china

HUAWEI

There is an ongoing hybridization of American capitalism and Chinese communism. Is Trump’s authoritarianism becoming more like Xi’s communism or Xi’s authoritarianism becoming more like Trump’s capitalism? One wonders–are we growing closer together or farther apart?

Books of Interest
Website: chetyarbrough.blog

House of Huawei (The Secret History of China’s Most Powerful Company)

Author: Eva Dou

Narration by: Nancy Wu

Eva Dou (Author, American journalist who reports on technology for The Washington Post.)

“House of Huawei” is a complex history of the growth and development of what became a Chinese multinational technology company that builds smartphones, laptops, smartwatches, and most importantly, telecom infrastructure for cloud services around the world. It is China’s version of Amazon that becomes a massive seller of tech equipment, internet use, and communication.

Ren Zhengfei (Chinese entrepreneur and engineer, founder of Huawei Technologies.)

There are many names of Huawei business leaders that are largely unknown to most Americans. Ren Zhengfei is the founder and most important person in Dou’s story. He is born in 1944 to schoolteacher parents during the Cultural Revolution. He served in the Chinese armies engineering corps that shaped his management style. He worked through famine, political purges, and the strict discipline of military service. He became the founder of Huawei in 1987.

Deng Xiaoping (China’s Chairman of the Central Advisory Commission of the Chinese Communist Party, 1982-1987)

The advance of Deng Xioping opens a capitalist door to the world for Huawei. Beginning in 1978 through 1989 Deng reforms the communist party and encourages a limited form of capitalism in China. When Xi takes over, Huawei becomes more directly subject to communist party oversight. As a company, Huawei is pulled closer to China’s government control. The Huawei network is classified as a national-security asset. Though Huawei may or may not have sought closer association with the CCP, it became entangled with state strategy.

Xi makes Huawei a national champion of innovation and semiconductor technology. It becomes a symbol of China’s technology ambitions while being a target of U.S. sanctions. Dou shows Huawei becomes a battleground for tech strategy between China and the Untied States

Sun Yafang (Chinese engineer and Chairwoman of Huawei, 1999-2018.)

Sun Yafang is a former chairwoman of Huawei. Her ties to Chinese intelligence services are viewed as a recurring controversy with Huawei’s involvement with America. Her relationship with China’s state power structure creates concern on the part of the U.S. with Huawei’s data collection as a part of Huawei’s practices in America.

Meng Wanzhou (aka Cathy Meng or Sabrina Meng, Deputy Chairwoman and CFO of Huawei.)

Ren’s daughter, Meng Wanzhou, becomes the Chief Financial Officer of Huawei. Wanzhou became known to the world when she is detained in Canada in 2018 at the request of the United States. Her arrest ironically leads to more familiarity with Huawei and its expansion in the world. The primary concern the author reveals is how dependent Huawei may be on the Chinese government for information about America’s technology services.

The fundamental concern of America, Germany, and Japan is Huawei’s use of data collection in their countries.

In the end, these countries decide to ban or restrict the use of Huawei’s equipment because of their ties to the Chinese Communist Party, government, and military. Beginning in 2019 the U.S. banned some of Huawei’s services and global chip supplies. By 2026, Huawei is banned from American federal networks, and telecom infrastructure services. Germany and Japan take similar actions between 2018 and 2026.

Dou explains Huawei’s history exposes deep contradictions with China’s government-directed economic growth.

The authoritarian and state-directed economic and political structure of China is a challenging contradiction to the idealism of communism. China’s communism is compelled to change ideologically from Marxism-Leninism to a state-directed form of capitalism. Huawei becomes a telecom giant euphemistically called socialism with Chinese characteristics. In truth, Huawei is structured to be more capitalist than communist with interventionist potential by the state if it conflicts with centralized control of the party.

Communist captitalism.

Dou explains how Party committees are created within Huawei’s management system. These committees exercise ideological control over Huawei’s executives. Huawei’s objectives are required to conform to national priorities. The development of 5G and telecom infrastructure becomes a national, not private asset of the company. This generates fear in the U.S. about security liabilities and foreign influence of China on U.S.’ and allied countries’ political and/or economic affairs. Dou notes China’s leadership insists on enforcing its security laws, data practices, and CCP’s rules of the road for Huawei’s operations.

Huawei discipline.

