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What the U.S. Can Learn from China

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While America is still reeling from the 2008 financial crisis, a high unemployment rate, and a surge in government debt, China’s economy is the second largest in the world, and many predict it will surpass the United States’ by 2020. President Obama called China’s rise “a Sputnik moment”—will America seize this moment or continue to treat China as its scapegoat?

Mainstream media and the U.S. government regularly target China as a threat. Rather than viewing China’s power, influence, and contributions to the global economy in a negative light, Ann Lee asks, What can America learn from its competition?

Why did China recover so quickly after the global economic meltdown? What accounts for China’s extraordinary growth, despite one of the highest corporate tax rates in the world? How does the Chinese political system avoid partisan rancor but achieve genuine public accountability? From education to governance to foreign aid, Lee details the policies and practices that have made China a global power and then isolates the ways the United States can use China’s enduring principles to foster much-needed change at home.

This is no whitewash. Lee is fully aware of China’s shortcomings, particularly in the area of human rights. She has relatives who suffered during the Cultural Revolution. But by overemphasizing our differences with China, the United States stands to miss a vital opportunity. Filled with sharp insights and thorough research, What the U.S. Can Learn from China is Lee’s rallying cry for a new approach at a time when learning from one another is the key to surviving and thriving.

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1 The China Miracle

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Success usually comes to those who are too busy
to be looking for it. HENRY DAVID THOREAU

CHINAS STEADY AND SPECTACULAR RISE in the last twenty years has perplexed many experts in Western circles. It has generated much intellectual debate as well as a wide range of emotions among Western academics, policymakers, politicians, and the public at large as people struggle to understand the manifold causes for the shift in international, economic, and political power.

Once isolated from the world and threatened by the West, China learned to change its fortunes dramatically in these last three decades. China burst onto the world stage a little while after the diplomatic breakthrough between it and the United States in 1972. Particularly in the last decade, since its accession to the World Trade Organization, China astounded observers around the world with its speed of urbanization, its modernization, its reduction of the number of people in poverty, and the sheer volume of foreign-exchange reserves it holds. China has accomplished much just in the last 15 years including the following:

 

2 Confucian Philosophy

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Riches and power are but gifts of blind fate, whereas
goodness is the result of ones own merits. HELOISE

DESPITE BEING KNOWN as the melting pot of the world, the modern U.S. culture has largely been shaped by Judeo-Christian religions and Western ideas passed down through the Enlightenment and dominated by the influences of Modernity. The democratic political system, the official holidays like Christmas, and the assumed importance of the notions of Freedom and Reason largely define modern Western civilization. Comparatively speaking, modern Americans know relatively little about Eastern religions and philosophies. While many factors define a nations identity, few would dispute that underlying cultural and religious beliefs shape and influence a nations character. One of the most visual examples of how cultural differences manifest themselves is the disparity between the way Americans and the Japanese conducted themselves in the aftermath of two devastating storms. The widespread looting after Hurricane Katrina stands in stark contrast to the stoic temperaments of the Japanese who stood in line for emergency help soon after the 2011 tsunami that destroyed Fukushima.

 

3 Meritocracy

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You can delegate authority, but not responsibility.
STEPHEN W. COMISKEY

Unlike in earlier centuries when ones birth determined ones permanent economic fortunes and clout in the world, most modern societies today subscribe to the notion that individuals should have the opportunity to live up to their potential through talent and hard work. Monarchies have been largely dismantled and replaced with institutions that recruit the most able individuals to run countries. Since blood lineage is no longer the sole determinant of the extraordinary privilege of leading most countries, determining who should have those roles and the best method for vetting those individuals becomes of paramount importance. Since the end of the Cold War, many countries that were once dictatorships or authoritarian regimes have converted to democracies because many were attracted by the relative freedoms and riches that characterized Western democratic economies.

However, there is also a developing consensus that the term democracy can be used to shield or excuse abuses and atrocities. In fact, many democracies have had egregious records in serving their citizens. India, hailed as a democracy, for example, still suffers from extensive poverty. According to a 2007 NCEUS estimate, 77 percent of Indians live on less than a half dollar a day. Additionally, there is still an active caste system. Its human rights abuses also can put totalitarian governments to shame. Bride burning, a practice in which thousands of young brides have been burned to death by their in-laws every year due to low dowries, has hardly received any coverage from Western media.1 Neither has its human trafficking been much reported. Around 10,000 Nepali women are brought to India annually for commercial sexual exploitation.2 Each year, estimates between 20,000 and 30,000 women and children are trafficked from Bangladesh.3 Finally, violence such as extra-judicial executions, disappearances, and torture of indigenous peoples by Indians in India have received condemnation from human rights organizations such as Amnesty International and the Human Rights Watch, but little else has been done by the international community to stop such life-threatening abuses.

 

4 Five-Year Plans

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We go where our vision is. JOSEPH MURPHY

Ask a person on the street what he or she plans to do or be in five years and the likely reaction you will receive is a blank face. The truth is that most people just dont envision themselves, let alone make plans, that far into the future. Research has shown that many often confuse medium-term with long-term tradeoffs and have difficulty with delayed gratification. A famous study by Walter Mischel, commonly referred to as the Stanford marshmallow experiment, showed that children who were able to refrain from eating a marshmallow in front of themknowing that they would be rewarded with two laterwere more likely to succeed as adults. Unfortunately, most of the children chose to eat the marshmallow immediately, giving up the prospect of receiving more at a later time. Despite the lessons taught in fables like Aesops The Ant and the Grasshopper, impatience for immediate pleasures often gets the better of us, and procrastination of undesirable tasks is common.

