This week I saw this article in the Financial Times about Washington’s reaction to the working relationship between Chinese tech companies and the Chinese military. Today, on the 100th anniversary of the end of World War I, I reflected on the horrors of modern war and the path we are on today.
The FT article does a good job exemplifying the differences between China and the US perspectives. From spending time in both countries, I’ve come to see that China and the US have different ways of doing things that they each deeply believe works best. China’s approach is top down, designed to create the coordination of its parts in pursuit of the best interests of China, much like a big, great company would do. This top down way of operating has been deeply imbued in the Chinese psyche over the centuries (going back to Confucius and through many dynasties) and has worked remarkably well for them for a long time, so it won’t change much.
In contrast, the United States has a more individualistic, bottom up culture in which individuals’ and companies’ ideas bubble up and compete so the best ones win out. The US system discourages cooperation (in fact it makes it illegal between companies in the same industry) and discourages top down government economic guidance. This more individualistic, bottom-up approach is imbued in the American psyche as strongly as the top down approach is imbued in the Chinese psyche and it won’t materially change. So, the sort of cooperation between China’s tech companies and its military described in the FT article is natural to the Chinese and at the same time seems inappropriate and threatening to Americans.
To be clear, I am not saying that either approach is better or worse or whose perspective is right. I am just saying that these different ways of seeing things are big, deep-seated ones that won’t change, even if trade or other agreements are made. And on this 100-year anniversary of World War I, as I reflect on how the war came about and transpired, I’m saying it’s important to consider the horrors of war and savor the peace that most of us have come to take for granted.
As you know, I believe that the same things happen over and over again because the cause-effect relationships that drive them are timeless and universal. Now, like in the times prior to a number of wars, we are at a juncture in which we will choose how we approach deep-seated differences. At the big picture level, if there is acceptance and respect for healthy competition in which self-interests are pursued simultaneously with the overarching goal of not having wars, there can be great productivity growth that will lift the whole world’s living standard in many ways. On the other hand, if these two sides try to force changes in the others’ intrinsic ways of operating and believe that the best way to do this is through threats and painful actions, there will be various types of war. This situation is especially risky because these different ways of approaching things exist between the two biggest powers in the world that are now economically comparable in size—and because China will become bigger and stronger in many or even most ways.
Because I study these cause-effect relationships that repeat through history, I have recently spent a lot of time closely examining the last 500 years, which led me to read and study a lot of statistics which I will soon share with you in a report that I’m now working on. In doing that, one book I reread and recommend to you is “The Rise and Fall of the Great Powers” by Paul Kennedy, which will show you most of the history of the last 500 years in detail and will help you see the patterns of events and the reasons for them. I also continue to recommend that you read “Destined for War” by Graham Allison, which focuses on the US-China relationship with reference to these patterns in history. I also recommend Hank Paulson’s and Wang Qishan’s recent speeches to Bloomberg New Economy Forum, which I think did a great job of providing an accurate picture of the US-China challenge.