Dou notes that Xi’s anti-corruption campaign pressures Huawei to tighten internal governance. Executives of Huawei were disciplined for being too extravagant. The CCP organized ideological training for company employees to more fully align them with the Party. China’s government interference in Huawei’s management leads to U.S. sanctions and an arrest of Meng Wanzhou’s in Canada. The United States has effectively banned Huawei telecom and surveillance equipment. Federal agencies cannot use Huawei devices. American internet companies in the U.S. that receive federal funds must remove Huawei equipment. Though Huawei phones and laptops are not banned in the U.S., they are not sold by major U.S. carriers or retailers. The UK, Germany, France, Japan, Australia, and Canada have taken similar actions against Huawei services. Huawei product like laptops and mobile phones are not universally banned but many Western countries have barred telecom infrastructure because of national security concerns.

What is striking about Dou’s book is the history of Huawei shows both confluence and separation between Communism and Capitalism.

Both use the capitalist tools of competition, private enterprise, and global markets. Both are involved in the private sector and provide preferential treatment, political protection, and financing. Nationalism is a greater force than Marxism for both China and the U.S. American corporate discipline is similar to communist party discipline. Further, economic and political strategies of America and China have similarities. However, the two cultures conflict with each other over globalization and levels of interference or control of private companies. America leans toward transparency, partnership, open markets, and international trust. China opts for secrecy, political reliability, ideological conformity, and oversight to ensure national security. Furthermore, America thrives on risk-taking, experimentation, a free market and decentralized decision making while China emphasizes political correctness, Party control, ideological discipline, and insistence on corruption elimination.

In sum, it seems there is an ongoing hybridization of both American capitalism and Chinese communism. Is Trump’s authoritarianism becoming more like Xi’s communism or Xi’s authoritarianism becoming more like Trump’s capitalism? One wonders–are we growing closer together or farther apart?

A HONG KONG LIFE

Like American capitalism, Chinese communism has its faults. One big difference is American capitalism offers a higher level of individual freedom with legal rights to defend oneself in a court of law (that is, of course, if you are not an immigrant).

Books of Interest
Website: chetyarbrough.blog

Red Roulette (An Insider’s Story of Wealth, Power, and Vengeance in Today’s China.)

Author: Desmond Shum

Narration by: Tim Chiou

Desmond Shum (Author, born in Shanghai in 1968, former Hong Kong businessman who lives in the UK. with a son born in the U.S.)

“Red Roulette” is an amazing personal story of a former Chinese citizen who marries a successful Chinese woman, Whitney Duan. She is disappeared by the Xi government in 2017. Shum and Duan were married from 2004 to 2015. His wife’s fate is unknown to Shum as he writes this book. Amazingly, Ms. Duan calls Shum four years after she is disappeared by China to ask him to not publish his book. Shum believes this is the first public contact by Duan since her disappearance in 2017.

Ms. Duan had chosen to capitalize on a system of doing business in China the way it had been done for many years. That system is riven with a kind of societal corruption revealed in “Red Roulette” that has grown with communism in China.

Women simply want an equal opportunity to succeed in pursuit of money, power, and prestige, i.e. all the secular objectives men take for granted.

Desmond Shum reveals surprises to many Americans about China’s culture. Despite a presumption of many non-Chinese, Shum explains power is personal, not institutional in China. One might presume that CCP’s control of wealth and power in China comes from the party and its leaders. However, wealth in China is only influenced by the communist government through a social network of beliefs. Shum explains personal relationships and connections are built on favors, gifts, and mutual obligations that are debts that carry the reality of power in China. This explains the title of the book “Red Roulette” in the sense that success in Chinese society is a game of chance based on bets placed on the value of favors, and gifts that CCP members believe have worth.

Debt for favors and gifts is in the eye of the beholder which makes fair payment a mysterious and chance driven calculation. Adding to that complexity is the power of a CCP leader to erase a citizen socially, legally, and economically. By erasure, Shum explains citizens may be detained, prevented from family contact, denied legal representation, arrested, impoverished, and isolated from any social contact. Shum explains his ex-wife, Whitney Duan, vanished for years with no charges, no trial, and no record of her disappearance.

Xi Jinping (Leader of the CCP in China.)

The CCP elite govern China through relationships among themselves, not by official meetings or party leadership orders that are necessarily based on definable communist dogma. Everything happens behind the scenes. Official meetings, if there are any, are strictly “for show”. Shum’s admits in his personal story that he and his ex-wife became wealthy through a corrupt relationship with Zhang Beili, one of the CCP apparatchiks and power brokers. One may argue the CCP is similar to the Congress of the United States. Wealthy capitalists, like CCP apparatchiks, game the stock market and society through political connection with elected government officials

Deng Xiaoping launched an initial shift away from Maoist central planning despite ordering the crackdown on Tiananmen Square in 1989.

