China vs. America: A Comprehensive Review of the Economic, Technological, and Military Factors, by Ron Unz

Over the last year I gradually became familiar with Chas Freeman, one of America’s most distinguished professional diplomats and a longtime expert on China. Despite his illustrious career, he had rarely appeared anywhere in our mainstream media, but once I discovered his interviews on several YouTube channels, I was extremely impressed by the depth of his knowledge and analysis, so I published an article presenting his views.

In one of his public lectures, he suggested that America’s new Cold War against China had many similarities to our previous conflict against the USSR, except that this time we were playing the role of our old vanquished adversary, an analogy I had frequently expressed myself:

In international affairs, as in physics, for every action there is an equal and opposite reaction. Our actions have stimulated China to mirror, meet, and match our military hostility to it. We are now in an arms race with China, and it is far from clear that we are holding our own…

Despite China’s remarkable military buildup, Beijing has so far kept defense spending well below two percent of GDP. Meanwhile, cost control continues to elude the Pentagon. DoD has never passed an audit and is infamous for the waste, fraud, and mismanagement that result from its reliance on cost-plus procurement from the U.S. equivalent of profit-driven state-owned enterprises – military-industrial corporate bureaucracies whose revenues (and profits) come entirely from the government. The U.S. defense budget is out of control in terms of our ability to pay for it.

Four decades ago, the United States bankrupted the Soviet Union by forcing it to devote ever more of its economy to defense while neglecting the welfare of its citizens. Now we Americans are diverting ever more borrowed and taxpayer dollars to our military even as our human and physical infrastructure decays. In some ways, in relation to China, we are now in the position of the USSR in the Cold War. Our fiscal trajectory is injurious to the general welfare of Americans. That, along with our liberties, is, however, what our armed forces are meant to defend.

Around that same time, someone else brought to my attention some of the YouTube channels created by Westerners who documented their travels to various foreign lands including China, or those who had actually moved to that country and were living there. I was fascinated to discover the existence of such widespread sources of personal, first-hand information about the reality of life in that enormous country, including both its huge cities and its small rural villages. After spending a couple of days viewing dozens of such videos, I published an article presenting some of my conclusions:

From the late 1970s onward, my predictions for China’s future development had always been far more optimistic than those of anyone else whom I knew, but nonetheless I have been staggered by the astonishing scale of that country’s achievements over the last 45 years…

Consider that in 1980, the Chinese population overwhelmingly consisted of desperately impoverished peasants, far poorer than Haitians. And compare that recent past with those videos of China’s enormous, futuristic cities, now among the most advanced in the entire world, with nearly all of those gleaming, towering edifices constructed in just the last two or three decades. Obviously, nothing like this has ever previously happened in the history of the world…

As a child, I occasionally visited Disneyland, and one of the popular early attractions of that pioneering theme park was Tomorrowland, depicting the urban wonders that our future would hold. But as far as I can tell, few if any of those developments ever occurred in our own country, with California’s aging, increasingly decrepit freeways merely becoming much more congested than they were a half-century ago, and America lacking even a single mile of high-speed rail. Meanwhile, the scenes of China’s magnificent cities seem exactly like what Walt Disney had originally envisioned, but filled with far more greenery and nature areas and constructed on a scale ten-thousand times larger.

The greatest factor behind China’s tremendous success had obviously been the high ability and hard work of the Chinese people, together with the clear competence of their government and its leadership:

For decades, international testing has shown that China has the world’s highest average IQ, and this finding has dramatic implications at the top end. As physicist Steve Hsu pointed out in 2008, international psychometric data indicates that the American population probably contains some 10,000 individuals having an IQ of 160 or higher, while the total for China is around 300,000, a figure thirty times larger.

Over the last couple of generations, respectable American intellectual circles have severely anathematized this controversial topic, but scientific reality exists whether or not our elites choose to pretend otherwise. Indeed, these racial and evolutionary factors regarding the Chinese people have been completely obvious to me for nearly the last half-century, and such factors largely explained my confident expectations of China’s rise, expectations that have been proven entirely correct.

A central point of that second article had been that China’s greatest resource was the large number of its highly-intelligent and well-educated citizens. As it happens, one such individual named Hua Bin had recently begun reading our website, and he left a favorable comment describing his own perspective.

…As a Chinese, I have already tuned out the dishonest western media when it comes to reporting on China (or any adversarial countries for that matter). I used to read NYT, WSJ, FT, the Economist, etc almost on daily basis, especially their reports on China, for at least 2 decades. But since 2017 or so, the bias in the reporting has become epidemic, even laughable. Now I receive most of my news from the so-called alternative media…

I myself certainly serve as a living proof of the vast changes that have happened in China – I was earning an income 6,000 times of my first job after college in 1993, when I retired 6 years ago. And no, I wasn’t a business owner either. I’d love to share some insights from an authentic local Chinese perspective.

When I checked, I discovered he’d left another favorable comment last month on one of my previous China articles, in which he had emphasized the positive traits inculcated by the Confucianist thought that has traditionally played such a central role in Chinese culture:

…One critical thing to know about China is the importance the country and its population attach to the concept of meritocracy and virture in personal behavior, economic life, and governance. This is the ideal to aspire as taught by Confucius since 500BCE. Just like the Bible, Confucius thoughts is a guide to the Chinese nation for the last 2500 years. Unlike the Bible, it is still a required part of the curriculum for every school child (except during the turbulent times of Cultural Revolution). The revival of Confucius teaching is a big part of the country’s success.

In his most recent comment, Hua also mentioned that he’d created a Substack in the last few weeks, and had begun writing various pieces on China’s economy, technology, and military preparedness against the U.S., providing links to several of these. On that Substack, he described himself as a retired business executive and geopolitical observer.

Once I began reading his posts, I was very impressed by his analysis and the wealth of detailed information he included, much of which was entirely new to me. His coverage of some of these important matters was quite extensive and he provided an important perspective I hadn’t previously encountered anywhere else. Therefore, we are republishing his Substack posts and adding him as a regular columnist to our website:

In addition, I’m excerpting major portions of his posts and aggregate them for this article, while retaining all his original bolding and without correcting his very minor typos.

Given his business background, it’s hardly surprising that a number of his posts focused on economic matters, and these included his first, debunking the myth of Chinese underconsumption that has become so widespread among hostile Western leaders and the mainstream media outlets that function as their echo chambers. He began by emphasizing that many of the largest expenses for American consumers simply didn’t exist in China:

Very importantly, Chinese consumers spend far less on big ticket service items – rental (China home ownership is over 90% compared with 60% in the US), healthcare (largely free or heavily subsidized), and education (free public education all the way through university and graduate school).

He went on to provide a long list of important comparison points, many of which would probably surprise even well-informed Americans.

It’s not just Chinese consumers spend less to get same, they actually consumer quite a lot given the nominal per capita GDP is less than 20% of US:

• China has the largest global retail goods sales, 20% larger than US, at dollar value without adjusting for purchasing power
• China auto sales was 30 million units in 2023 compared with 15 million in the US
• 13 million residential units were sold in China in 2023 (after 3 years’ negative growth) compared with 4 million sold in the US
• China accounts for 30% global luxury goods sales, even in economic downturn, 2X of US
• China is the largest outbound tourist country with 200 million outbound trips made a year
• China leads the world in sales of mobile phones, LED TV, home electronics, sporting goods and a lot of other consumer goods by a wide margin
• China consumers 1/3 of electricity generated in the world, reaching 8000 terrawatt hours last year compared with 4000 terrawatt hours for the US
• China has surpassed the US in per capita daily calorie and protein intake
• Chinese life expectancy is 78.6 compared with 77.5 in the US, when 18% of US GDP is in the healthcare sector and 7% in China
• Chinese graduates over 5 million STEM college students a year verse 800,000 in the US
• Chinese total household debt is $11 trillion vs $17.8 trillion in the US
• Chinese total household savings is $2 trillion vs. $911 billion in the US
• According to the Federal Reserve, 40% Americans cannot cover with $400 unexpected expense. I don’t know any comparable number for the Chinese

Based on data, I think it’s safe to argue Chinese consumers don’t underspend compared with global average or even over-consumption countries like the US. They certainly have a bigger cushion in the form of savings and much less indebted.

He freely admitted that one difficulty that China currently faced was finding suitable employment for large numbers of its college-educated youths, who are unwilling to work in the factories as so many of their parents had done. Therefore:

…there are 30 million unfilled manufacturing jobs in the country. As a result, China has the world’s highest adoption of robotics – 50% of all robots sold in the world is in China.

