China as Top Dog is Inevitable

I recently got the chance to see the American Factory– and it was amazing for distilling what I have observed about the Chinese to a broader audience of Americans.

I have been fortunate over the last 11 years to work and school with Africans, Europeans and Americans. More recently with Asians and even more so with the Chinese. I am thus privileged to have observed that the Chinese at work are a truly special people with a work ethic that is superior by a large measure to many other races. When you work with the Chinese you realise that you are working not with individuals but with a system. A system backed by a fierce sense of national pride, three thousand years of Confucian traditional heritage and amazing work ethic repurposed from mass rice farming to mass industrial production.

China was the world’s largest economy for thousands of years before the rise of western industry and military. Between the 1700’s to early 1900’s- a period the Chinese refer to as the embarrassment, China was dominated by the West and even forced through war by the British to import opium in order to balance the British-China trade deficit that arose from large scale tea imports by Britain. The purpose of Mao Zedong’s communist revolution was to return power back to the Chinese people based on Chinese self-determination in order to ensure Chinese survival.

Since 1949, the Chinese communist party through 5 different premiers has pursued this singular goal of Chinese Self-determination. At the heart of the Chinese communist party’s ethos is that the Chinese will never be brought to their knees again.

To achieve this, the Chinese Communist Party has focused on making the Chinese nation into a singular organic being in which all members work in concert and in harmony at scale. Fractious individualism is subsumed to the state in exchange for the state providing jobs and taking the Chinese out of poverty. This is the intrinsic contract embodied in Confucianism- a Chinese system of thought that places the father as the head of the family unto whom the rest of the family defers in order to maintain social order (the Chinese have a primordial fear of social chaos). In exchange for the power the father receives, he must fulfil his responsibility as provider, protector and keeper of order. As the father is to the family so is the Chinese Communist party to the Chinese.

To the Chinese Communist Party anyone with Chinese heritage is Chinese- be they American-Chinese or British-Chinese. China is the motherland and anyone with Chinese heritage is expected to be first loyal to China and other Chinese before others.

To achieve a remarkable degree of control of the Chinese in China numbering over 1 billion people, the Chinese communist party revolutionized Chinese culture (a process called the Cultural Revolution) to remove traditional gods. They replaced faith with the state. They replaced religion with mercantilism.They subsumed the Chinese individual to the Chinese nation. The Chinese have now become mostly atheistic and derive meaning from creating wealth for the motherland through work. The typical Chinese puts the company he works for and his country China before himself. This is not 1 person. This is 1 billion Chinese people acting in unison to put their companies and their country first! How do you compete against this?

The Chinese when they work are not working only because they want to earn the next dollar per hour or make it up the ranks to president. They are working to prove themselves worthy of their nation. To the Chinese, as poignantly quoted by the Billionaire Cao Dewang in the American Factory movie, “the meaning of life is to work“. And they mean this literally. Where software developers in the west work 8 hours and request overtime to show up on weekends, Chinese developers work 14 hours, 7 days a week. A 2 person Chinese developer team will churn out code in 1 month for 25% the cost what will take a 5 member western developer team 3 months to produce. What about developers from India? Africa? – forget it!

When the Billionaire Jack Ma recently said that those seeking work -life balance and who could not survive the Chinese company 996- rule should avoid seeking a job in Alibaba, many in the west were aghast. But he was just saying what is in-fact seen as normal in China. In fact many Chinese live by the 927 rule (9am to 2am, 7 days a week). They are not working so hard to impress you. To them this is their life and how it should it be. Just as many people of faith tell you that they believe the purpose of life is to serve their gods; to the Chinese, the purpose of life is to work. If they work for foreign firms, they work hard to not disgrace the Chinese nation. If they are working for a Chinese state owned or state backed company, this takes even more important meaning. Their work is then seen in the context of serving the greater benefit of the Chinese motherland.

Hence while the western worker will fight for his rights at work and the next raise, the Chinese worker will keep the peace trusting the process and deriving meaning from his work no matter how lowly paid, believing that he is serving his country and protecting the national reputation and pride.

Many people think that China is practising capitalism the way the west intended. China adopted western capitalism and has recreated it into its own image. Western capitalism is built on the principle of market efficiencies deriving from parties engaging, collaborating and competing on basis of rational self interest. And that this rational self interest creates the invisible hand that drives markets. In essence western capitalism is primarily transactional on basis of enlightened self interest. The Chinese have modified this into transactions on basis of meaningful self interest. Meaningful self-interest being that the transaction has to be meaningful for the Chinese state for it to be meaningful to the Chinese person.