As somewhat of a realist, one understands governance is based on leaders presumed power, wealth, and political influence. Shum argues China’s economic modernization and capitalism began with Deng Xiaoping who rose to power after Tiananmen with Hu Jintao continuing China’s economic boom. Shum argues today’s Xi is increasing control of the CCP and the economy with the traditions of Chinese society. In the author’s opinion, China is reinstituting a Mao-style autocracy that is spreading fear across the country.

In fairness to Shum’s assessment of China, there is evidence of America’s slip into autocracy in today’s economy.

Zuboff’s scholarly examination of American internet mavens concludes “…Surveillance Capitalism” will lead to Orwell’s “1984” or B.F. Skinner’s “Beyond Freedom and Dignity”.

Shum believes Xi Jinping’s CCP anti-corruption campaign is only a pretext for power consolidation. In Shum’s opinion, Xi’s targeted removal of CCP apparatchiks is not because of their corruption but because they rival his power over the party. Xi’s campaign on corruption increases fear among CCP members and influencers that reinforce traditions of China’s rule by personal relationship and connection. Xi’s goal is to increase personal loyalty to himself which is part and parcel of the history of Chinese social norms. Shum’s evidence of corruption is the increase in disappearances, secret detentions, arrests of businesspeople without charges, and insistence on what is characterized as party discipline.

Whitney Duan and Shum when they were married.

Whitney Duan’s disappearance is Shum’s primary example of Xi’s Chinese governance. Duan is characterized as ambitious, brilliant, and determined. Her rise to power in Chinas is from close relationships she develops with people who have influence in the communist party. She befriends Zhang Beili, the wife of the Vice Premier of the CCP, Wen Jiabao. Because of that association, Duan has privileged access to information about land deals and major real-estate projects in China. She uses that information to make deals with advanced knowledge that result in great economic wealth for her and her former husband. Shum marries Duan and they both capitalize on insider information they gain from Duan’s relationships. One presumes the marriage ends because of the stresses and political dangers involved in their common business interests.

The quality of Kafka’s story in “The Trial” is the human desire for freedom that is not extinguished even in the darkest times of a country’s repression. This is a hope one presumes for both China and America, but human nature gets in the way.

In 2017, two years after the author’s divorce, Whitney Duan disappears. There are no charges, no trial, no public disclosure, and she is unable to contact any of her family including the son she has with Shum. No one knows if she is dead or alive. The state refuses to say she has been detained. One presumes, she is arrested because of Xi Jinping’s anti-corruption campaign and his purge of some party members like Wen Jiabao. Interestingly, just before the book is to be published, Whitney Duan calls Shum to ask him not to publish. Obviously, she is alive.

One big difference between American capitalism and Chinese communism is a higher level of individual freedom with legal rights to defend oneself in a court of law (that is, of course, if you are not an immigrant). That is a significant difference between China and America. However, both countries are impacted by bad actors that game the system based on personal relationship and influence with political leaders.

On the one hand, this story reinforces belief that Xi is trying to reform the CCP. On the other, the methodology of autocracy offers no defense against the injustice of being condemned without trial.

One concludes Whitney Duan lost in the game of Chinese Roulette by being part of a relationship that gave her inside information from the CCP. Her disappearance is proof of the theme of Shun’s book about the importance of relationships and connections to gain power and financial success in Chinese society. Like American capitalism, Chinese communism has its faults.

Chinese and American Youth

Books of Interest
Website: chetyarbrough.blog

Young China (How the Restless Generation Will Change Their Country and the World)

Author: Zak Dychtwald

Narration by: Zak Dychtwald

Zak Dychtwald (Author, public speaker, fluent Mandarin speaker, world traveler, graduate of Columbia University who moved to China and spent 4 years interviewing local Chinese.)

“Young China” is a fascinating comparison of a world traveler’s perception of the difference between young Americans and Chinese youths. A reservation one has in listening to Dychtwald’s explanation of Chinese youth is whether a 4-year immersion in a foreign culture constitutes a society’s truth or just a topical view of an intelligent observer who gravitates to students of similar ambition.

America’s Achilles heel.