Meanwhile, American society has solved this same problem by providing an enormous number of highly-paid service jobs, but it’s unclear whether most of these actually create any net value for our society and our economy:

The US does produce a lot more service industry jobs (80% GDP) vs. China (55%). There is clearly more bankers, lawyers, accountants, consultants, insurance agents, PR specialists, stock brokers, computer programmers, real estate agents, health workers in the US. As a result, the average American consumes a lot more services offered by these professions. China produces more (manufacturing GDP at 32% GDP) than US (10%). Therefore, Chinese consumers buy a lot and the country also exports a lot.

 

A second myth that Hua addressed in a November post was that of Chinese “overcapacity.” But this actually amounted to a euphemistic Western way of admitting that its own business enterprises could not compete with those of China. Such accusations were often coupled with complaints that many Chinese businesses are state-owned rather than private.

However, as he pointed out, this criticism seemed logically inconsistent. America’s reigning neoliberal dogma had always maintained that government-owned enterprises were inherently inefficient and uncompetitive, so denouncing China for having many such state-owned enterprises that were successfully outcompeting private Western corporations merely demonstrated the bankruptcy of that ideological framework.

Instead, he argued that the ultimate ownership structure of such companies mattered less than whether the marketplace in which they operated was sufficiently competitive, and in many sectors such widespread competition was far more the case in China than in America:

While there is a mix of different types of ownerships (including fully foreign-owned like Tesla) in China, major players in these industries in the US are entirely privately owned.

In all these fields, China is pulling ahead or improving faster than the US for a critical reason – the marketplaces are simply more competitive in China. Ownership simply has no effect on enterprise/industry competitiveness.

In the electric automative sector, the US has one big player Tesla while China has BYD, Cherry, Great Wall, Nio, Xpeng, Li, Huawei, Xiaomi, and dozens more as well as Tesla.

In mobile phones, the US has one single player Apple while China has Huawei, Xiaomi, Honor, Vivo, Oppo, and also Apple and Samsung.

In ecommerce, the US has Amazon (with eBay at a distant No 2 with a fraction of Amazon’s market share) while China has Alibaba, JD, PDD, Douyin/TikTok Shopping and also Amazon and eBay (before they pulled out after losing the competition). Same is true for almost all other critical industries.

The secret of economic success is NOT ownership but rather the presence of competition (i.e. market). Competition leads to intense pressure to innovate, improve quality, and reduce costs. It leads to an expansion of capacity and scale as businesses try to compete and win. It leads to true meritocracy – i.e. may the best player win.

On the other hand, lack of competition leads to monopoly and stagnation as the players underinvest, pursue barriers against competition, and raise margins/prices. You can do an industry by industry analysis for US businesses and find out the level of concentration (thus lack of competition) very easily.

I would argue China is a far more market-oriented economy than the US in most industries. This is the underlying reason for China’s competitiveness and the so-called “overcapacity”. The US attempts to undermine China’s competitiveness will get nowhere because the Chinese do not buy into its self-serving “neoliberal” economic policies.

The severe consequences of such lack of market competition in America was most obviously apparent in the military sector. Thus, despite our gargantuan military spending, we have been completely unable to match Russia’s far smaller economy in producing the munitions being expended in the Ukraine war:

One interesting manifestation of the US problem with its monopolistic private sector is its inability to keep up weapons production to support the Ukraine war. Its military industrial complex is plagued with undercapacity, high cost, and low efficiency despite having the world’s largest military budget (by an enormous margin). The consolidation of the vaulted military-industrial complex into 5 giants has led to a lack of competition and accountability in most parts of the defence acquisition system. It has led to undercapacity and extreme high costs (of course high margins).

Today while these private defence contractors boast the highest revenue and market cap globally, the US cannot even produce sufficient basic ammunitions such as 155′ artillery shells let alone missiles, warships, fighters and other sophisticated weapons at scale. If the US cannot outcompete production against Russia, what is its chance against China, the world’s largest industrial powerhouse? China’s “overcapacity” issue is indeed a nightmare for the US.

 

A couple of days later, Hua published a post focusing on the GDP comparisons between China and the U.S. made by Western media outlets. These have always heavily favored the latter country, but he suggested that some of them were highly misleading.

First, he argued that the Chinese government had been entirely correct in bursting the country’s huge real estate bubble. By contrast, the American government had allowed its own similar housing bubble to grow unchecked prior to 2008, ultimately resulting in the devastating financial collapse of that year. He also supported the deliberate shift away from consumer tech and the deflation of the stock market bubble, policies that he argued had been beneficial despite their very negative portrayal in Western media:

However, the reality is that bursting the overpriced and over-leveraged real estate bubble is a necessity and arguably long overdue; consumer tech is absorbing too much resources and leading to short-sighted oligarchies and unsustainable wealth disparity; and the stock market is never a reliable indicator of either overall Chinese economic performance or individual business performance anyways. BYD, the EV maker, now trades lower than 5 years ago despite the fact it dethroned Tesla as the global EV leader in early 2024 and its sales have grown severalfold.

He went on to note that the headline GDP figures seized upon by Western media outlets failed to consider numerous crucial elements:

Ignoring the obvious difference in nominal market exchange GDP vs. Purchasing Power Parity GDP which puts the size of Chinese economy a third bigger than the US already, I have focused only on nominal GDP comparison for simplicity.

Here are some interesting factoids I uncovered (everything can be referenced from sources such as Statista, US Bureau of Economic Analysis, China National Bureau of Statistics):

1. Imputations: this refers to “economic output” that is NOT traded in the marketplace but assigned a value in GDP calculation. One example is the imputed rental of owner-occupied housing, which estimate how much rent you would have to pay if your own house was rented to you. This value is included in the reported GDP in the US. Another example is the treatment of employer-provided health insurance, which estimates how much health insurance you would pay yourself if it was not provided by employer. Again, this imputation is included in GDP calculation in the US.

As of 2023, such imputations account for $4 trillion in US GDP (round 14% of total).

In China, imputation to GDP is ZERO because China doesn’t recognize the concept of imputed/implied economic output in its statistics compilation. Too bad your house is not assigned an arbitrary “productive value” once you buy it in China

2. Construction: in the US, construction contributes to 4% GDP (roughly $1.1 trillion) while in China, construction contributes to 7% GDP (roughly $1.2 trillion). However, China pours the same amount of concrete in 3 years as the US did in the last century. China imported $128 billion worth of iron ore in 2022 and US imported $1.15 billion in 2021. China produced 1.34 billion tons of steel in 2022 vs. 97 million tons by the US in the same year. China built 45,000 km high speed rail in the past decade and US built none.

Considering all the ports, highways, bridges, apartment buildings China builds every year vs. the US, the almost identical construction value in GDP seems laughable.

This shows the non-sense of comparing US GDP vs China.

3. Professional services: services such as law, accounting, tax, insurance, marketing, etc. account for 13% US GDP ($3.5 trillion) while it accounts for 3% Chinese GDP ($0.5 trillion). There are 1.33 million lawyers in the US vs. 650,000 in China; 1.65 million accountants and auditors in the US vs. 300,000 in China; 59,000 CFAs in the US vs. 4,000 in China. 20,000 lobbyists are registered in Washington DC alone while China has no such profession. And of course, the pay for these jobs is much better in the US, ergo the higher GDP value. There are definitely more lawsuits, insurance transactions, annual tax auditing, and congressional lobbying happening in the US vs China. But it is unclear how that translates into national power.

4. Manufacturing and services: 38% of Chinese GDP comes from manufacturing and 55% from services. In the US, 11% and 88% respectively. Very literally, China is a much more productive force of “hard goods” while US is a post-industrial economy tilted overwhelmingly as a “soft goods” producer. If the day comes for a hot war between the two countries, China is far better prepared for a hard power confrontation.

As an example of the ridiculous factors behind these misleading Western GDP statistics, he pointed out some of the items that the British had chosen to include in their own GDP:

A side note, I also ran across some less wholesome facts when doing research on the subject. I refer to a Financial Times report just for a laugh. In 2014, UK started to include prostitution and illegal drugs in its GDP reporting to the tune of 10 billion pounds a year. This raised the reported UK GDP by 5% in an effort to help the government raise its debt ceiling.

To derive at this number, the statistics bureau had to make some assumptions: “The ONS breakdown estimates that each of the UK’s estimated 60,879 prostitutes took about 25 clients a week in 2009, at an average rate of £67.16. It also estimates that the UK had 38,000 heroin users, while sales of the drug amounted to £754m with a street price of £37 a gram.”

