by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)
Designed to calm down fears of an ominous US-China trade war, President Xi Jinping’s speech at the Boao Forum, crammed with Chinese metaphors, was the logical extension of his landmark address to Davos early last year – when he established China at the vanguard of globalization 2.0.
At the Boao Forum, Xi stressed a “new phase of opening up” the Chinese economy; blasted a “cold war and zero-sum mentality”; and praised China’s long economic development march – from WTO membership to the foremost trade/connectivity 21st century Eurasia integration project, the Belt and Road Initiative (BRI).
For the near future, the Chinese economy would have to follow one of two main vectors. Beijing might choose to open its economy mostly to US multinational corporations; a strategy privileging the West. That would be China’s Plan B. Or, roughly throughout the next seven years, Beijing may stage yet another breakthrough, solidifying itself as a high-tech Mecca. That’s China’s Plan A.
Plan A happens to be totally integrated with the BRI connectivity drive – from Eastern China to Western Europe via Central Asia, Southeast Asia, Southwest Asia and even the Caucasus. China, via BRI, aims to export not only capital and business savvy but also value-added high tech products.
And that brings us to the clash between two roadmaps – which should be read in detail – that are at the heart of a much debated, possible and certainly vicious trade war; China 2030 and Made in China: 2025.
2030 or 2025?
China 2030 was published, significantly, way back in 2013, by the World Bank in conjunction with the Chinese Finance Ministry and State Council. It’s still a product of the Hu Jintao era, calling for all the requisite “market reforms,” with emphasis on the “need” for China’s strategy “to be governed by a few key principles: open markets, fairness and equity, mutually beneficial cooperation, global inclusiveness and sustainable development.”
Xi Jinping, though, had broader ideas. Expanding on a concept initially floated by the Chinese Ministry of Commerce, at first named One Belt, One Road (OBOR), were also unveiled in 2013, in Astana and Jakarta. It took a while for the news to sink in that OBOR was nothing less than a full blueprint for pan-Eurasia integration.
Then, in 2015, Beijing unveiled what is the de facto national economic strategy: Made in China: 2025.
This is all about China – once again – stepping on the gas, this time to reduce dependency on foreign technology and the role of assembly line for foreign companies, by increasing investment in research and development; improving automation in Chinese factories; and developing strategic sectors such as robotics.
There’s already a 2020 target; arrive at 70% of production with Chinese-made components. The manner that the success of Huawei ruffled so many feathers in the US – the home of Apple – is just a small illustration of what may lie ahead.
Yet Made in China: 2025 is way more ambitious, aiming to propel the Middle Kingdom to the Top Three of global high-tech industry leaders before 2049 – when the People’s Republic turns 100. That’s how China plans to beat the middle-income trap.
So Beijing has drawn its own, indigenous roadmap towards becoming a state of the art high-tech “manufacturing superpower” exporting made in China high-speed rail, aircraft, electric vehicles, robotics, AI technologies and the 5G standards that will power the Internet of Things.
Previous economic role models certainly include South Korea – whose process of gradual chaebol modernization was state-guided. And crucial inspiration is also drawn from Industrie 4.0, the German national strategic initiative launched in 2011 aiming to consolidate the nation’s technological leadership in mechanical engineering.
Europe is watching
The fact that Beijing won’t accept a subservient role in a US-dominated high-tech economic environment run by a tiny corporate elite spells out what’s unimaginable for this elite; a definitive swing of the world economy by 2025, from the West to the East.
Beijing won’t back down. The whole drive is away from the unilateral moment towards a multipolar world – where the partnership with Russia plays a key role, as they coordinate their efforts on everything from the yuan and the ruble backed by gold to an alternative to the SWIFT payment mechanism, culminating with the most far-reaching project in world history in terms of economic connectivity across more than 60 nations and cultures; BRI – which is bound to be integrated with the Eurasia Economic Union (EEU) – happens to be, essentially, a concerted, state-guided industrial policy.
As this Global Times editorial stressed, a US-China trade war won’t solve anything, much less the clash between China 2030 and Made in China: 2025. US industrialists are in a very delicate position – as they have massively invested in China; transferred technology to China; and even use Chinese technology themselves – as supply lines are global. If a tech wall would ever be erected between American and Chinese companies, Europeans would gladly replace the Americans.