Not knowing the author’s life experience, one assumes he has not lived the life of most American college students of his generation. As a graduate of Columbia, his decision to learn Mandarin Chinese, and choice to travel to China for a four year stay suggests he is not a typical American youth. Further, as the meaning of the saying “Birds of a feather flock together”, one presumes his choice of interviewees is not likely to be typical Chinese college students but those who excel in intelligence and academic pursuit.

Contrast of lives in China.

The main Chinese youths whom the author interviews and becomes acquainted with are Ben, Vivian, Chen, Liu, and Mei. Ben–who is a striver who has a rural background. Vivian is a young professional woman who speaks English and comes from the middle class. Chen is a university student who embraces nationalist beliefs of young Chinese. Liu is a young teenager who experiences the meritocratic pressure of academic achievement in China. And finally, Mei is a young Chinese college student dealing with job aspirations, dating, marriage pressure, and career ambitions.

Education is the great strength of China.

In some sense, these characters have American student similarities. One can find similar Americans in each of the broad categories of these five Chinese students. However, Dychtwald sees Chinese students as “dreamers and strivers” while his experience is that American students are skeptical about the value of education and their future. Dychtwald finds Chinese college students take their performance on college exams more seriously than American college students. High academic achievement is a critical goal to a Chinese student while to an American graduating with a degree is the primary goal and finding a career is more important than achieving high scores on college exams. Chinese youths see themselves as a part of a national achievement for China while Americans see themselves as cogs in a capitalist machine that may or may not turn into successful careers.

College is a pressure cooker for Chinese students while it’s more of a cultural experience and stage of life for most American students.

Finally, Dychtwald notes Chinese students are globally curious, Western influenced, while being confident in the superiority of their own country. In contrast, American students care less about other countries, know few languages beyond English, and see their country as just one of many cultures in the world. Dychwald is an outlier in that he does not view China as a threat to American hegemony, but a country focusing on improving the lives of their citizens.

The risks of singular leadership.

Admittedly, this review is a narrow interpretation of Dychtwald’s fascinating book. Only an extraordinary intellect would move to China after graduating from college and learn fluent Mandarin during a 4 year stay in China. It makes we who are old wish we had the privilege of Dychtwald’s intelligence to live life over again.

To this book reviewer, the flaw in American democracy is the rising gap between rich and poor. Dychtwald implies the flaw in China is its reliance on a singular leader’s actions to improve the daily lives of its citizens. America has the advantage of 4-year democratic change in leadership while China is dependent on an authoritarian’s health and judgement as a singular leader.

THE MIDDLE WAY

As every American, particularly white people of conscience know, ethnic minorities are faced with hardship, violence, and social discrimination until ruling majorities realize that all human beings are entitled to equality of opportunity in the society in which they live.

Books of Interest
Website: chetyarbrough.blog

Voice for the Voiceless (Over Seven Decades of Struggle with China for My Land and My People.)

Author: Dalai Lama

Narration by: Edoardo Ballerini

Dalai Lama (Author, born in 1935 is presently 91 years old. He is the spirtual head of Tibetan Buddhism.)

“Voice for the Voiceless” is the wish of every minority in the world. State supremacy over the individual in communism sharply contrasts with democracy in degrees of un-freedom revealed by what a citizen can be and do. Competition and descent, suppression of minority voices, control of information, collective identity, and human rights are insisted upon by communist leadership according to “Voice of the Voiceless” by the Dalai Lama.

American government checks and balances.

In a democratic government, there are multiple societally expressed interests like legal protection for dissent, creation of non-government organizations, guarantee of free speech, and institutional checks and balance on the power of its leaders. It is not that America or any democracy is perfect in its makeup but in the China that the Dalai Lama describes, communism is designed to prevent any form of opposition to its leadership. In the Dalai Lama’s view, no compassion exists in China’s government.

The infamous and unidentified “tank man” who stood in the way of the Tiananmen Square crackdown.

The most prominent historical evidence of a lack of government compassion is shown by the Tiananmen Square massacre during the Deng administration. The Dalai Lama’s opinion is reinforced by a Chinese guide who closes the doors of a private meeting room in which several Americans are informed of China’s reaction to the Tiananmen massacre. Chinese students and citizens who demonstrated at Tiananmen Square were asking for communist party reform, a reasonable level of leadership accountability, and elimination of corrupt Chinese government leaders.

In today’s China, President Xi consistently supports authoritarian rulers’ right to rule without interference from outside interests.