Thus, Western economists have adopted a bizarre framework in which rising levels of crime contribute to the official economic measure of national prosperity.

I strongly agreed with all of his arguments, and his telling point about how the service sector of an economy can be easily manipulated is one that I have previously emphasized as well. Certainly many service industries are absolutely legitimate, necessary, and valuable in a modern economy. But that sector can also be artificially inflated without limit by including the output of individuals who spend their days trading meme stocks or crypto currencies back-and-forth, or who hire each other as diversity-coaches. So I think it is quite enlightening to exclude services and compare the two economies by focusing entirely upon the productive portion of the GDP.

Moreover, although he conservatively relied upon nominal exchange rates in comparing the two GDPs, most analysts agree that the use of Purchasing Power Parity (PPP) statistics is much more realistic. if we combine these two approaches, the disparity between the real productive GDP of the two countries turns out to be enormous.

Some of the industrial statistics I cited in a December article were eye-opening:

But automobiles are the world’s largest industrial sector, with manufacturing and sales together totaling nearly $10 trillion per year, almost twice that of any other. And the following month the Times published a chart showing the actual trajectory of China’s auto exports compared with that of other countries, and the former had now reached a level roughly six times greater than that of the U.S.

Coal mining is also one of the world’s largest industries, and China’s production is more than five times greater than our own, while Chinese steel production is almost thirteen times larger. The American agricultural sector is one of our main national strengths, but Chinese farmers grow three times as much wheat as we do. According to Pentagon estimates, China’s current ship-building capacity is a staggering 232 times greater than our own.

Obviously America still dominates some other important sectors of production, with our innovative fracking technology allowing us to produce several times as much oil and natural gas as does China. But if we consult the aggregate economic statistics provided by the CIA World Factbook or other international organizations, we find that the total size of China’s real productive economy—perhaps the most reliable measure of global economic power—is already more than three times larger than that of the U.S. and also growing much more rapidly. Indeed, according to that important economic metric, China now easily outweighs the combined total of the entire American-led bloc—the United States, the rest of the Anglosphere, the European Union, and Japan—an astonishing achievement, and something very different from what most casual readers of the Times might assume.

 

In a more recent post, Hua discussed the assassination of the United Healthcare CEO and the shocking degree of popular support the killing attracted, an extreme example of the widespread outrage produced by some of the corporate business policies permitted by our government.

United Healthcare is in the news these days after its CEO was killed by a gunman in New York. The words Delay, Deny, and Depose were inscribed on the bullet casing.

Clearly the killing was motivated by a grievance against the company and the industry in general.

United Healthcare stands out as a particularly vicious player in one of the most despised industries in the US. It has an industry leading claim denial rate of 32%. It uses AI to process most claims and has an astounding 90% error rate (I wonder what they used to train such an AI system – a database of anti-social psychopath precedents:).

The company has no doubt ruined countless lives and families. One commentator on YouTube pointed out, hilariously, that this is a killing with millions of potential suspects. 77,000 smile and celebration emojis were posted on United Healthcare’s Facebook page announcing the death of its CEO before the page was taken down. And the sentiment expressed about the incident has been overwhelmingly sympathetic to the killer.

He suggested that this is merely a symptom of the disastrous consequences of American neoliberal economic policies run amok:

What does this incident say about the state of healthcare business in the US, the largest industry representing 18% GDP? What does it say about the general state of the shareholder capitalism and corpocracy in the country?

This calls in mind the recent scandal involving Boeing and the quality problems with its aircrafts. Can consumers have faith in businesses that put profit ahead of safety and the welfare of its customers?

The list of such corporate malfeasance is long and varied. Many once household names suffer massive negative public image problem and a collapse of consumer trust.

One fundamental reason behind this zero-sum game played by corporations against their own customers is the drive for profit, all under the philosophy of so called shareholder value maximization.

This goes hand-in-hand with the fundamentalist neoliberal free market dictates advocated by the University of Chicago school of economics led by Milton Friedman since the 1980s.

– Deregulation – instead of government providing oversight on businesses so that they adhere to basic rules of consumer protection and product safety, the government delegates such oversight to the businesses they are supposed to regulate. A case in point is Boeing, who issues its own airworthiness certification on behalf of FAA. Similarly, most healthcare legislations are written by lobbyists working for healthcare insurers and big pharm on the Capitol.

– Privatization – according to the same free-market economic philosophies, governments in the west have pursued aggressive privatization of public services and infrastructure with disastrous results – higher prices, poorer services, job losses. The US government has privatized basic state functions such as prison system and war fighting (e.g. Blackwater mercenaries). The UK government privatized Thames Water, the water utility for greater London, which has led to increased water prices, poorer water quality, lack of maintenance and a variety of other issues for its 13 million customers.

Exasperating the situation, private equity is running rampant buying up low-cost housing, nursing homes, medical practices, etc. The highly leveraged buyouts and takeovers have directly contributed to increasing cost of living and reduced services in affected businesses. These malpractices are well documented in Brendan Ballou’s book Plunder: Private Equity’s Plan to Pillage America.

– Profit obsession – as stock price becomes the sole criteria to evaluate business performance, executives are focused on cost cutting, outsourcing, and financial engineering (loading up debt or share buybacks) to improve the bottom line.

One good example of this profit obsession that will really hurt the country at some point is the military industrial complex in the US. As the defence industry is privately owned in the US, companies are effectively organized as a cartel with 5 top defence contractors taking up 90% market share. There is little motivation to compete on costs as profit is guaranteed in a cost plus procurement system.

These defence companies produce overengineered systems that are extremely expensive and take a long time to produce. The military industrial complex has become, in effect, a money laundering scheme to enrich the companies and the politicians at the expense of taxpayers.

As a result, despite having a military budget bigger than the next 10 countries combined, the US cannot even produce enough ammunition for its proxy war against Russia in Ukraine, barely the high intensity war it needs to fight with China or Russia directly.

This profit obsession has also led to the kind of management practices as with the railway operators. They have reduced the number of workers per train, increased the railcar length and weight, cut back on maintenance and safety measures and implemented so-called precision scheduled railroading (basically maximizing the hours worked by the staff).

The direct result is repeated rail accidents like the derailment in East Palestine, Ohio. The US reports 10,000 railway accidents per year, which makes it the worst performing rail safety country in the world behind India.

– Weak leadership – the profit focus of US shareholder capitalism has directly led to the rise of professional managers with background as bean counters rather than engineers or technologists, who barely understand the products of their own companies.

As the goals of businesses have increasingly become purely financial, financial engineers are becoming CEOs rather than real engineers. This is what happened to once iconic companies like GE, Intel, and Boeing which all have such financially-oriented CEOs preceding their decline. This phenomenon is well documented in David Gelles’ book The Man Who Broke Capitalism – How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America.

Just as Hua believed that China was outperforming America economically, he felt that trends also favored China in the technological competition between the two countries and discussed that in a post published last month.

He noted that one of China’s current top leaders has emphasized the importance of science and technology for decades:

ORDER IT NOW

Mr. Wang Huning is the 4^th highest ranked Chinese official and widely acknowledged as the brain trust for the Chinese leadership in the last 3 decades. He was a professor of Political Science at Fudan University in early 1990s and wrote the famous book America Against America in an analysis of American society after spending 6 months as a visiting scholar in the US in 1988-89.

In his seminal book, Mr. Wang pointed out “to surpass the US, you must surpass them in science and technology”. The rest of the book is very incisive as well and I highly recommend.

His thinking has greatly influenced the Chinese government’s strategy to invest heavily in R&D for long-term economic development. The official lingo of “new quality productive force” captures the concept of leveraging S&T to promote innovation in Chinese economy.

This post analyzed the findings of ASPI, an Australian-based thinktank, which had recently published its 2024 Critical Technology Tracker, an annual comparative analysis covering 64 different technologies in 8 meta categories, with the latter including:

• Advanced Information and Communication Technologies
• Advanced Materials and Manufacturing
• AI Technologies
• Biotech, Gene Technologies and Vaccines
• Defence, Space, Robotics and Transportation
• Energy and Environment
• Quantum Technologies
• Sensing, Timing and Navigation

Because this ASPI report tracked these same data categories back to 2003, it allowed the trends to be shown over time, and over the last twenty years these had shifted dramatically in China’s favor.