Meanwhile, Beijing will play the appeaser – for instance, by opening up its financial sector to foreign investment, including the removal of foreign ownership caps for banks.
Bottom of Form
Yi Gang, the newly appointed governor of the People’s Bank of China, promised at the Boao Forum that Beijing will allow foreign investors to take a maximum 51% equity stake in brokerage firms, futures companies and fund management firms, and will remove foreign equity ceilings in all these sectors by 2021.
With formidable diplomacy, Yi stated, “I would say with financial and service industries opening up, the US in the future would have more comparative advantage in service trade. So that when we have goods trade and services trade, these two would balance out as a result.”
Then there’s always the hard road to “solve” the US trade deficit. In a research note, this is what Goldman Sachs analysts – led by Chief Economist Jan Hatzius – have suggested: “For a deficit country such as the US, it is possible to scale up the trade restrictions sufficiently to achieve even an ambitious deficit reduction target. But this comes at a heavy cost in terms of weaker growth. Put simply, the only surefire way to reduce the deficit sharply under retaliation is a recession.”
Trade war or recession, only one thing is clear; China will do whatever it takes to implement Made in China: 2025 – its roadmap to high-tech preeminence.
Pepe, I believe that nothing will stop Made-in-China High-speed Train. Why? Because, “No make America great again” will work ever, that train left the station long time ago and it’s not coming back.
The ruling US/Zionazi Western elites realise that their global Full Spectrum Dominance is over, so we will have war, their last source of unrivaled power. These psychopaths are convinced that they are a universal elite, set above all others, certainly ‘mere Asiatics’. There is no chance that the West will EVER allow a multi-polar world. They’ll destroy it before surrendering power over it.
What remains to be seen is whether Chinese society can duplicate the creativity characteristic of the West. With all its many faults, the United States and Europe produce invention after invention. Despite Japans’ rise they were never able to demonstrate the same capability. I used to think that Japan grew on the back of all inventions of the West, but that once they achieved a certain level of development, marvelous inventions would be coming from Japan, which would benefit the rest of the World. It did not happen. China is not Japan, but the same kind of rigidity in their educational system, lack of entrepreneurs (although that seems to be changing) may mean that they will not lead the way to the future, whatever ‘planning’ they might conduct.
So what would you say about S.Korea. They seem very inventive. And they started with state owned companies.
I have seen very little creativity in the West – especially in the US. I’ve been involved with famous ‘innovative’ campaniles like IDEO, spent years in San Francisco and many more in Los Angeles with famous producers, writers etc. Even their art is not creative – they rarely have anything to say.
It’s a myth – they just have money (they print) and through media they have managed to persuade the rest of the world they are somehow ‘superior’. Foreigners are waking up finally. The fat Emperor is a pedophile, has syphilis and no clothes…
I have worked as a project manager and most times Americans just want to throw more money and people on a problem – without trying to understand the real issue at the root.
Hopelessly out of touch with reality and themselves.
That’s their biggest success – using propaganda, Harvey goldsteins of this world to lie and brainwash foreigners they are somehow creative or innovative. It’s mostly foreigners who are
I agree and find the treachery and normalised lying deeply tragic, the West will never outgrow it . In order to survive Western nihilism the rest of the world must ignore it.
Are you kidding, SteveK9 ?…
Have you forgot that China, a 5000 years old civilisation, has invented noodles, powder, paper, and I don’t even mention China medicine (Chi and meridians) ?…
Have you forgot that the most powerful super-computers are in China, not in USA ?…
You must be kidding.
have you seen that airport in Beijing (PEK)?
DC Reagan etc look like a shithole in comparison
the biggest ‘success’ of Anglo Zionist Psychopaths has been promoting BS and un-reality, enforcing fraud – to appear ‘experts’, ‘noble’ , ‘wise’ and talented. That loudest megaphone is all they have
When in reality they are just a bunch of sad, hoarding, psychopaths – unable to love anyone or have any honor even if they wanted to. It’s a very sad life – that’s why the are so greedy – that’s all they have (and they probably hate themselves too – like those characters from Woody Alen’s movies)
I was sure someone would bring up gunpowder. Please.
You’re not really getting it. Virtually everything in the modern World … as it was put in some movie ‘was invented by some American’. The transistor, the laser, the integrated circuit, the personal computer, look at Nobel Prizes over the last 50 years. I really hope China does move to the fore. I am a Scientist and have known a number of Chinese Scientists and they will tell you what I did.