The Dalai Lama writes “Voice for the Voiceless” to challenge China’s political system which denies rule of Tibet by the Dalai Lama as its head of state. His demand reminds one of histories of displacement of native tribal leaders in America in the 17th and 18th centuries. Recognizing the fates of proud native leaders in America, the Dalai Lama (who has been exiled to India since the 1950s) is asking the communist government to allow him to be the leader of his “tribe” in Tibet. In America, more than two hundred years passed before genuine recognition and opportunity were seriously offered America’s natives. It has taken nearly 200 years for America to offer equal opportunity for tribal natives to pursue their interests as recognized ethnic minorities. What the Dali Lama wishes for Tibetan people in China is in many ways the experience of minorities in a democracy, let alone a communist autocracy.

Mary Annette Pember offers a firsthand, intergenerational perspective of America’s effort to assimilate native inhabitants of America.

Natives of America grew together as common ancestors that could choose life in a system of government that came to understand the importance of tribal self-determination. Natives of America had land rights, and a concept of cultural difference; accompanied by jurisdictional authority to pursue economic development as a distinct ethnic minority. The Dalai Lama clearly shows Tibetan people have a similar ethnic origin and desire for freedom and self-determination. Only time and ethnic solidarity offer hope for them to realize their goals.

Barbara Demick gives listeners a picture of Tibet with a darkness that rivals the narrative she creates for North Korea in “Nothing to Envy”.

Communist China is not America. However, the Dalai Lama appears to want a level of independence to protect a Tibetan way of life for Buddhists to preserve their cultural identity and language without violent resistance by the Chinese system of government. This is a reminder of native American’s struggle in democratic America. The Dalai Lama seems only to wish for human and religious freedom, not nation-state hegemonic control. He notes Tibetans have no institutional power, no representation in the Chinese government, and no legal way to challenge state’ government policies.

Mao Zedong (1893-1976) Father of the Peoples Republic of China)

The Dali Lama’s book surprisingly notes the initial relationship with Chinese communism that proposed a “Seventeen-Point Agreement” which offered a framework for Tibet to have the recognition requested by the Tibetan culture. However, the tenor of the “…Agreement” is violated with Tibet being occupied by Mao’s government. Mao orders his administration to keep the Dalai Lama from fleeing and pressured Tibetan leaders to negotiate subservience to the Chinese Communist Party. Mao’s goal is to unify Tibet with China, not provide Tibetan autonomy within the structure of Chinese suzerainty. There was to be no self-determination of Tibetans, no interest in preserving Tibetan institutions, no role for the Dalai Lama, and no Tibetan’ autonomy. Mao demanded integration, not reconciliation.

The book “Being Peace” is a layman’s introduction to Buddhist belief.

As the Dalai Lama grew to understand what Mao and future leaders of the CCP really wanted, he chose to leave Tibet in the late 1950s. He exiled himself to India, the origin of Buddhism’s creation. Buddhism teaches liberation from suffering through compassion, wisdom, and meditation. These were not a part of the Communist ideals of Mao or his successors. The core belief of communism is that truth comes from the party whereas Buddhist believe truth is from inner realization. Every Buddhist is a sentient being that has compassion for individual suffering while a CCP member subordinates their feelings to the needs of the state and national unity. All religions are a potential threat to state control which is the basis and practice of communism and, to a lesser extent, all forms of government.

The Potala Palace in Lhasa, Tibet is the historic residence of the Dalai Lamas.

The Dalai Lama represents a threat to communism because he is a global moral figure, a symbol of Tibetan identity, and a spiritual authority independent of the state. Buddhist belief in inner freedom, compassion, and spiritual autonomy directly conflict with the ideals of communism because of its belief in the collective rather than the individual. An interesting irony in that communism is a form of government that endorses a collective concept. Of course, a communist collective is external to one’s inner self while Buddhism believes a collective is formed through an inner understanding of the self. China insists on centralized government authority, conformity to its edicts, and personal identification with the state’s government. One’s heart goes out to the Tibetan people and the discrimination they are suffering. Only time offers hope for their future.

THE U.S. & CHINA

Both America and China need to change. Both are making authoritarian errors that are unnecessarily threatening world comity, human progress, and the potential for peaceful coexistence. This seems simple on its face but hard in reality.