China currently leads in 57 of the 64 technologies in the 5 year period between 2019 and 2023. US leads in 7. There has been a stunning shift of research leadership over the past two decades from the US to China.

• China led 52 of the 64 technologies in the 5 year period between 2018 and 2022 in the 2023 report; it took the lead in 5 more technologies one year later
• US led in 60 of the 64 technologies between 2003 and 2007
• China led in only 3 of the 64 technologies between 2003 and 2007

The leadership competition for these critical technologies is basically between China and the US. Europe and rest of Asia (Korea, Japan, India, Singapore) play a secondary role. In most fields, the lead China and US have over the rest of the world is massive.

The report also focused upon the potential monopolies in major technologies:

ASPI also attempts to measure the risk of countries holding a monopoly in research…

• China is the lead country in everyone one of the technologies classified as “high risk” – meaning China is the only country globally with a “monopoly” in high impact research of any technologies; US may have a lead in certain technologies but does not pose a monopoly risk
• 24 of the 64 technologies are at high risk of Chinese monopoly – meaning Chinese scientists and Chinese institutions are doing an overwhelming share (over 75%) of high impact research in these fields.
• Such high monopoly risk fields include many with defence applications such as radar, advanced aircraft engines, drones/swarming/collaborative robots and satellite positioning and navigation.

ASPI also identifies the institutions that are leading such research work in each country. Here is the result –

• The Chinese Academy of Sciences (CAS) is by far the world’s largest and highest performing institution in high impact research with a global lead in 31 of 64 technologies
  
• Other strong Chinese research institutions include Peking University, Tsinghua University, Harbin Institute of Technology, Hong Kong Polytechnic, Beihang, Northwestern Polytechnical University, National University of Defence Technology, Zhejiang University, etc.
• In the US, technology companies, including Google, IBM, Meta, and Microsoft has strong positions in AI, quantum and computing technologies. Other strong performers include NASA, MIT, GeorgiaTech, Carnegie Mellon, Standford University, etc.

The post closed by noting these technological advantages had direct commercial and military consequences:

China now leads the world in many of the most important future technologies. The success of its commercial companies in telecommunications (Huawei, Zongxin), EV (BYD, Geely, Great Wall, etc.), battery (CATL, BYD) and Photovoltaics (Tongwei Solar, JA, Aiko, etc.) are directly built on such R&D prowess.

Similarly, the Chinese military’s modernization is built on the massive technological development of the country’s scientific community and its industrial base.

With its lead in science and technology research, China is positioned to outcompete the US in both economic and military arenas in the coming years.

In my November article on the underlying factors behind China’s rise, I’d sharply criticized Daron Acemoglu and James A. Robinson, the 2024 winners of the Nobel Prize in Economics, for their past claims that China had no hope of becoming a major technological innovator and would be permanently relegated to merely copying Western products. Instead, I had briefly noted a couple of the crucial technologies in which China now led the world, but I had no idea that its lead had become so widespread across so many important categories, and I would have certainly cited this very comprehensive assessment if I’d had it available at the time.

This technological comparison of China and America heavily relied upon the information provided by ASPI. In an earlier post, Hua had emphasized that these ASPI conclusions could probably be trusted because of its record of considerable hostility towards China:

ASPI is a viciously anti-China Australian think tank funded partially by US State Department. This organization that published the fake Xinjiang genocide and covid-pandemic reports to smear China can hardly be considered as biased favourably to China.

Over the last decade, the mainstream American media has regularly emphasized the likelihood of a war with China in the near future, with a recent example being a lengthy late October article in the New York Times carrying the headline “The U.S. Army Prepares for War with China.”

Therefore, this post focused upon the military implications of China’s technological development, and Hua reasonably regarded such military issues as much more important than economic growth alone. He noted that during the nineteenth century, China had greatly suffered at the hands of countries with far smaller economies, while he considered the recent record of America’s aggressive wars as very threatening to his own country:

Closer to home, in 1840, the Qing Dynasty had a GDP that was 6 times of Britain and 20 times of the US, as per Wikipedia. But it lost badly in the Opium War and as a result, China suffered a hundred-year humiliation. China’s economy was much larger than Japan when it lost the Jiawu War (also known as the First Sino-Japanese War) in 1895. It had to cede Taiwan to Japan until 1945 when Japan was defeated in WWII.

The brutal reality is China must focus completely on winning the hard power competition with the US. The best outcome is of course winning without fighting a hot war. But that is unlikely to happen as no hegemon in history has chosen to fade without fighting with everything it has. Nothing in US rhetoric and behavior today or its short but violent history in the past gives hope that it wants to pursue co-existence with adversaries, real or imagined, anywhere in the world. It is clear that the US doesn’t want a multipolar world unless forced to live in one.

A war is coming, if you spend a minute listening to US politicians, generals and media who seem to want it with all their hearts.

For China, Russia, Iran or any other countries who want to remain sovereign, it is a choice between living on your knees or fighting with a stiff spine. The choice taken by the US vassal states in Europe, Asia, Australia, and elsewhere is neither desirable nor practical. So, whether we want it or not, things are coming down to a life-or-death fight, most likely in less than a decade.

Given these serious concerns, he summarized some of China’s major advances in military technology. Although I lack the expertise to evaluate his claims, these were all extremely detailed and precise, enhancing their credibility, and I would be interested in seeing them evaluated by a knowledgeable expert in that field.

– China test launched its DF31AG ICBM successfully last month, making it the only country with a successful recent test performance in long-range (12,000 kilometre) nuclear attack capability. China also has DF41 in its arsenal, a Mach 25 18,000 km hypersonic ballistic missile that carries 6 times more nuclear warheads than DF31. These, together with submarine-launched JL-3, serve as a strong deterrent to US nuclear blackmail

– China 5th-gen stealth heavy fighter J20 has upgraded its engine with WS15. It now outperforms F22 (let alone the smaller F35) in speed, manoeuvrability, and longer beyond-visual-range air to air missile (PL17). Its stealth, avionics, radar, EW capability, speed, range, and firepower far exceeds F35, a medium-size jack-of-all-trades cheaper fighter which is now the main aerial combat platform for the US. China produces 100 J20s a year and the US has stopped producing F22 due to its high cost. There is also a two-seat version of J20 – the J20S – which has unmanned loyal wingman swarming capability. China has started production of its own medium-size stealth fighter J35 as a cheaper, high volume 5-th gen figher.

– China has fielded multiple hypersonic missile systems such as DF17, DF26, DF100, YJ21, while US has yet to field any, falling behind not just China and Russia but also Iran in this critical future military technology. Russia shocked the west with its hypersonic HGV missile Oreshnik in Ukraine just the other week. While the Oreshnik is still an experimental weapon, China’s DF17 or DF26 are mature systems tested many times over the years and have been deployed in the Rocket Force for half a decade. According to the US DoD, China has conducted twice more hypersonic missile tests in the past decade than all other countries combined.

– On the naval front, US Navy openly acknowledges China’s ship building capacity is 230 times of that of the US. The US Navy is now resorting to outsourcing navy ship building and maintenance to Korea and India, against US own laws

– China can produce conventional precision-guided rockets at the same unit cost (USD4-5000) as US builds dumb artillery ammos like the 155mm shells. The US DoD head of procurement warned in 2023 that China’s defence budget has a 3 or 4 to 1 advantage against the US in procurement value for money. Given its industrial base, China can not only produce more cheaply but in much larger volume as well. As we can see in Ukraine and the Middle East, quantity has a quality of its own when it comes to high intensity modern warfare. In a hot war, the cost exchange and quantity exchange will heavily favor China.

– China is the only country in the world that can mass produce CL-20, the most destructive non-nuclear explosives. Imagine CL-20 explosive warhead on DF17 in an attack on US aircraft carrier – a hit translates into 5000+ KIAs and $14 billion capital asset excluding aircrafts on board. The much-acclaimed “mother of all bombs” that the US dropped on the hapless Afghanis will fale next to that meteorite strike.

– China’s PHL16 multiple launcher rocket system is a high mobility high precision attack platform similar to HIMARS but it has a range of 500 KMs vs 300 km for HIMARS with higher payloads and higher precision (guided by the Beidou satellite system, which is itself far superior to the outdated GPS system the US military relies on). Unlike the HIMARS system which is treated as a scare miracle weapon by the west, China has deployed the PHL16 system to more than 40 army battalions in 4 provinces close to Taiwan. PHL16 alone can conduct blanket precision strikes on any point in Taiwan on road-mobile TELs. The Chinese call such cheap saturation strike weapon as “all-you-can-eat buffet” in a Taiwan pre-landing bombing campaign.