And building high-speed trains, modernizing their country, yes, I’m amazed and pleased as anyone. What I mean are inventions. That is the ‘future’.
The ‘American’ inventing something is often Chinese, Indian or Korean. The US has pillaged the intellectual cream of the rest of the world since WW2 in a deliberately contrived ‘brain drain’. The USA has enjoyed fifty or more years of scientific dominance thanks to its advantages after WW2, which have been ebbing away since the 70s. The USA also expends billions on research, mostly military, through DARPA, but with commercial applications, but that, too, will decline as US debt piles up. And the US and Chinese education systems are like two poles, antipodes where the Chinese system works vastly better, producing far more graduates and post-graduates, and better educated citizens. Moreover the Chinese are actively reforming their education system to emphasise creativity and innovation, although as one can see when visiting China, cultural creativity is booming.
OK gunpowder SteveK9. What do you think? It was a trifle invention? It was in fact revolutionary. Until then, weapons were based on the sword, spear, bow and arrows i.e. slash, stab, throw or shoot. The Chinese invention of gunpowder and it associated weapons introduce a revolutionary new concept in weaponry – explosives. Since then all modern weapons, including nuclear weapons are based on explosives of one kind or another. Chemical and biological weapons were invented by the West. But these inhuman weapons are banned!
The West makes the bubble in which it lives thicker and thicker, so that it can’t see outside and it makes it harder to prick it. But it will eventually suffocate inside.
I could be wrong – it HAS happened before, however, didn’t China outstrip the US in patent applications for the last few years running?
I suggest you slog through Needham’s ‘Science and Civilization in China’. The notion that the Chinese lack creativity is truly delusional Western racist supremacism taken to insane extremity.
It seems that the U.S. and China both are throwing a lot of money around in Africa. There seems to be some kind of tug-of-war going on. The U.S is scrambling around, as seen post Tillerson tour of Africa, trying to get African governments not to buy into the China model.
The U.S. has also has expanded its military presence in Africa its forces with many African national forces that push comes to shove, insubordination by any African leader will face certain military coup de eta.
But when African leaders see giant , massive Chinese grants and cheap easy credit loans, infrastructure projects, schools, universities and hospitals, and a generally nice amicable people, the Chinese. As they don’t do demands, and ultimatums but are in it for a mutually beneficial win-win scenario.
The U.S. is working overtime, even through soft power (NGO’s, religious missionaries, et al) to try and scare Africans away from the Chinese ‘ interference’ and ‘ over lordship ‘ , its ‘ rob the continent of its precious resources ‘ etc. In other words, the Chinese are the new ‘colonialists’. But interestingly enough, they bring brief cases and hand shakes, instead of memos and instructions. With a threat of overthrow looming over their heads. African leaders will try to placate between the two, but I think for Washington, this is a zero-sum game. ‘Your either with us or against us’ mentality.
Angola, and a few other places are benefitting greatly by way of infrastructure projects, schools, colleges, highways, direct aid and grants and as a result the standard of living there has risen enormously. Other African states will be watching and yearning, ready to jump ship if they just could.
Same thing with Mexico, where Trumps putting on taxes on cars assembled in Mexico is causing it major headaches. Ford, General Motors, Toyota have already cancelled plans for more plants in Mexico. Then China steps in, and announces that a deal has been reached with the Mexican government for China to build a state of the art automobile manufacturing plant for the Chinese car company Great Wall Motors. A plant costing 500 million will be built. And China has openly stated that they envision Mexico as a critical part of the BRI initiative. If you’re in good with Mexico, the rest of Latin America will fall to your sphere. I think the Chinese know this and are broadening relations with Mexico in a big way. Look for big grants and loans and announcement of major, massive projects to be started soon.
Simply put, the Chinese come to the table with plan that’s just too good to turn down. Everything on the win-win formula.
The Chinese spread prosperity and mutual benefit, the US and the West spread terror, fear and hatred. Some choice.
Imagine if you will,a pack of Western banker wolves,teeth bared and hungry. And then they hear these words from China “…”opening up its financial sector to foreign investment, including the removal of foreign ownership caps for banks”. Dinner is served!
LOL! “Come into my parlour” said the spider to the fly. We shall see who gets dinner and who gets to be dinner!
Hahaha… This must be true (I believe you are right); if not, poor China will indeed be the dinner plate.