Books of Interest
Website: chetyarbrough.blog

THE THIRD REVOLUTION (Xi Jinping and the New Chinese State)

BREAKNECK (China’s Quest to Engineer the Future)

Authors: Elizabeth C. Economy, Dan Wang

Narration by: Anna Perrin, Jonathan Yen

These two authors were listened to because of their similarities and differences about America’s and China’s political/economic systems. They show some similarity that reinforces their arguments about America’s and China’s economies. Ms. Economy was born in America while Wang was born in Canada. Wang’s parents fled China just before he was born. Ms. Economy is an American political scientist, foreign policy analyst, and noted expert on China’s politics and foreign policy. Wang, as a son of Chinese parents, is a Canadian technology analyst and writer. Ms. Economy is a co-chair of a program on the US, China economic/political studies at the Hoover Institution. Wang is a visiting scholar and a research fellow at the Hoover Institution.

America/China-Worlds Apart?

These authors analytic approach to the political economy of America and China are viewed from different perspectives. Ms. Economy approaches the Chinese economy from a governance and global strategy perspective, while Mr. Wang views America’s and China’s economies from a technological and manufacturing perspective.

Ms. Economy explains how Xi has centralized power that is reshaping China’s institutions and extending China’s global influence. Xi recognizes a level of greed and corruption that infected communist functionaries and began firing many of the party leaders to restore his vision of the ideals of communism. In contrast, Wang focuses on an engineering mentality of Chinese governance and its strategy to make China the most powerful nation in the world.

Example of China’s largest production automobile, the BYD.

Ms. Economy shows strategy is not enough to make China, or for that matter, America great. She notes great advances China has made but criticizes the quality of China’s industrial production, i.e., particularly an auto industry that has become the largest in the world but with many product features that fail its buyers. There are safety, quality, durability, and reliability criticisms of China’s cars. BYD is one of China’s strongest brands. As an example, China recalled an estimated 110,000 electric vehicles due to battery defects. In 2024, 32 million vehicles have been produced in China. Its closest competitor is America which only produced an estimated 10.5 million vehicles.

“The Wealth of Nations” is about politics as an essential ingredient of economics.

Both authors agree that China is a deeply state-driven economy. However, Ms. Economy suggests China’s strengths and weaknesses are based on political ideology while Wang argues it is because of China’s focus on engineering and technology. This seems a “Potato-Pototo” argument that leaves a reader feeling there is little difference, i.e., China’s power and growth is limited by its system of governance with technology being only a part of its strength and weakness. The same is true of all forms of government, including democracy.

The risk of authoritarian power.

Ms. Economy notes the fragility of China’s authoritarian political power that refuses to allow openness to citizen opinion about new projects or ideas that change their lives. In contrast, Wang notes America’s failure to capitalize on engineering and the capitalist capabilities of America’s economy because of too many lawyers. Wang explains America’s resistance to economic growth is constrained by a lawyer mentality of “not in my backyard”. In contrast China’s economic growth ignores human impact of projects (like dams) that displace millions of Chinese citizens without political voice. Both authors seem correct with the implication of a solution that is within the capabilities of both systems of government, i.e., China should become more concerned about its citizens welfare and America should invest in public works that benefit all Americans.

The digital age magnifies power and influence.

The two authors see different solutions for America’s and China’s quest for world influence. Ms. Economy argues America needs to compete with China’s global ambitions by using some of the same financial and political investments that demonstrate the value of capitalism over authoritarianism. Wang agues engineering, manufacturing, and industrial capacity must be reinvented in the U.S. Some may argue that is what Trump is trying to do but many would argue he fails to make a distinction between technological growth and polluting industrialization. Both America and China need to change. Both are making authoritarian errors that are unnecessarily threatening world comity, human progress, and the potential for peaceful coexistence. This seems simple on its face but hard in reality.

BALANCE

It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”.

Books of Interest
Website: chetyarbrough.blog

Breakneck (China’s Quest to Engineer the Future)

Author: Dan Wang

Narrated By: Jonathan Yen

Feng Chen Wang aka Dan Wang (Author, Canadian technology analyst and writer, visiting scholar at Yale Law School.)

Dan Wang is a highly credible author of the 21st century economies of China and the United States. Mr. Wang’s mother and father were born in China when the one child policy was the law of the land. Mr. Wang was born in Canada in either 1991 or 1992. Though Mr. Wang may be an only child, his parents advised him that living in China was challenging because of its state control and family planning that restricted their human rights.

Dan Wang has lived in Canada, America, and China.