I’d never heard of the Zhuhai Airshow, but it is apparently a leading venue at which China unveils its latest aerial military technology and weapons systems, and the previous month he had published three posts on the new ones presented there, followed by a post describing China’s new MD-19 hypersonic aircraft:

 

A few days later Hua followed this up with a lengthy post entitled “Comparing War Readiness Between China and the US,” and I found his overall analysis quite persuasive.

He began by emphasizing that a war seemed very likely:

It is hardly an exaggeration to say a military conflict is a high probability event between China and the US in the coming decade. There are flash points in the Taiwan Strait, the South China Sea and the East China Sea.

Rhetoric from the American officialdom and media clearly signals the US plans to militarily confront China and stop its economic, trade, and technological developments. Its fleets of ships and airplanes are constantly circling Chinese shore. It is mobilizing its lackeys in the region to fight on its side.

Mutual hostility is at the point for war to break out.

This won’t be a WWI type of sleepwalking into a war. Everyone knows a showdown is coming.

He then focused upon the industrial factors that were likely to dominate such a conflict, and China’s strong superiority in that regard:

• The Ukraine war and the Middle Eastern conflicts have shown that modern wars between peer belligerents will be long, bloody, expensive, and above all, highly dependent on war production and logistics.

• China has a 3 to 1 advantage versus the US in overall industrial capacity and an unquantifiable advantage in surge capacity. China’s share of global manufacturing output is 35% vs. 12% for the US. China has idle or mothballed capacity for almost all major industrial products from steel to electronics to vehicles to ship building to drones.

• Such capacity advantage applies to the defense industry.

• Much of Chinese industrial capacity is state-owned and can be easily mobilized for defense production. All major defense firms are state owned and produce for purpose, rather than profit.

• China’s cost, speed, and scale advantages in industrial production are not in dispute while the US suffers from well-documented cost and production schedule issues in its military industrial complex.

• It’s safe to say China enjoys the same pole position in its capacity to sustain a long war as the US enjoyed in WWII. China has an overwhelming industrial superiority that the US has never experienced with any adversaries in its history.

He next noted that the conflict would occur close to China but very far from the United States:

• The war will be fought in China’s shores or near abroad – possibly Japan and the Philippines. Much of the action will happen in a radius that can be covered by Chinese intermediate range missiles and land-based bombers and fighters.

• The nearest US territory will be Guam, 4,800 kilometers away. The US does have military bases in Japan, Korea and the Philippines. But these countries will take the risk of being bombarded by China if they allow these bases to be used against China. It’s unclear how they will choose despite the hawkish rhetoric expressed in their pledge of allegiance to the US. One can talk tough now but act quite differently when facing certain destruction.

• In essence, the war will be one between a landed fortress and an expeditionary air and maritime force. For most of the history of war, ships lose to fortress.

All of America’s many wars since World War II have been fought against technically inferior opponents against which our military possessed enormous superiority and could operate with near total impunity. However:

• None of these US military assumptions apply in a war with China and will be a liability rather than asset. The muscle memory of the US military will be deadly to itself in the coming war.

• Chinese military doctrines have been honed for the last 70+ years around territorial defense and Taiwan reunification. The explicit mission of the PLA is to ensure the success of a war in the Taiwan Strait and South China Sea.

• The specific war doctrine for these scenarios is called Anti Access Area Denial (A2AD). The essence is to deny enemy access to the theater of war and inflict unacceptable losses for any intervention…

• These assets bear no resemblance of anything the US military has fought against before.

• China also brings to the battle no presumptions about the enemy and their capabilities since the Chinese military has been peaceful for over 40 years. Despite the lack of experience, the upside is such a military will adapt to changing war environment more rapidly and adjust its strategies and tactics under the circumstances. There is no bad habits or assumptions to unlearn.

He also argued that China’s national support for a war fought so close to its own homeland would be enormously greater than America’s ideological commitment to its continued imperial adventure more than six thousand miles away in East Asia:

• One often overlooked aspect of war is the will to fight. It comes down to why the military is putting their lives on the line. In a peer to peer situation, the party that can endure the most pain for the longest will prevail.

• China is fighting for its territorial integrity and its national pride. It has the collective will of the population firmly behind it. The US is fighting to maintain its hegemonic rule in an imperialist adventure. The pain threshold of its society is much lower. Put it bluntly, China is much more casualty tolerant than the US will ever be in a war at China’s door step.

• Cost of failure calculation differs completely. For the Chinese, losing a war is an existential threat. No government can hope to retain its legitimacy if it backs down from a war when the barbarians are at the gate. For the US, it’s just a chess board move in the “great game”. Losing a war in Taiwan or SCS is a setback but doesn’t represent an existential problem.

• The late Singaporean Prime Minister Lee Kuan Yew summarized the stakes well – “China will fight a second time, a third time until it wins when it comes to Taiwan and will never give up”. Can the US say that about its commitment?

Finally, he pointed out that America’s own military track record over the last three generations had hardly been impressive:

• The US has a very spotty track record in wars after WWII despite having a military budget that dwarfs the rest of the world. It practically lost every war except the 1991 first gulf war against Iraq.

• Interestingly, China was the first country that broke the US string of military successes when China pushed the US back from the Yalu River to the 38^th Parallel and fought the US and its allies to a standstill in the Korean peninsular in the early 1950s…

• China did that when it had to send a poorly equipped peasant army after 4 years’ bloody civil war. China’s GDP in that time was less than 5% of the US, which was at the pinnacle of its military and economic power after WWII.

Therefore I found it very difficult to disagree with his ultimate conclusion:

When you consider the capacity for war, the geography, the will to fight, the military doctrines and the two countries’ track record against each other, it is an easy bet who will prevail in the next war.

Until about a decade ago, the notion of a war between China and America would have been considered very farfetched in our own country, but a crucial turning point came in 2015 with the publication of a long article in The Atlantic by Graham Allison, founding dean of Harvard’s Kennedy School of Government. “The Thucydides Trap: Are the U.S. and China Headed for War?” answered its title’s question in the affirmative, arguing that for many centuries wars had regularly occurred when a reigning power such as America was faced with a rising power such as China, a position that Prof. John Mearsheimer had previously suggested in his own articles and books. This striking analysis greatly influenced elite DC political circles.

Two years later, Allison expanded that same thesis into Destined for War, which quickly became a national bestseller. As I explained in a 2023 article:

Allison’s entire academic career had been extremely sober and respectable, and this surely magnified the impact of his incendiary title and dramatic prediction. The front of the paperback edition was packed with a remarkable ten pages of glowing endorsements by a long list of the West’s most prestigious public figures and intellectuals, ranging from Joe Biden to Henry Kissinger to Gen. David Petraeus to Klaus Schwab. It seemed obvious that his message had struck a deep chord, and his national bestseller received enormous acclaim, being selected as a book of the year by the New York Times, the London Times, the Financial Times, and Amazon. So even as far back as six years ago, the serious possibility of an American war with China had become a very hot topic to our political and intellectual elites.

However, the growing likelihood of a U.S.-China war alarmed some individuals, prompting arguments on the other side:

As Mearsheimer and Allison both emphasized, a central component of America’s anti-China geopolitical strategy has been to organize a local balancing coalition to support our containment efforts, and Anglophone Australia has been a charter member of that group. We share a British colonial heritage with that country, which fought as our staunch ally in World War II, and its politics is heavily influenced by native son Rupert Murdoch’s powerful right-wing media empire. So given these factors, Australia’s once very friendly relations with China have rapidly shifted in this new direction, marked by episodes of intense public hostility and trade embargoes.

Naively optimistic Americans might hope that any future war with China could be kept far from our shores, with our own large country protected by the width of the Pacific Ocean. But no rational Australian could feel the same way, since his nation is located in that region and is dwarfed by a China more than fifty times larger in population, likely ensuring that any war would have devastating consequences. Thoughtful Australians have surely recognized such facts and grown alarmed at these dangerous international trends, so it was hardly surprising that one of the first major responses to the Allison-Mearsheimer framework came from an Australian.

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Kevin Rudd had served two terms as Prime Minister of his country (2007-2010 and 2013), and afterward relocated to America, where he later became President of the Asia Society based in New York City prior to being named Australia’s ambassador to our country a few weeks ago. In March 2022, he published The Avoidable War, bearing the grimly accurate subtitle “The Dangers of a Catastrophic Conflict between the US and Xi Jinping’s China.” Although I had only been very slightly familiar with his career, I decided to read his book for his insights on averting that looming global conflict.

