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I think history will suggest that the end of Deng Xiaoping's long-term strategy of "hide our capacities and bide our time" around 2015 was too premature to meet

I think history will suggest that the end of Deng Xiaoping's long-term strategy of "hide our capacities and bide our time" around 2015 was too premature to meet the government of China's long-term goals. The moderate amount of international goodwill that existed seems to have completely evaporated and been replaced with significant amounts of suspicion following the events of the past few years in the region. Because of this, China finds it harder than ever to access US semi-conductor technology through financial means, being blocked from acquiring companies due to national security concerns. Even deals without any immediately obvious problems such as Broadcom/Qualcomm are being blocked. Additionally, the demographics situation is very severe in China, and made worse by the gender-imbalance among young people caused by the One Child Policy. While Chinese government debt and household debt rates are relatively low, company debts are extremely high. Far too high for a nation without a high per-capita GDP. Interestingly enough, the demographic situation in the US is highly favorable compared to all other advanced economies (it also has a debt problem though) The demographic situation dovetails into this interesting op-ed piece [1] about offering more green cards to international students -- it argues that even with the high risks of espionage in certain areas, it's well worthwhile for the long-term US economic competitiveness. I submitted this article to HN a few hours ago, but after 10 upvotes it was flagged -- which is unfortunate, I thought it's a very intellectually stimulating topic of discussion that's urgently required in our open, inclusive society. I highly recommend people read the article and think deeply about it. [1] https://www.bloomberg.com/view/articles/2018-06-04/trump-is-closing-doors-to-world-s-smartest-people https://www.bloomberg.com/view/articles/2018-06-04/trump-is-...