This very different approach to capitalism is what has helped China dominate mass production. The Chinese will invest large sums of money backed by State loans pooled from Chinese individual savings in order to build massive factories so as to employ as many Chinese as possible. In turn, this generates production scale economies that lowers product unit costs enabling the Chinese compete on price and dominate export markets. Because the Chinese see their work as being in the interest of the state they would work longer, harder, cheaper and with no protestations about their working conditions. This in turn helps them expand production faster for cheaper as each additional Chinese worker added to the workflow in fact reduces the marginal unit cost. Even more importantly because they value loyalty to the company on behalf of the state, they will learn more from you than you can ever learn from them. You will never be able to pry compete-information from them on basis of money. They will be more than willing to pry information from you to create their own companies. They work for something more meaningful than money- the motherland!

Because Chinese Capitalism is based on meaningful self-interest, they will out-work you, out-compete you and out-last you!

There is simply no way to compete against people whose work is driven more by honor than money. This is why they are destined to rule the world.

More so their three thousand years of written culture gives them knowledge of the worth of their heritage and historical insights that many modern nations lack. Their nation has weathered three thousand years as a single national identity. That knowledge is bound in their culture. United as they now are with knowledge of their special history- and you think you got a chance to divide them?

The miracle of the Chinese Communist Party is to have got one billion Chinese to subsume self to the Chinese company on behalf of the state. To get millions of people to work in conditions unthinkable in other parts of the world because of meaningful self-interest. This has helped the Chinese to lower unit cost per worker to a level that only robots can beat. 

As the Chinese Communist Party now begins to move the whole of Chinese society towards producing higher value economic products such as AI, China has the potential to completely leave the rest of humanity behind in the sphere of advanced tech. The level of advanced tech that 1 billion Chinese working together can create should scare anyone with foresight. When the Chinese are done, their technology would be as though some advanced Martians brought extraterrestrial intelligence to earth. The West simply cannot compete unless they re-do the current nature of global capitalism (as they are now doing) that the Chinese have so successfully gamed. They must move the economy to automation. They must move the economy to green technologies. They must develop 3D production and promote nationalistic enterprise. They must push the Chinese to open their local markets and reduce access of Chinese researchers to Western research institutions . Since the West cannot compete on cost, they must place tariffs to make it impossible for the Chinese to compete in Western markets. They must try to stymie China’s rise to top dog through military encirclement in the Pacific and by trade war distractions.

But the Chinese are no fools. They have pre-empted these moves. And are preparing for a 40 year war with the West- to be fought on their terms.

2500 years ago, a Chinese military strategist Sun Tzu said ” Therefore the clever combatant imposes his will on the enemy, but does not allow the enemy’s will to be imposed on him“. The Chinese will only fight on their own terms. To escape the US pacific encirclement, they created the Belt and Road Initiative – enabling them export by land while using sea lanes as close to shore as possible. To participate in the western-led shift in the structure of the global economy, they launched their 2025 strategy to move Chinese economic activity into higher value sectors such as clean energy, advanced manufacturing and exponential technologies. They continue to build their military capability especially at sea in order to be able to fight when they decide in the Pacific. Through debt diplomacy, they have purchased an international alliance of dependent 3rd world countries to support their interests in western-built multilateral institutions. They are out-maneuvering the West using the rules created by the West.

50 million people with a sense of shared nationhood is more powerful than 200 million people in a country with no shared purpose! Now imagine how much more powerful a billion people with a shared identity and history is. This is the power of China! Chinese economic dominance is built on a whole society response. To compete with the Chinese, you need a whole society response.

The Chinese have three thousand years of nationhood, a powerful meaning to work and a responsible, efficient and powerful central government that is able to drive 1 billion people towards a singular objective. The Chinese are playing the long game for the sake of their motherland. There is a higher meaning to Chinese capitalism than just becoming the largest economy in the world and achieving imperial glory. The purpose of Chinese capitalism is for Chinese Ethnic Survival. How can you compete against China if you cannot recreate these attributes responsible for China’s rise ? How can you compete against China if you cannot develop a whole society response to get your people working together for a higher meaning? Simply put, China is unstoppable!