Rudd seems to possess an ideal background for the important task he has set himself, having majored in Chinese studies in college and being completely fluent in Mandarin, a language he began learning at age 18. As he explained in his introduction, he has lived and traveled extensively in both China and America, has many friends in each country, and very much hoped they could avert what he considers their unnecessary conflict. I found his book excellent and it certainly merited the glowing praise it received from Allison himself, a personal friend of the author, as well as from Kissinger and other leading American military and academic figures. The work was published in English and obviously aimed primarily at an American audience, so it appropriately devoted the bulk of its pages to explicating China’s perspective, but the American side of the conflict also received considerable coverage.

A large portion of Rudd’s book focused upon the personal career and ideological views of Chinese President Xi, who during the previous decade had established himself as his country’s most powerful leader since Deng or perhaps even Mao.

Personalities may often matter little in geopolitics, but there are also some exceptions. Following the 1997 death of Deng Xiaoping, China had been run by a collective leadership, with several jostling factions and important figures usually sharing political power with its top leader. But Rudd emphasized that this situation has now drastically changed, and Chinese President Xi Jinping had successfully established his personal authority in China to an unprecedented extent, sidelining all his potential Communist Party rivals and making himself the most powerful Chinese leader since Mao. Xi also managed to remove the reelection term limits for his office and although he is now 69, his father lived to 88 while his mother is still alive at 96, so he could still remain China’s paramount leader through the 2020s and into the 2030s.

Given these realities, any current analysis of Chinese goals and strategies should necessarily focus on those of President Xi, who therefore constitutes the central figure of Rudd’s book. Indeed, the work seemed to heavily overlap with the author’s Oxford doctoral dissertation on “Xi Jinping’s Worldview” that he had also been preparing during those same years

Rudd seems uniquely qualified to provide this analysis. Prior to becoming Prime Minister, he had had a long career as an Australian diplomat, eventually rising to become Foreign Minister, and he had first met Xi more than 35 years ago, when both were very junior figures; over the years he has spent a total of ten hours in conversation with him on six separate occasions, including some that were quite informal. Add to this his multitude of other personal sources acquired over the decades, both Chinese and Western, and I doubt that there are many outsiders who can match his understanding of the goals of China’s top leader. Therefore, we should take the author quite seriously when on a couple of occasions he described these in dramatic terms: “Xi wants to secure a place for himself in Chinese party history that is at least equal to Mao and greater than Deng.”

Rudd presents Xi’s major goals in a series of ten chapters, representing the concentric circles of his strategic objectives, and these occupy half the book. Xi places the greatest importance upon maintaining political power and securing national unity, followed by economic development, modernizing the military, and then increasing China’s influence in its neighborhood, along its Asian periphery, and eventually worldwide. I found Rudd’s organizational approach helpful and his analysis quite plausible.

Rudd’s full biography of Xi was just released by Oxford University Press a couple of months ago. Presumably drawing very heavily upon the doctoral dissertation he completed on that same figure, it ran much longer than the relatively brief sketch he’d provided in his 2022 book, and it was far better documented, containing more than 65 pages of notes and a bibliography of Western and Chinese sources that filled more than 100 pages of very small print, one of the longest I’ve ever encountered. But although it certainly provided a great deal of detailed information and convinced me of some things that I’d previously doubted, I actually found it less interesting and useful than what he’d much more briefly published a couple of years earlier.

At the time he’d written that previous book, Rudd was still a private citizen living in New York City, and our extreme hostility towards China had not yet become fully bipartisan, being instead regarded by many in his elite circle as associated with Trump’s widely-disliked policies. But since then, Rudd has been appointed Australia’s ambassador to America while the Biden Administration enacted technological and economic sanctions far harsher than anything Trump had done, with an overwhelming majority of NATO allies having gone along with these policies. These embargoes seemed to violate all international trade agreements and could easily be considered acts of war.

All of this reflected the very widespread consensus among our mainstream political and intellectual elites that China was our great global adversary, with a kinetic war in the near future being quite likely. Such sentiments naturally permeated much of Rudd’s text, which seemed enormously more hostile and negative toward both Xi and China than what he’d written just a couple of years earlier. Two of the glowing blurbs on the back cover came from Tom Donilon, a former National Security Advisor in the Obama administration and former Bush Secretary of State Condoleezza Rice, both hardline figures in our national security establishment, and I actually regarded their strong endorsements as an unfavorable indicator.

As he stated early in his Preface, his overall framework argued that Xi has been moving China towards what the author called “Marxist Nationalism,” which he described as “taking Chinese politics to the Leninist left, Chinese economics to the Marxist left, and Chinese foreign policy to the nationalist right.”

Another book that I’d read several months ago on the same subject was Prof. Alfred L. Chan’s very hefty volume published in 2022 by Oxford University Press. Although it was presented as a biography of China’s current leader, a great deal of the material in the more than 700 pages actually focused on the complex inner workings and political history of China’s ruling Communist Party from the time of Xi’s childhood seventy years ago, including brief capsule biographies of a very large number of China’s other high-ranking figures during those decades.

Much of the material seemed rather dull to a non-specialist such as myself, but it was exhaustively detailed and comprehensive, so it did constitute a very comprehensive reference source on that topic.

 

Taken together these two thick Oxford University Press books on Xi filled more than 1,300 pages and attracted numerous prestigious endorsements. Yet although it ran only a tiny fraction of that length, one of Hua’s Substack posts on that same Chinese leader and his supposed accomplishments seemed far more incisive, providing numerous important factual details that had been entirely ignored by those vastly longer volumes or perhaps buried so deep in other material that they passed unnoticed:

• 10 Achievements of Xi Jinping
  The transformative leadership of Xi and more to come in the future
  Hua Bin • Substack • December 2, 2024 • 2,700 Words

The opening paragraph set forth the thesis presented, and it was followed by a simple skeletal outline of those ten alleged major achievements, with each containing several lettered sub-points, generally running only a sentence or two each:

Chinese President Xi Jinping has been compared with Chairman Mao and Deng Xiaoping as one of the great leaders in the People’s Republic of China. He fully deserves such accolades. What is said about him in the western mainstream media is irrelevant and meaningless from a Chinese perspective (what do you expect from adversarial sources in today’s west? Use their low-browed treatment of Trump for reference).

1. anti-corruption
2. poverty reduction and common prosperity
3. BRI – the belt and road initiave
4. Made in China 2025
5. prioritize science and technology
6. pollution and safety
7. military reform
8. crackdown on tech monopolies
9. burst the housing bubble
10. cultural and civilizational revival

Obviously, Xi runs China and sensible Chinese citizens would probably avoid sharply criticizing his leadership. But I’m less convinced that merely keeping silent would be a problem, and if the author had taken that approach on his English-language Substack, I doubt he would have faced any negative consequences. Therefore, I tend to believe that the positive sentiments that he expressed towards Xi were probably sincere though perhaps somewhat one-sided, and much of his material matched what I’d often seen mentioned in the fiercely anti-Xi Western media, though it was obviously portrayed in very different fashion.

The first item on the list was the anti-corruption drive that Xi launched soon after beginning his leadership in 2013. According to Hua, Chinese corruption had reached huge levels at that point and was widely regarded as the country’s biggest problem, something that I’d seen regularly mentioned elsewhere. In fact, according to the author, many Chinese such as himself had even left the country in frustration. But Xi then launched a massive anti-corruption drive in which huge numbers of officials were punished:

• when Xi took the helm in 2013, the country suffered from a deep-rooted severe corruption problem at all levels. Corruption was named as the single most critical issue facing the country. Most citizens were deeply frustrated and lost much faith in the government and the party. Many left the country including this author.
• Xi has run the longest anti-corruption campaign in Chinese history (ongoing to this day). In his first 5 years, over 1 million officials from national to local government, state-owned companies, banks, and military were prosecuted and punished. This included over 300 vice minister level and above officials out of roughly 2000 in total: 1 member of the Poliburo Standing committee (same offical rank as Xi), 2 vice chairmen of the Central Military Commission (the most senior military posts after Xi himself as commander in chief), 7 cabinet ministers (including the Railway Minister who was sentenced to death).
• More vice-minister and above level officials were removed and prosecuted in the 5 years than the previous 60 combined.
• the anti-corruption drive continues to this day. In the last 12 months, the foreign minister, 2 defence ministers (the incumbent and his predecessor), 9 generals in the PLA Rocket Force, numerous SOE CEOs, senior bankers, hospital administrators, etc. have been removed for corruption.