obelix_ 8y ago
Idk I think US has bigger problems than whether it's semiconductor tech gets stolen. Social media and the news media have created such a dysfunctional environment that I am finding it increasingly hard to believe constructive debate/solutions on anything are possible until the underlying environment producing the dysfunction is cleaned up. If not we are just going to get more and more leaders from both sides propped up purely for skills to pander.
- endtime 8y ago
  > If not we are just going to get more and more leaders from both sides propped up purely for skills to pander. While I share some of your concerns about the media, isn't this (just an uncharitable way of stating) the entire purpose of democracy?
  - Udik 8y ago
    Western democracy has always been tempered (and sometimes subverted) by the control exerted by cultural elites on mass communications. Now that control is faltering, and we're seeing the results.
    - nvarsj 8y ago
      Quite the opposite. Instead, the floodgates have been opened to anyone, like the Russian government, with free access to powerful media platforms if you have the capital. Prior to that the mass media was in the hands of only a few, all based in the US. Control of the masses has been API'd. Basically, China should have bought more Facebook ads.
      - varjag 8y ago
        Looks like you both argue for the same thing. In times before, news distribution was subject to editorial process and basic standards of journalism. Not that it wasn't without own issues, but it helped sort out outright lunacy, bigotry and conspiracy theories. Distribution in 2010s bypasses that and mass media are now secondary to social network rumour mills. The political outcomes worldwide and deterioration of Western democracies are related to this.
        JKCalhoun 8y ago
        Not sure they are arguing the same. "Editorial process and basic standards of journalism" is not "cultural elitism" — it's what we had, lost, and now desperately need again.
    - 8y ago
leonroy 8y ago
Great piece from Bloomberg, thanks for sharing. Whilst the US does project itself as the bulwark of free speech, free markets and free thinking its history of protecting them has been cyclic. I fear we are going through a particularly nasty regression right now. It’s a perfect storm of liberals moving to cities, slowness to redistrict suburbs hence giving them greater voting sway and also the effect of suppression in wages amongst blue collars and likely all sectors to be honest as globalisation waves its sword and brings 100s of millions out of poverty in the East and also as regressive tax law enriches holders of capital to an alarming extent. I don’t know what the antidote is - it sometimes feels as if it could go the way towards WW3 at one extreme or people coming to their senses and realising that the promises of Trump and Brexit enrich only the profiteers.
Zafira 8y ago
I agree this policy is likely folly and that China showed its cards far too early, but I also believe that the Western policy of hoping that welcoming in China would lead to greater democratic freedoms was one of arrogance. The current landscape of trade deals and international law is clearly Western focused and to believe that other cultures are simply going to happily go along with that logic in the long run seems foolish. For instance, despite complaints about persistent intellectual property issues in China, there is no strong legacy of this right in Chinese history, but then the idea of rule of law is somewhat alien too.
- friedman23 8y ago
  > and to believe that other cultures are simply going to happily go along with that logic in the long run seems foolish This framing is problematic. It's not other "cultures" that are resistive to the idea of liberalism and democratic ideals, it's the despots that lead and control those governments that are resistant. How many non Western cultures have thrived under democracies with individual liberties? Japan, a country with a culture that cares little about individualism is one of the most prosperous nations ever.
  - Zafira 8y ago
    I am not arguing democratic ideals are bad. Obviously these norms and standards can be introduced to any culture and assimilated over time. What I am arguing is that the method that seems to have been used to get people to accept them doesn't work, was never going to work, but mostly that forcing the construction of certain legal/cultural rights onto groups as part of some international framework was bound to have issues. It has been done in a very sort of, "To join our club, you have to believe that this thing we made up is a universal truth." As an example, the concept of authors' rights is something that is enforced through the Berne Convention and the original signatories in 1887 were shockingly all Western (or Westernized) nations. Acceptance of it is a WTO membership requirement. The existence of authors' rights is not a thing in some cultures and it is orthogonal to democratic values, but in order to play ball in the global arena, you have to agree that it is a thing.
- Angostura 8y ago
cm2187 8y ago
Another challenge to this list: for long the Chinese high growth rate has been fueled by foreign investments (basically foreign companies outsourcing their production to China). This reduced a lot with the financial crisis (and outsourcing of factories is mostly done, now if anything automation is reversing that movement) and China compensated by a massive increase in debt which fueled a real estate bubble and as you mentioned worrying high level of debt. Now that has to stop at one point, and then what?
fouc 8y ago
> the demographic situation in the US is highly favorable compared to all other advanced economies How can we determine this? Which economies are we talking about? Does anyone with economics knowledge know if there are formulas/math around demographics in order to determine healthy vs unhealthy demographics (if such a concept is even relevant)?
- shasheene 8y ago
  > How can we determine this? Using a population pyramid graph [0]. You can see the data in [1]. It's a nice way to visualize the amount of working aged people vs dependents (youth and elderly). In short, a bulge of working age people ("demographic dividend") is good for the economy in the short-term, but unsustainable. The 'baby boomer' generation was one such demographic dividend. China talks about the '4-2-1 problem' (1 child needs to pay for living costs for their 2 parents and 4 grandparents). If you search for that term you can come across lots of articles. Interstingly, what is ideal depends on the type of economy: in developed economies closer to retirement is supposedly the most economically productive period of ones life (eg, information workers), but in less developed economies youth is the most productive period (eg, labor workers in factories). [0] https://en.wikipedia.org/wiki/Population_pyramid https://en.wikipedia.org/wiki/Population_pyramid [1] https://www.populationpyramid.net/united-states-of-america/2050/ https://www.populationpyramid.net/united-states-of-america/2...
  - yourapostasy 8y ago
    > Interstingly, what is ideal depends on the type of economy... If that is true, then is the growing consensus that older cognitive economy workers in developed economies are increasingly disadvantaged in the job market a signal that "developed" economies are regressing, or the conjecture needs reformulation to account for other factors? I suspect the latter.
mistermann 8y ago
That article, as do so many others, rests its reasoning on a whole bunch of premises that are not facts, and there is not the slightest whiff of uncertainty throughout the entire piece. Granted it's an opinion piece so one shouldn't expect too much, but so much of what one reads in the "news" these days is written similarly: some actual facts, but plenty of opinions presented as fact. I believe much of our post-secondary educational institutions are similar. It's no wonder hardly anyone can tell the difference between fact and opinion anymore. I'd argue this intellectual Achilles heel is one of the fundamental enablers of the political/gender/etc wars going on right now in Western societies, and this large and growing lack of social cohesion may ultimately play a crucial element in the "China vs US battle for #1 superpower". Anyone who projects into the future based on the premise that Western Liberal democracies are simply unbeatable (Democracy is the worst form of government, except for all the others) would benefit from even mild reading of history.
gumby 8y ago
> The moderate amount of international goodwill that existed seems to have completely evaporated and been replaced with significant amounts of suspicion... Are you in the USA? Because I'm sitting in Malaysia (who historically has a fraught relationship with China) where China is greeted with a mix of suspicion and opportunistic welcome (knowing that any cash or other assistant will have many strings attached)... basically the same way people think of the USA. In other words: no change; no international good will to lose.
- sysdashprice 8y ago
  Speak for yourself. South Koreans love that US has defended them against the maniacal dictators around the country. Taiwanese people love that US has protected them against the Chinese aggression, and support their island of democracy. Even some Chinese people love that US was the main capital provider into the country that lifted Chinese from abject poverty. While around the world, muslims are angry that China has enacted a concentration camp for millions of muslims. (I'm sure since you're in Malaysia, you should have heard your muslim friends say something about this). Americans are pissed off that China steals trade secrets and doesn't abide by any of the laws in WTO. Vietnamese, Indonesians, and Filipinos are upset about the Chinese aggression in South Sea. Japanese are upset about the perpetual hatred Chinese government has against Japan (tons of WW2 drama portraying Japan as evil).
  - hungryhobo 8y ago
    seems like he is speaking for himself while you are representing a whole bunch of people...
  - LeonidasXIV 8y ago
    > tons of WW2 drama portraying Japan as evil Well if I look at Japanese history in China in WWII and before , that portrayal might actually be justified. Especially given Japans stance on it, where museums in the country conveniently leave out Japans actions in China at that time. Coming from Germany that attitude seems… dishonest at least.
sysdashprice 8y ago
I think China had no choice in 2015. The collapse of the stock market, spurring the capital outflow (currently, 3 Trillion of 6 Trillion of China's wealth is overseas) and induced by the 'corruption crackdown' by Xi Jing Ping, exposed the fragile economic condition in China (350% debt/gdp). China realized it was playing a severely weak hand, and it had to act belligerent in its own self interest. So it - threatened several of its neighbors with occupying and later arming the islands in SCS - threatened to invade Taiwan - ramped up hacking efforts to steal IP around the world - told its citizens to stop buying from Korea after the missile crisis - told its citizens to stop buying from Japan after the island issue - propping up dictatorships around the world this is all in an effort to redirect the world to look away from its demographics decline, growth flatlining, reshoring and factories moving out of China, etc
vfulco2 8y ago
You nailed it in a way I could not verbally articulate.

