise of prosperity in the East, which now finds itself copying the West even as the West has lost confidence in the means by which it became rich.
History certainly does take strange twists and turns.