Although my newspapers and books claimed that Xi was using this campaign to eliminate his current and potential political rivals, they still reported many of the most important cases, so I have no reason to doubt the overall totals that Hua presented, which were certainly huge. But according to the author, the average Chinese citizen expressed great satisfaction over such widespread punishment of corrupt officials, which seemed perfectly plausible.

In a post published a couple of days later, he argued that the difference between Chinese political corruption and the American variety was that the latter had gradually been decriminalized and normalized, so that almost none of the guilty parties were ever punished, citing numerous very telling examples to support this harsh verdict:

Also in the past week came news of corrupt behavior by the sitting US president Joe Biden, who gave an unconditional and blanket pardon to his son Hunter Biden for illegal gun ownership and drug possession. The language used in the pardon is so broadly that it is laughable – Hunter Biden was “pardoned for all crimes he committed or may have committed or may have taken part in between 2014 and 2024”.

Interestingly, Hunter Biden wasn’t even charged with his real crimes including using his father’s position for gains in Ukraine (Burisma board seat for a cool $1 million a year) and even acting as bagman for outright bribes on behalf of his father, the “big man”.

Another news from the US this week came from the president-elect Donald Trump who just named his in-law Charles Kushner to be the next US ambassador to France. Very interestingly, Trump pardoned Kushner when leaving office in 2020 for his crimes which carried a 14-year prison sentence. This real estate felon and convicted criminal will have to be addressed as “your excellency” by the French starting next January.

More on Trump, it is widely reported in the US media that Trump took a $100 million donation from Jewish gambling kingpin Sheldon Edelson, now dead, in his first presidential campaign in 2016. As a quid pro quo, Trump moved the US embassy from Tel Aviv to Jerusalem against international law. In this election cycle, it is reported Miriam Edelson, the widow, gave Trump another $100 million for backing Israel to annex Gaza and West Bank.

Another outright corruption involves the octogenarian former Speaker of the House, Nancy Pelosi, who has the dubious distinction of an EFT fund named after her (Nancy Pelosi Portfolio with ticker BK20883) for her prowess as an insider trader of US securities in the stock market. The Pelosi portfolio returned 65% in 2023, vastly outperforming the S&P500. According to Quiver Quantitative, Pelosi’s stock picks returned 775% vs. market index of 221% between 2014 and 2024. The “democracy” touting old witch is a super star stock picker, handily beating the most high-powered hedge fund managers on Wall Street.

So how should we understand and make sense of corruption in the world’s two major powers? Here is my take –

– Chinese corruption is retail, individual, punishable. Xi made the issue his No. 1 domestic policy priority when he took power in 2013 and hasn’t taken his foot off the brake to date.

Xi’s corruption drive took down hundreds of thousands of officials at national and local government level, including members of Politburo, defence ministers, foreign minister, railroad minister, provincial governors, mayors of major cities, bank CEOs, state owned company executives, military procurement officials, hospital administrators and countless others.

– Chinese corruption is about corrupt individuals. Corruption is illegal and heavily punishable. It may never go away as human defects won’t go away but it is risky for the corrupt individuals. Corrupt officials can steal lots of money, but they run a very real risk of being shamed and losing everything including literally their lives (the railroad minister was executed).

– On the other hand, US corruption is wholesale and institutionalized. Such corruption is legalized and therefore protected. Such corruption is not even recognized as prima facie corruption. This is done through legislations like Citizen United which legalizes money in politics by treating political donations as freedom of speech.

This is done through institutionalized evolving doors between Pentagon and military industrial complexes (e.g. Lloyd Austin and Raytheon, David Petraeus and KKR), between government offices and lobby firms (Tony Blinken and WestExec Advisors), between regulators and those they are supposed to regulate (e.g. Tim Geithner working as CEO of Warburg Pincus after his stint as Treasury Secretary to bail out Wall Street at the expense of the main street).

This is done through codified patronage systems like the presidential right to nominate campaign donors to posts like ambassadors.

As a result, American corruption is systemic, wholesale, and unreformable. It is large scale, open, risk free, and unaccountable. There is no shame involved. In the US, corruption carries very high rewards and a strange sort of “honor” (like having an EFT fund named after your insider trading prowess).

 

After discussing the important issue of corruption, Hua moved on to the second item in his long Xi Jinping post:

• Xi announced a nation wide drive for Common Prosperity and poverty reduction initiative. 3 million grassroot officials were dispatched to rural areas to live and work on site for “targeted poverty allevation” in the countryside from 1 to 3 years. 1 trillion RMB ($150 billion) was invested. As a result, over 100 million people were brought out of extreme poverty.
• meanwhile, the government has enforced pay reduction in various bureaucracies and the financial service industry in particular. China is probably the only country in the world where bankers are being paid less today than 5 years ago. A side benefit is to reduce the attractiveness of financial industry compared with other productive sectors of the economy. After all, actual engineers are far more important for the society and economy than “financial” engineers.

In a somewhat vaguer manner, I’d seen these same facts described in the Western media, though they were often portrayed in very negative terms as a sign that Xi was reverting to Mao’s Marxist dogma. For example, Rudd took exactly this position in his very recent book. Thus, the facts themselves did not seem under sharp dispute, and although I hadn’t previously seen the figure of 100 million Chinese people raised from dire poverty, given the resources invested such a result hardly seemed implausible.

Xi’s signature Belt and Road Initiative (BRI) and Made in China 2025 campaign have been heavily covered in the Western media, though often denounced by American officials and portrayed in a sharply negative fashion, with accusations that BRI projects would mire recipient countries in severe debt bondage. However, the public statements of a more objective observer such as former Ambassador Chas Freeman have been strongly favorable, suggesting that such BRI failures were limited to a very small number of cases. So Hua’s claims about the success of those two major Chinese initiatives seemed plausible to me.

Some of the other items were already discussed earlier. Several posts had thoroughly documented China’s highly successful drive to prioritize science and technology and the same was true for the efforts to reform and improve the Chinese military by developing powerful new weapons systems aimed at deterring or winning a war against America. The unsustainable property bubble had been attracting too much investment and speculation and by bursting it sooner rather than later, much additional damage was avoided. I think Xi’s famous statement that “houses are for people to live in, not for speculation” is exactly the sort of sensible idea that American officials should have followed prior to our own 2008 financial collapse.

A dozen years ago, China’s large cities and its countryside had some of the worst pollution in the world. I’d mentioned this major problem in my 2012 article while arguing that a society with such rapidly growing wealth would probably be able to eventually eliminate this problem, but this seems to have happened much more rapidly than I had ever expected. All the videos taken by recent Western visitors seemed to show almost pristine conditions in both the cities and the countryside, with some of the rural peasants mentioning how much things had improved over the last few years. Given all these park-like urban street scenes, Hua’s claim that China annually planted more trees than the rest of the world combined was very plausible, as well as that China held a similar share of sales for new electric vehicles. He also emphasized that “China is one of the safest countries in the world with exceptionally low crime rate, drug use, or homelessness.”

The crackdown on Tech monopolies was also portrayed in very plausible fashion, close to the impression I already had. As the author plausibly explained:

• the reality is that consumer tech companies in China are becoming rent-seeking monopolies just like their counterparts in the US. Such concentration of market power as well as financial capital and tech talents are bad for consumers and the development of new innovative businesses.
• by limiting the unregulated growth of tech monopolies into areas like consumer finance (e.g. Alipay), China preemptively addresses the risks associated with unbridled capitalism at the expense of consumers and competitors. The west is facing the same challenge with its tech giants like Google and Facebook. However it lacks the political will and suffers from regulatory capture by these deep-pocketed private firms who can deploy numerous lobbyists and lawyers to maintain and extend their monopolies.
• China also is redirecting capital and talents to higher-priority tech initiatives by limiting these consumer-tech businesses which only marginally improve the country’s high tech competitiveness. Deep hard tech such as semiconductor, industrial AI, and unmanned technology is direct beneficiary of such policy shifts.