obelix_ 8y ago

Idk I think US has bigger problems than whether it's semiconductor tech gets stolen. Social media and the news media have created such a dysfunctional environment that I am finding it increasingly hard to believe constructive debate/solutions on anything are possible until the underlying environment producing the dysfunction is cleaned up. If not we are just going to get more and more leaders from both sides propped up purely for skills to pander.

endtime 8y ago
> If not we are just going to get more and more leaders from both sides propped up purely for skills to pander. While I share some of your concerns about the media, isn't this (just an uncharitable way of stating) the entire purpose of democracy?
- Udik 8y ago
  Western democracy has always been tempered (and sometimes subverted) by the control exerted by cultural elites on mass communications. Now that control is faltering, and we're seeing the results.
  - nvarsj 8y ago
    Quite the opposite. Instead, the floodgates have been opened to anyone, like the Russian government, with free access to powerful media platforms if you have the capital. Prior to that the mass media was in the hands of only a few, all based in the US. Control of the masses has been API'd. Basically, China should have bought more Facebook ads.
    - varjag 8y ago
      Looks like you both argue for the same thing. In times before, news distribution was subject to editorial process and basic standards of journalism. Not that it wasn't without own issues, but it helped sort out outright lunacy, bigotry and conspiracy theories. Distribution in 2010s bypasses that and mass media are now secondary to social network rumour mills. The political outcomes worldwide and deterioration of Western democracies are related to this.
      - JKCalhoun 8y ago
        Not sure they are arguing the same. "Editorial process and basic standards of journalism" is not "cultural elitism" — it's what we had, lost, and now desperately need again.
  - 8y ago