From 2017 to 2023 he worked as a technology analyst in Hong Kong, Beijing, and Shanghai. As a young man, Wang bicycled across China with young friends. Having been educated in Canada and the United States, growing up in Toronto and Ottawa and going to high school in Philadelphia, he has a broad understanding of the economies of all three nations. Of course, his specialty is technology which gives him a unique understanding of what is happening in America and China today. He graduated from the University of Rochester in 2014, studying philosophy and economics.

Trump’s apparent view of Xi.

After listening to Wang’s book, one begins to understand why President Trump’s perspective is that the world, with emphasis on China, has taken advantage of America’s economic wealth by eviscerating its industrial industries with less expensive product made in other countries. Wang presumes as a person who has an economics education that Adam Smith (the Father of Economics) and Donald Trump are right when they argue tariffs are justified in areas of national defense, or for retaliation. On the other hand, Adam Smith, noted “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Adam Smith (Father of Economic Theory)

Smith argued if another nation can provide the same product for less cost, a prudent buyer should buy the cheaper product and use money saved to produce a different product. Wang and Trump disagree with Smith because the revenue producer that America turns to is the service industry rather than product development. What is missed by Wang and Trump is that America is the third largest agricultural producer in the world with China and India being the largest. Of course, the difference is that America has 1/3rd the population of China and India, respectively. Lower population and high agricultural production in the United States hugely benefits its economy. More significantly, food, like water, is an essential need of life. The point is that non-food product production is not necessary for living life.

Loss of industrial production to China.

Wang’s and Trump’s argument is that America’s loss of industrial production has made it too dependent on other countries. They either infer or say Americans are forgetting how to manufacture product. They argue American industries are closing because of America’s inability to compete with other nations because of labor and material cost differences. History shows America fails to expand its industries because production of things is provided by other nations at a lower cost. And as Adam Smith noted, “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Wang decries America’s movement toward a service industry as the basis for economic growth.

America is the richest country in the world, but America has failed to eliminate poverty, house the homeless, feed the malnourished, and provide for the infrastructure needed to improve America lives. One may ask oneself-what is wrong with becoming a service industry nation? Why does America have to return to its past. As Adam Smith noted: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” The future is about being healthy, being housed, fed, and clothed. It should not be about being the richest and fattest minority in the world, particularly when there is an inordinate gap between the rich and poor.

Wang argues America’s economy is diminished, not by reduced industrialization, but by its growth of legalism that reinforces nimby (not in my backyard) litigation.

Delays in public improvements in America are restrained by lawsuits that protect the rich and victimize the poor. An example is the long delays in mass transportation improvements which become more costly with every year that passes before completion. The delays are caused by litigation. When China can build rapid transit in 3 years while it takes 15 or more years in America, one wonders why. The huge investments China has made in massive infrastructure improvements have vastly improved their economy. In contrast, America wastes investment resources litigating mass transportation improvements in California, Washington, and other states by increasing costs from delays caused by litigation. It is like throwing the baby out with the bath water because the number of people who benefit from infrastructure improvement are largely discounted or ignored. Equally appalling is homelessness in America because of NIMBY’ objection to low-cost multifamily housing that could get the homeless off the street. Cost benefit analysis should prevail, not litigation based on interest group objection. In Wang’s terms, American infrastructure decisions should be based on science and engineering like, what he argues, China bases their infrastructure decisions upon.

President Eisenhower.

The fundamental point is that America has lost sight of the importance of a balance between benefit to the public and individual rights. Equality of opportunity is split between the rich and poor with the middle class being too complacent while the rich reap unconscionable reward. Where are the Eisenhower-like Presidents who promoted an Interstate Highway System that created a 421,000-mile interstate highway system?

Trump is no Eisenhower because he wishes to return America to a past rather than look to its future. It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”. Wang’s book explains how China has succeeded in improving their economy while America’s economy is failing.

UNINTENDED CONSEQUENCE

Technology is a key to social need which has not been well served in the past or present and could become worse without pragmatic accommodation.

Books of Interest
Website: chetyarbrough.blog

Daughters of the Baboo Grove (From Chian to America, a True Story of Abduction, Adoption, and Separated Twins)

Author: Barbara Demick

Narrated By: Joy Osmanski

Barbara Demick (Author, American journalist, former Beijing bureau chief for the Los Angeles Times.)