 

5 Special Economic Zones

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Dont be too timid and squeamish about your actions.
All life is an experiment. The more experiments you
make the better. RALPH WALDO EMERSON

MAOS SUCCESSOR DENG XIAO PING famously said, It does not matter if the cat is black or white as long as it catches mice, signaling that he no longer demanded that the country adhere to strict ideology, but wanted pragmatism to inform policy. His pragmatic statement was not only revolutionary during his time given the Communist ideological orientation in China back then, but it is even revolutionary today here in the United States as it relates to economic policy.

For decades, the study of economics in the West has been based on empirical observation of society and extrapolated into a broader theory in an attempt to turn a social science into a harder science. Mathematical formulas were further created to describe an economic theory or law in much the same way that mathematical formulas were developed for the hard sciences of physics or chemistry. The problem with economic theories is that economics isnt a hard science no matter how much economists would like it to be. In the hard sciences, scientific experiments can be replicated. Atoms and chemical reactions are predictable. Humans however are not. Humans have the freedom to choose, and while humans may often make economically rational decisions, they are also just as likely to make choices based on other factors. Humans also can behave differently based on cultural influences. The best economists can do is create models or abstractions to use as a guide to understand the system. We cannot assume, however, that these economic models will ever represent the entire truth.

 

6 Real Economy First

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The chief value of money lies in the fact that one lives in
a world in which it is overestimated. H. L. MENCKEN

FOR DECADES, THE U.S. FINANCIAL SERVICES INDUSTRY has played an important role in allocating capital to great businesses and ideas. Analogies have been made that financial services is akin to the circulatory system, circulating money to different industries and companies. In the process, financial firms assist in creating great wealth, producing world-class companies all over the world today.

But because money is used in every industry, financial services, unlike other industries, affect the entire ecosystem. This special trait therefore puts the financial industry into a separate category from all other industries. As such, a watchful eye must oversee its activities and abilities so that the financial industry doesnt overstep its boundaries given its unique power. Returning to the circulatory analogy, cash, like blood, is integral to the economic system. But if a patient receives too much blood in a blood transfusion, the patient dies. In other words, the financial services industry, if too powerful, can negatively impact other industries in the economy. In 2008, the world discovered that is exactly what happened.

 

7 Soft Power

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Ultimate excellence lies in not winning every battle but
in defeating the enemy without ever fighting. SUN-TZU

JOSEPH NYE STRESSED IN HIS PROGNOSTICATIONS about power in the 21st century that the capacity to coerce will become less important in the modern age, while the ability to set agendas and the terms of debate will be relatively more useful. In this context, economic power and moral authority may hold greater sway than military force. In other words, the future of global negotiating lies more in the carrot rather than the stick.

As China has grown in economic power, it has acquired the means to redirect entire nations in brand new directions. Though the Chinese could have easily pursued similar colonial practices that the Americans and Europeans once used in Africa and throughout Latin America, the Chinese have opted to create a different kind of empire. Rather than exploiting and brutalizing people, keeping them in servitude, and denying them education, China approached people in developing nations with an entirely new proposition. In exchange for the natural resources it so desperately needs for its own domestic economy, China has offered developing nations billions of dollars to invest in infrastructure as well as Chinese management and labor to help poor nations get their hard and soft infrastructure projects off the ground.

 

8 Cocreating a Better World

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So, let us not be blind to our differencesbut let us
also direct attention to our common interests and to
the means by which those differences can be resolved.
JOHN F. KENNEDY

FUTURISTS OFFER DIFFERENT PREDICTIONS about what will happen in the coming decades. George Friedman of Stratfor has speculated on the domination of the United States in geopolitics. Ray Kurzweil believes in singularity and that humans will one day achieve immortality. George Orwell and Franz Kafka wrote about authoritarian dystopias ruining everyday lives. All of them or none of them may come true. But the future begins now because what happens in the future always begins as thought in the present.

Today we have an explosion of ideas and opinions that appear on the Internet, on media airwaves, and in daily conversation. Sorting out truth and priorities can be daunting, especially when consensus is difficult to achieve. But its important to recognize that the most vital things to our lives commonly appear to be the least urgent and sometimes require the most work. For example, reconciling difficult relationships or studying for exams can offer great payoffs when the proper time and care are invested, but breaking the inertia in order to genuinely begin the hard work often becomes the biggest stumbling block. The problem is that the world cannot afford to procrastinate on solving the mounting global problems. We need to develop the political will and wisdom to work with all nations of the world to come up with agreeable and actionable solutions. That work will prove difficult to do and easy to put on the back burner, but humanity is at stake. In a hyperconnected world, it no longer will be sustainable for the minority international elite to thrive while billions of people suffer and die unnecessarily. The poor of the world will know and will not tolerate the present state of affairs. Change will happen whether we take a proactive position or not. I suspect that taking a proactive stance will help make the inevitable transitions smoother and less radical in the long run.

 

Epilogue: What China Can Learn from America

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