leonroy 8y ago

Great piece from Bloomberg, thanks for sharing. Whilst the US does project itself as the bulwark of free speech, free markets and free thinking its history of protecting them has been cyclic. I fear we are going through a particularly nasty regression right now. It’s a perfect storm of liberals moving to cities, slowness to redistrict suburbs hence giving them greater voting sway and also the effect of suppression in wages amongst blue collars and likely all sectors to be honest as globalisation waves its sword and brings 100s of millions out of poverty in the East and also as regressive tax law enriches holders of capital to an alarming extent. I don’t know what the antidote is - it sometimes feels as if it could go the way towards WW3 at one extreme or people coming to their senses and realising that the promises of Trump and Brexit enrich only the profiteers.

Zafira 8y ago

I agree this policy is likely folly and that China showed its cards far too early, but I also believe that the Western policy of hoping that welcoming in China would lead to greater democratic freedoms was one of arrogance. The current landscape of trade deals and international law is clearly Western focused and to believe that other cultures are simply going to happily go along with that logic in the long run seems foolish. For instance, despite complaints about persistent intellectual property issues in China, there is no strong legacy of this right in Chinese history, but then the idea of rule of law is somewhat alien too.

friedman23 8y ago
> and to believe that other cultures are simply going to happily go along with that logic in the long run seems foolish This framing is problematic. It's not other "cultures" that are resistive to the idea of liberalism and democratic ideals, it's the despots that lead and control those governments that are resistant. How many non Western cultures have thrived under democracies with individual liberties? Japan, a country with a culture that cares little about individualism is one of the most prosperous nations ever.
- Zafira 8y ago
  I am not arguing democratic ideals are bad. Obviously these norms and standards can be introduced to any culture and assimilated over time. What I am arguing is that the method that seems to have been used to get people to accept them doesn't work, was never going to work, but mostly that forcing the construction of certain legal/cultural rights onto groups as part of some international framework was bound to have issues. It has been done in a very sort of, "To join our club, you have to believe that this thing we made up is a universal truth." As an example, the concept of authors' rights is something that is enforced through the Berne Convention and the original signatories in 1887 were shockingly all Western (or Westernized) nations. Acceptance of it is a WTO membership requirement. The existence of authors' rights is not a thing in some cultures and it is orthogonal to democratic values, but in order to play ball in the global arena, you have to agree that it is a thing.
Angostura 8y ago

cm2187 8y ago

Another challenge to this list: for long the Chinese high growth rate has been fueled by foreign investments (basically foreign companies outsourcing their production to China). This reduced a lot with the financial crisis (and outsourcing of factories is mostly done, now if anything automation is reversing that movement) and China compensated by a massive increase in debt which fueled a real estate bubble and as you mentioned worrying high level of debt. Now that has to stop at one point, and then what?

fouc 8y ago

> the demographic situation in the US is highly favorable compared to all other advanced economies How can we determine this? Which economies are we talking about? Does anyone with economics knowledge know if there are formulas/math around demographics in order to determine healthy vs unhealthy demographics (if such a concept is even relevant)?