Emily, I believe you meant to say “poor China will indeed be (on) the dinner plate”.
Errr.. Yes. Sorry, English is my second language. But, you know what I mean.
Short of a nuclear war, it is too late to stop China. And even then, China will very likely recover faster than the US i.e. if the US still exist. It was too late since the Great Recession in 2008 when China propped up the US economy. The US is very obviously in terminal decline ala the late great USSR. When that happens it will need China to prop it up again. But the US will likely break up into several smaller states.
China is now moving at warp speed. It had happened at least twice before – during the Spring and Autumn and Warring states period up to 221 BC when the new Qin emperor burnt all the science books. At that time, Chinese innovations were 2000 years ahead of the rest of the world. The burning of the science books push back China’s development 1000 years to the beginning of the Zhou Dynasty.
China then stagnated until the pacifist Song Dynasty. Song Dynasty’s 100 years of innovations moved China 500 years ahead of the rest of the world. The Song Dynasty invented the weapons (including gunpowder and the reflex bow) for defensive purposes only. I believe the spread of Buddhism greatly influenced the pacifism of the Song.
Song weaponry and technology was copied and taken over by the Mongols.
Now China is ready to leap forward 2000 years in technology perhaps in a space of just 50 years … and carry the world with her!
World, get ready and hop on the Chinese time machine!
One may wonder, in view of the progresses of Archaeology, whether China is not responsible for ALL the inventions of ‘civilization’! Trade between China and the western parts of Eurasia seem to be extremely old.
Don’t forget India. India created many technologies and philosophies that China later adopted and turned into new and various forms. What a pity that the servile Indian elites refuse to work in co-operation with China, preferring to be stooges of the USA and Israel.
Lol! Please name a science or new technology that Indian civilisation indigenously produced that have global impact.
If what you’re saying is true then since history tends to repeat itself, the Chinese should keep an watchful eye and counter any attempts to rollback progress they made from both within and without, like it happened before.
I am desperately sorry that I can’t locate a quotation from a book written just at the turn of the century, trying to read the tea leaves of the next millennium. But definitely it went like that: “It might become clear that the whole history was just a chapter of the Chinese history”. Was it Felipe Fernandez-Armesto Millennium (1995)?
Yi Gang, the newly appointed governor of the People’s Bank of China, promised at the Boao Forum that Beijing will allow foreign investors to take a maximum 51% equity stake in brokerage firms, futures companies and fund management firms, and will remove foreign equity ceilings in all these sectors by 2021.
This is not new. I seem to remember China announcing the relaxation of foreign ownership limits a few months ago, just after Xi got an extra term. I’m not sure why China is now allowing foreigners to own Chinese banks.
The Chinese will regulate these foreign banks, unlike the West where it is open slather for the financial parasites. There will be no financial parasite buying political influence and control in China, unlike the USA, either.
@SteveK9. The original Japanese (the Yayoi) were refugees fleeing the Qin conquests from the China’s coastal regions – Shantung (Qi state) and Shanghai (Chu state). Likely that partly accounts for their ferocity against the Chinese during WW2.
Anyway the Japs were very innovative. Their car technology beat the US. But what frightened the Yanks was their chips technology which has game-changing military applications.
Moreover, the Japanese were out-innovating the Yanks as a occupied and subjugated country by the Yanks. They were not allowed to be better than the Yanks.
The Japanese were forced to hand over their chips technology to the Yanks and forced to commit economic harakiri by signing the Plaza Accords. Almost overnight, the Japanese Yen appreciated from about 300 to 1 USD to 100 to 1 USD. That was the underlying cause of Japan’s stagnation, not the resulting asset inflation followed by consumer price deflation. In contrast, the German Mark held steady from 1980 (1.713 Marks to 1 USD) to 2001 (2.067 Marks to 1 USD) after which the Euro was adopted.
As for innovation, the Japanese understood that they are an occupied country and cannot be better than the occupiers. Therefore, their chips technology stagnated and the Koreans and Taiwanese took over. They are not allowed to have an indigenous aviation industry. They are very good with robotics and were the first to automated the car assembly lines. But even in this area they kept their heads down.
I would say if allowed freedom and be able to act as Japanese without the militarism, they can out-innovate the Yanks and give China some very good (and needed) competition.
….well said, Simon…China would NEED such competition from Japan…it will be mutually beneficial to both of them…!!!