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China Faces New Historic Challenges

{Editor’s note: Qiushi published an article discussing three challenges that China has faced since it became the second largest economy in the world: the U.S.’ suppression, the low end of the industry chain, and the lack of discourse power.

The following is an excerpt from the article.} {1}

China has become the world’s second largest economy. Along the road of reform and opening up, it has encountered a series of extremely complex new situations and new problems and has confronted unprecedented, historic challenges. These challenges are summed up as “three traps”: one, in international relations, is the “Thucydides trap”; the second, in the domestic economic development, is the “middle income trap”; and the third, in the political and cultural area, is the “discourse hegemony trap.”

The “Thucydides trap” is the conflict between an established power and a rising power. It is the inevitable result of the U.S. global hegemony facing a rising China. U.S. monopoly capital, based on the “dollar hegemony,” can only survive by siphoning off global surplus value (value added), while China, with a population of 1.3 billion, is a major source of global surplus value. For this reason, the U.S. hopes for four results. First, China will always stay at the low end of the international industrial chain; second, that it can limit China’s development through its trade protection policy; third, that it can force China to accept the dollar hegemony’s exploitation forever; and fourth, that the U.S.-led world political and economic order will tightly restrict China forever. Under the premise that these conditions are satisfied, the U.S. desires to maintain a good relationship with China.

However, China has now become the world’s second largest economy. It is breaking apart the U.S.-led international economic order through economic innovation and industrial restructuring, and through the “One Belt One Road.” It is getting rid of the dollar’s hegemony through the Asian Infrastructure Investment Bank and through RMB offshore settlement. In this situation, the American hawks acting on behalf of the interests of the American wealthy clique must do everything possible to provoke China’s neighboring countries to contain China. They cause tension and turmoil in China’s surrounding environment so as to induce China’s capital outflow and curb China’s economic development and strength. This is the nature of American monopoly capital based on the dollar’s hegemony.

To achieve the containment of China, the U.S. uses two means. One is its “soft power,” the international discourse based on so-called “universal values.” The second is its “hard power,” primarily the U.S. military power, high-tech strength, and its intellectual property rights. The soft and hard powers work together to place enormous pressure on China. This is the so-called “Thucydides trap.”

“The middle income trap” is the unique situation brought to developing countries by the basic conflict inherent in the capitalist mode of production. Developing countries have developed rapidly through the introduction of international capital. International capital has taken away the maximum surplus value through production. Such surplus value is then re-invested as new capital to expand production. On the one hand, social productivity is developed, leading to the rapid growth of the economy. On the other hand, it pays the price of three lows (low wages, low welfare, and low efficiency) and three highs (high consumption, high pollution, and a high rate of accidents), resulting in the entire national economy becoming highly dependent on low-end industrial capital investment and long-term social productivity trapped at the low end of the international industrial chain. This mode of economic growth is inevitably unsustainable.

The main content of the “discourse right trap” is about the so-called “universal values,” i.e., some individual values obtained through the “conceptualization of the world” metaphysical abstract method are treated as if these values are derived naturally from “human nature.” They are considered to come from the “universal law” of a certain universe. The resultant so-called “universal values” are given a supreme position, above all societies and people. Using channels of overwhelming promotion via international media and education systems, the international capital power occupies the so-called “high ground of human morality” and monopolizes the global political, ideological, and cultural discourse, specifically through the “international evaluation criteria” that permeates all aspects of social life. If we accept these “universal values,” we must comply with a variety of “international standards” developed for these “universal values” so that our behavior will be trapped in the discourse hegemony of Western countries, thus losing our own discourse sovereignty.

To cope with the historic challenge of the “Thucydides trap” is, in essence, to achieve China’s “power dream.” On the one hand, (China should) strengthen the common interests shared between China and the U.S. and strive to establish a “community of common destiny” for China, the U.S., and the people around the world. On the other hand, (China should) resolutely and properly deal with the U.S. containment strategy against China. (China should) transform the pressure of the U.S. to contain China into an enormous drive to unite the Chinese people in building a strong national power. (China should) adhere to an independent and peaceful diplomatic strategy, adhere to the “never seek hegemony” political commitment, neither stir up trouble nor fear it, safeguard China’s politics, economy, and national defense, using all possible means, as well as enhance the “soft power” of the international discourse and the “hard power” from science, technology, and the military.

To cope with the historic challenge of the “middle income trap” is, in essence, to achieve China’s “getting rich dream.” The supply-side reform of the “three cutting, one lowering, and one improving” (cutting industrial capacity, cutting the housing inventory, cutting leverage, lowering corporate costs, and improving weak economic links) is an important strategy to deal with this challenge. The new concept of “innovation, coordination, green development, opening up, and sharing” set forth by the Communist Party’s Fifth Plenary Session of the 18th National Party Congress can be regarded as the top-level design of China’s economic development. Building stronger, better, bigger state-owned enterprises will demonstrate the socialist advantage and is vital to our country when dealing with the “middle income trap.”

To deal with the historic challenge of the “discourse right trap” is, in essence, to achieve the “dream of national cultural rejuvenation.” To deal with the current “discourse right trap,” we should put an end to the history of China being “scolded” and maintain China’s independent culture among countries in the world. (China should) break through the monopoly of the Western countries on the international discourse.

These three major historic challenges are interrelated. To cope with them requires a top-level design, and an overall push of the strategy of strengthening the country and enriching the people. The key to whether the China dream will come true lies in whether we can successfully deal with the “three traps.” The process of coping with these historic challenges is the process of realizing the China dream of “national rejuvenation” and “the happiness of the people.”

{1} Qiushi, “Three Traps: China Faces New Historic Challenges,” April 25, 2017.