shasheene 8y ago
> How can we determine this? Using a population pyramid graph [0]. You can see the data in [1]. It's a nice way to visualize the amount of working aged people vs dependents (youth and elderly). In short, a bulge of working age people ("demographic dividend") is good for the economy in the short-term, but unsustainable. The 'baby boomer' generation was one such demographic dividend. China talks about the '4-2-1 problem' (1 child needs to pay for living costs for their 2 parents and 4 grandparents). If you search for that term you can come across lots of articles. Interstingly, what is ideal depends on the type of economy: in developed economies closer to retirement is supposedly the most economically productive period of ones life (eg, information workers), but in less developed economies youth is the most productive period (eg, labor workers in factories). [0] https://en.wikipedia.org/wiki/Population_pyramid https://en.wikipedia.org/wiki/Population_pyramid [1] https://www.populationpyramid.net/united-states-of-america/2050/ https://www.populationpyramid.net/united-states-of-america/2...
- yourapostasy 8y ago
  > Interstingly, what is ideal depends on the type of economy... If that is true, then is the growing consensus that older cognitive economy workers in developed economies are increasingly disadvantaged in the job market a signal that "developed" economies are regressing, or the conjecture needs reformulation to account for other factors? I suspect the latter.

mistermann 8y ago

That article, as do so many others, rests its reasoning on a whole bunch of premises that are not facts, and there is not the slightest whiff of uncertainty throughout the entire piece. Granted it's an opinion piece so one shouldn't expect too much, but so much of what one reads in the "news" these days is written similarly: some actual facts, but plenty of opinions presented as fact. I believe much of our post-secondary educational institutions are similar. It's no wonder hardly anyone can tell the difference between fact and opinion anymore. I'd argue this intellectual Achilles heel is one of the fundamental enablers of the political/gender/etc wars going on right now in Western societies, and this large and growing lack of social cohesion may ultimately play a crucial element in the "China vs US battle for #1 superpower". Anyone who projects into the future based on the premise that Western Liberal democracies are simply unbeatable (Democracy is the worst form of government, except for all the others) would benefit from even mild reading of history.

gumby 8y ago

> The moderate amount of international goodwill that existed seems to have completely evaporated and been replaced with significant amounts of suspicion... Are you in the USA? Because I'm sitting in Malaysia (who historically has a fraught relationship with China) where China is greeted with a mix of suspicion and opportunistic welcome (knowing that any cash or other assistant will have many strings attached)... basically the same way people think of the USA. In other words: no change; no international good will to lose.

sysdashprice 8y ago
Speak for yourself. South Koreans love that US has defended them against the maniacal dictators around the country. Taiwanese people love that US has protected them against the Chinese aggression, and support their island of democracy. Even some Chinese people love that US was the main capital provider into the country that lifted Chinese from abject poverty. While around the world, muslims are angry that China has enacted a concentration camp for millions of muslims. (I'm sure since you're in Malaysia, you should have heard your muslim friends say something about this). Americans are pissed off that China steals trade secrets and doesn't abide by any of the laws in WTO. Vietnamese, Indonesians, and Filipinos are upset about the Chinese aggression in South Sea. Japanese are upset about the perpetual hatred Chinese government has against Japan (tons of WW2 drama portraying Japan as evil).
- hungryhobo 8y ago
  seems like he is speaking for himself while you are representing a whole bunch of people...
- LeonidasXIV 8y ago
  > tons of WW2 drama portraying Japan as evil Well if I look at Japanese history in China in WWII and before , that portrayal might actually be justified. Especially given Japans stance on it, where museums in the country conveniently leave out Japans actions in China at that time. Coming from Germany that attitude seems… dishonest at least.

sysdashprice 8y ago

I think China had no choice in 2015. The collapse of the stock market, spurring the capital outflow (currently, 3 Trillion of 6 Trillion of China's wealth is overseas) and induced by the 'corruption crackdown' by Xi Jing Ping, exposed the fragile economic condition in China (350% debt/gdp). China realized it was playing a severely weak hand, and it had to act belligerent in its own self interest. So it - threatened several of its neighbors with occupying and later arming the islands in SCS - threatened to invade Taiwan - ramped up hacking efforts to steal IP around the world - told its citizens to stop buying from Korea after the missile crisis - told its citizens to stop buying from Japan after the island issue - propping up dictatorships around the world this is all in an effort to redirect the world to look away from its demographics decline, growth flatlining, reshoring and factories moving out of China, etc

vfulco2 8y ago

You nailed it in a way I could not verbally articulate.