The last item on Hua’s list was described as “cultural and civilizational revival,” and the author actually devoted considerably more space to it than any of the other nine. According to his account, during the three decades since China had opened up to the West and reformed, huge social changes had taken place, but not all of these were healthy and beneficial. Many Chinese had lost touch with their own cultural traditions and had begun to glorify everything Western, resulting in a decline in family values, with elements of the Chinese intelligentsia being particularly vulnerable:

Western nihilist liberalism took root among many so-called intellectuals. Many became openly subservient to western values and interests. Some started to advocate them blindly without understanding their particular cultural roots or compitability with local Chinese reality or even their failings in the west’s own society (like with LGBTQ, the trans movement and wokeism).

…as the west led by the US started to confront China’s rise, these societal changes, if unchecked, represented a significant internal weakness that could be exploited to damage China’s interest and advance our adversaries’. The riots in Hong Kong was a case in point. The west desperately wanted to exploit any internal weaknesses and polarization to promote color revolution and regime sabotage as part of their long-practiced playbook.

Therefore, Xi and his leadership team began strongly pushing back against these potentially dangerous Western cultural influences and had instead promoted traditional Chinese culture, very much like Russian President Vladimir Putin had been doing in his own country for similar reasons. As a result, Chinese consumers now increasingly favored their own traditional literature rather than that advocated by leading Western cultural figures and domestic films rather than those produced by Hollywood.

All of these Substack posts were written by an obviously intelligent and very well-educated Chinese author, and although many of the specific details might be sharply disputed by some of his mainstream Western counterparts, I doubt that any of the material presented would be regarded as shocking or unacceptably extremist.

However, the ideological taboos of Chinese society differ considerably from those of our own, and as a result some of the other posts he published during the first half of December fell into an entirely different category. Despite our boastful claims that we live in a free society, any mainstream Western academic, government official, journalist, or business leader who publicly expressed such controversial ideas would immediately be purged from respectability and probably see his career and reputation destroyed, while perhaps even be facing imprisonment in some countries or de-banking with confiscation of his financial assets. As I’ve sometimes mentioned in my writings, such harsh social sanctions are related to a shrewd observation widely misattributed to Voltaire:

To learn who rules over you, simply find out who you are not allowed to criticize.

Some of the titles of Hua’s posts indicated their incendiary content:

The first of these posts began by setting forth the author’s position in very clear terms:

After a year of observing the utter criminality and inhumanity of Israel’s actions in the Middle East, I have decided to investigate the origins of its dark national/racial/religious ethos from historical documents.

There seems to be numerous sources to draw insights from and there are many interesting analytical perspectives one can take, including –

• The relationship between the decline of the west and the rise of the jews in western political establishment, especially in the US
• The complete convergence of Zionism and neoconservatism to the point they are now interchangeable concepts
• The roles played by the jews in the increasing militarism and jingoism in the west
• The surprising (maybe not so surprising) similarities and parallel of Zionist ideologies and actions with the Nazis

One interesting piece of historical records seems a good place to start to understand Judaism and Zionism – the Protocols of the Elders of Zion.

As an outside observer completely free from generations of our own ideological conditioning, the author simply went through numerous elements of that notorious early twentieth century document and noted how many of these seemed eerily similar to exactly what had taken place in the West since that time, especially with regard to the successful political strategies followed by its very powerful Jewish and Zionist minorities.

And although the third, shorter post had a much more innocuous title, some of the simple observations it contained were just as explosive. Although many Westerners might share his view that the economic doctrines promoted by the University of Chicago have inflicted huge damage upon America and the rest of the West, no one of any respectability would have dared to describe the ethnic dimension as Hua so freely did:

It promotes a fundamentalist free market concept, featuring privatization, deregulation, and formation of trusts.

The resultant financialization of the economy directly led to deindustrialization and a crumbling of manufacturing and the real production and consumption economy.

It gave birth to popular business practices such as asset-light strategy, offshoring and outsourcing which have hollowed out the productive economy.

The current US economic system is a rentier oligarchic system where financial parasites feed on the real economy and will eventually subsume it.

This economic system has led to unprecedented wealth gap and societal polarization.

– On the political front, long time University of Chicago political scientist Leo Strauss was the intellectual godfather of neoconservatism ideology.

The ideology promotes hegemonic imperial designs based on militarism, racial supremacy, and fervent Zionism. The neocons have adopted an Israel-first expansionist foreign policy coupled with aggressive military postures across the world.

The neocons are directly responsible for the wars in Iraq, Afghanistan and the Middle East. These wars have cost taxpayers over $7 trillion, estimated by Brown University’s Watson School.

Interestingly Leo Strauss studied in Germany under Carl Schmitt, the chief Nazi legal scholar and political theorist.

Strauss’ students at the University of Chicago include some of the most renowned neocons such as Paul Wolfowitz, Douglas Feith, and Samuel Huntington who invented the Clash of Civilization concept to justify the hawkish US military expansionism.

The hardline neocon support of Israeli genocide in Gaza and Lebanon has destroyed US reputation, making a mockery of its hypocritical advocacy of human rights and freedom.

Interestingly, both Milton Friedman and Leo Strauss are Jewish. Most of the neoliberal free market economists and neoconservative foreign policy makers are also Jewish.

These include Alan Greenspan, Ben Bernanke, Paul Krugman, Paul Wolfowitz, Elliott Abrams, Richard Perle, Paul Bremer, Douglas Feith, Madeleine Albright, Robert Kagan, Irving Kristol, Victoria Nuland.

Collectively, these Jewish economic and foreign policy makers have done great damage to the world.

The intellectual takeover of the University of Chicago by the Jews is a reflection of the Jewish takeover of the US. This takeover is leading to the bankruptcy of the US economic and political systems.

The parasites have won and will consume the host.

 

The Wikipedia page for the Protocols of the Elders of Zion runs 10,000 words with a multitude of references and notes, and as might be expected it provides a very establishmentarian view of that controversial topic. The Protocols are described as a work of stark antisemitic lunacy, only taken seriously by the ignorant and the deranged, but the introductory section closes by quoting a scholar who characterized that document as “probably the most influential work of antisemitism ever written.” I think that the vast majority of today’s mainstream Westerners would hold views very similar to those of the Wikipedia article, being totally at odds with the posts published by the Chinese author.

However, as I explained in a 2018 article, Western views had actually been very different a century ago. In the aftermath of the successful Bolshevik Revolution, whose leadership was overwhelmingly Jewish, the Protocols soon became one of the most widely published documents in history, with the contents endorsed by the august Times of London, the world’s most influential media outlet.

A decade of exhaustive archival research by Prof. Joseph Bendersky, a mainstream Holocaust historian, revealed that America’s entire national security establishment also took the Protocols very seriously at the time, believing that the document accurately described the conspiratorial and subversive plans of organized Jewish groups, who constituted a deadly threat to Western civilization. The private correspondence of some of those leading American officials demonstrated that they still retained those views as late as the 1970s.

During the 1920s, billionaire Henry Ford ranked as our greatest industrialist, an international hero of towering reputation, and he also endorsed the Protocols, which he excerpted and discussed in the Dearborn Independent, a newspaper he established that achieved America’s largest national circulation. Ford played a central role in creating the American middle class, while the Chinese writer argued that the economic policies advanced by so many American Jews have now reversed that great achievement and largely destroyed that same middle class.

Hua explained that he had been prompted to investigate the Protocols after witnessing the unending scenes of horror that had been inflicted upon the Middle East over the last year by the Zionist Jews of Israel, and I found this explanation quite plausible. Indeed, since October 2023, I have repeatedly suggested that such international reactions might be the most important long-term consequence of the bloody Israel/Gaza conflict, for example doing so in the closing paragraphs of a May 2024 article:

Several months ago a young military serviceman named Aaron Bushnell from a strongly Christian background became so distraught at his country’s active involvement in what he regarded as the supreme crime of genocide that he set himself on fire and died in an act of protest, an event certainly without precedent in American history and extraordinarily rare elsewhere in the world. Although the story quickly vanished from our own media, the coverage on global social media was enormous, and may have lasting consequences.

After discussing that tragic incident, I went on to suggest that the dire fate of Gaza’s Palestinians might ultimately be seen as having played a similar role. Their deaths may have now suddenly revealed America’s long-concealed rulers both to our own people and to the rest of the world…

For similar reasons, I think that the tens of thousands of dead Gazans did not lose their lives in vain. Instead, their martyrdom has dominated the global media for the last five months, conclusively revealing to the entire world the moral bankruptcy of the international system that had condemned them to their fate.

Probably hundreds of millions of people worldwide have now begun asking themselves questions that they never would have previously considered. I suspect that those responsible for the destruction of Gaza may come to rue the day when they helped open doors that they may eventually wish had been kept tightly shut.

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