Is China’s Growth a Well Executed, Sustainable Strategy or a Short Lived Emergence?

China's age old city of world strategyIf I were a strategist for China’s planned economy in 1978, I would look to America’s Gilded Age as my playbook and model.  America did not rely heavily on exports to grow her enormous wealth for that time.  She connected her internal markets through the building of the great railroads, with supporting industries like steel to build the rails.  Our entrepreneurs’ first strategy was to build internal trade with our settlers to the west.  This strategy, or perhaps happenstance, would later support the growth that ultimately allowed America to supply the First World War, and to emerge as the world’s 20th century hegemonist.

During the Gilded Age, America’s wealth accumulated in the very few hands of our “Captains of Industries”.  Searching for the needed imported mining materials to continue our rapid growth, our Captains encouraged Theodore Roosevelt to embark on one of the greatest engineering and construction feats the world had known of that time, a canal to cross the Isthmus of Panama.  Through the opening of the canal in 1914, we created an economic path to mining materials that would later supply our war industries.  America had the luxury of growing our internal markets first, connecting with third world suppliers through hegemonist relationships second, and exporting war goods to Europe third.

In China’s case, she has a much larger internal market to feed than America did at the turn of the century.  If China has planned her economy well, she knows that to sustain internal consumer growth, she needs secure access to much of the world’s raw materials. She also remembers that lack of access to commodities inevitably led Japan into World War Two.  Therefore, secure commodity control through hegemonist relationships is critical prior to China accelerating internal consumer growth.  The question of how to acquire the funding for these relationships might lead China to Japan’s export growth model. 

While Japan’s model proved unsustainable during the eighties, by copying it for a brief thirty years, China could acquire the needed capital to first build the hegemonist trading relationships needed for later internal growth.  Unlike capitalist democracies, China’s planned economy, using capitalism as its means, could command the ability to concentrate wealth as easily as America’s Captains for this purpose.

Could China’s interdependence with America really have been only a needed transitional step to acquire America’s wealth and trading relationships for China’s second phase of inward consumer trade and rise to 21st century hegemony dominance?  Was China’s plan, “Export first, acquire hegemonist trade second, and build internal trade third?”  Was this a masterful, long horizon strategy, executed with age old discipline, or was it happenstance which will prove a short lived emergence for China?

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