Political & Economic Lessons from China

July 29th, 2011
in Op Ed

by Frank Li

China is becoming yesterday’s America, while America is becoming yesterday’s China!

China is a competitor, not an enemy. The only way for America to have any chance to fend off the competition from China is to become better itself, which can’t be done without a better understanding of China. In an earlier post, I briefly explained China’s political system in an American way. This article will provide an overview of China’s recent history and list out five big political and economic lessons from China for America.

Follow up:

Overview of China’s recent history (1949-1976)

Have you noticed that everything important in China is named “The People’s”?   Here are three examples:

  • The name of the country: The People’s Republic of China.
  • The Army: The People’s Liberation Army.
  • The money: The People’s money or Renminbi (or RMB for short).

It was not like that until 1949 …

What happened in 1949?

The CPC (Communist Party of China) led by Mao succeeded in the revolution. The proletarians (also known as “the People”) became the masters, turning the country into a huge lab for an experimentation called “socialism” (also known as “communism” in the West). The People purged the rich (i.e. shot them or sidelined them), named everything important theirs (i.e. “The People’s”), and worshiped themselves: the workers, peasants, and soldiers.

What happened from 1949 to 1976?

A total disaster! The worst was a man-made famine that killed some 20 million people in the early 1960s (think of North Korea today!). The second worst was the Great Proletarian Cultural Revolution (1966-1976), during which Mao’s opponents within the CPC were purged like the rich after 1949. By 1976, China became dirt poor, so poor, and hopeless, that a young man like me (born in 1959) thought of nothing but “getting the hell out of here” (think of the Cubans today!).

Why such a total disaster? Mao knew nothing about the economy or construction, nor did the People! What did they know? Class struggle (e.g. robbing the rich) and destruction! In other words, the proletarians were in charge, and everybody in China became a proletarian!

What happened in 1976?

Mao died! Better yet, Mao did not have a son succeeding him! Mao’s only (able) son (Anying) was killed in the Korean War, thanks to the Americans (“Amen”), or today’s China, under Mao Jr. or Mao III, could be as bad as today’s North Korea! Rumor has it that Mao never forgave Peng Dehuai, China’s Command-in-Chief in the Korean War, for this “sin” and made up a reason to have him purged in the late 1950s. We may never know the real reason behind Peng’s purge. What’s known for sure is that Mao spent the rest of his life scrambling for a succession plan, without success.

What happened after 1976?

Deng Xiaoping became the leader in China. He reformed the country and set it on the right course. For a brief summary of China’s history from 1976 to today, click here.

What does China really look like today?

Everything important is still “the People’s,” but in name only. The economy belongs to the rich, while the autocrats, who are not elected by the People, own the government. For a good understanding of today’s China and today’s CPC, read this.   Here are three excerpts:

The party was established in 1921 in the name of people like him [a peddler]. But today it is widely seen as representing the entrenched interests of the wealthy elite – the kind of people who spend more on a single meal in Xintiandi than this peddler would make in an entire year.

With more than 80 million members, it is the world’s largest political organization. In spite of its insistence that it remains true to its Marxist-Leninist, Maoist heritage, though, it is perhaps better described as the world’s largest chamber of commerce.

The first sentence of the manifesto of the CPC states that the party “is the vanguard of the Chinese working class”. Yet today, fewer than 9 percent of its members are classified as “workers” while more than 70 percent are recruited from the ranks of government officials, businessmen, professionals, college graduates and military.

What a huge difference from 1976!  Now, is this system ideal?  No, not at all (reference)!  But it is infinitely better than the system under Mao! Moreover, it is, overall, “slightly better” than the American system (reference), and that is why China is on its way to become the largest economy on earth by 2030. In a competitive world today, all what a hiker needs to do, when chased by a hungry grizzle, is to run a bit faster than the other hiker!

Five big lessons from China

(1) When the proletarians (or the People) are in charge, we all become proletarians! Punishing success (= the rich), you will end up without any success.

(2) The system is everything! Between socialism and capitalism, choose the latter!

(3) For prosperity, capitalism is a must, while democracy is merely an option. Sacrificing capitalism for democracy, you will end up with having neither.

(4) Democracy could be an ideal form of government in theory. But no know-how yet in practice. Here are two things known for sure though:

a. Democracy, as we know it today, does not work. Instead, the Chinese system (= capitalism + autocracy) has fared far better than the other systems over the past two decades, with no end in sight.

b. For a third-world country like India, democracy is a liability for prosperity.

(5) Time is often the best cure for many ills. Peace and trade, not war (reference)!

As I sum it up....

Can’t handle such big political and economic lessons from China yet?  How about a lesson from Cicero in 55 BC? Here you go:

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

What has the West learned over the past 2,066 years? Nothing, apparently!

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About the Author

Frank Li Frank Li is the Founder & President of W.E.I. (West-East International), a Chicago-based import & export company. Frank received his B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering. He worked for several companies until 2004, when he founded his own company W.E.I. Today, W.E.I. is a leader in the weighing industry not only in products & services, but also in thought and action. Dr. Li writes extensively and uniquely on politics, for which he has been called "a modern-day Thomas Jefferson" (see page 31).


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1 comment

  1. isaac says :

    Excellent summary, and I appreciate you sharing you views.
    If China could rein in corruption and nepotism, it would be truly running on all cylinders.

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