This is a brief and fascinating historical glimpse of a government policy gone awry. Like America’s mistaken policies on immigration, Barbara Demick’s story of China’s one-child policy traces the effects of government overreach. Demick tells the story of a rural Chinese family who births twin sisters during the time of China’s unjust enforcement of their one-child policy. One sister is abducted by Chinese government officials, and is adopted by a family in Texas. The ethics of an inhumane Chinese government policy and the perfidy of free enterprise are exposed in Demick’s true story of two children’s lives.

The territorial size of China in respect to continental America.

China’s one-child policy leads to a Chinese criminal enterprise to capitalize on kidnapping and selling children born to families that could not afford the fines for having more children than the law allows. Undoubtedly, most children born were cherished by their parents, but the hardship of life and human greed leads to unconscionable human trafficking. Kidnapping became a part of a legal and criminal enterprise in China. Government policy allowed bureaucrats and scofflaws to confiscate children from their parents and effectively deliver or sell children to orphanages or people wanting to adopt a child. Demick recounts stories of grieving parents and grandparents that cannot get their children back once they have been taken.

Child trafficking, broken families, loss of personal identity, human shame, and the immoral implication of other countries interest in adopting children are unintended consequences of a poorly thought out and implemented government policy.

Demick becomes interested in this story because of a message she receives from a stepbrother of an adopted Chinese sister that has a twin that lives in China. Because of Demick’s long experience in visiting and reporting on China, she had a network of people she could call. Using adoption records, Demick is able to find the Texas stepsister who had been kidnapped when she was 22 months old. She was trafficked to an orphanage in the Hunan Province of China. Years later, through messaging apps, the twins communicated with each other and shared their photographs. They eventually meet in China in 2019.

One is hesitant to argue a government policy is a unique act of China when every government makes policy decisions that have unintended consequences.

America’s policy decisions on immigration are a present-day fiasco that is as wrong as the one-child policy in China’s history. The one-child policy is eventually rejected by the Chinese’ government but Demick’s book shows how bad government policy has consequences that live on even when they are changed by future governments. America’s policy on immigration will be eventually reversed but its damage will live on.

Getting back to the story, Demick is instrumental in having the mother of Esther (aka E) and the twins meet in China.

One is hesitant to argue a government policy is a unique act of China when every government makes policy decisions that have unintended consequences. The twins are initially reticent but warm to each other in a way that bridges the cultural and language divide between the sisters. The two mothers see their respective roles in their daughter’s lives. E and her identical twin, Shuangjie, are reserved when they meet because of the cultural distance that was created by E’s adoption.

**E. appears more confident than Shuangjie who is more reserved and less assured.**

However, Demick suggests they seem to mirror each other in subsequent meetings. One feels a mix of emotions listening to this audiobook version of “Daughter’s of the Bamboo Grove”. They have grown up in different environments but seem to have been raised in similar economic circumstances, though the two economies are vastly different in income per household, the two appear to be raised in similar economic classes.

Every person who reads/listens to “Daughter’s of the Bamboo Grove” can view the story from different perspectives.

There is the perspective of identical twins raised in different families, cultures, and histories. How are identical twins different when they are raised by different parents and in different cultures? Another perspective is that Xi and Trump have had dramatic effects on the societies their policies have created. The Twin’s meeting in 2019 is one year after my wife and I had visited China. Xi had become President after his predecessor began opening China’s economic opportunities. Two incidents on the trip when Xi had become President come to mind. The first is the feeling one has of being monitored everywhere and the internet restrictions when used to ask questions. The second was an incident in a crowded Chinese market when I was approached by a beefy citizen who raised his arms and seemed to be angrily talking to me in Chinese which I sadly did not understand. The distinct impression is that I was not welcome. This was a singular incident that did not repeat in our 21-day tour, but it seemed like an expression of hostility toward America.

This listener/reader thinks of the unintended consequences of Trump’s treatment of alleged illegal immigrants.

Trump’s immigration policy is similar to China’s earlier mistake with the one-child policy. America’s, China’s, and Japan’s economies are highly dependent on youth which is diminished in two fundamental ways. One is by public policy that restricts birth, and the other is immigration. Freedom of choice is a foundational belief in democracy while considered a threat in autocracy. In America today, it seems there is little difference between America, Japan, or China in regard to government policy that threatens the future. All have an aging population that can only be aided by younger generations. Even though manufacturing may become less labor intensive, public need in the service industry will grow. Technology is a key to social need which has not been well served in the past or present and could become worse without pragmatic accommodation.

COST/BENFIT

“Apple in China” is a message to the entire world about the risks of technological relocation solely based on reducing costs of labor in a politically and culturally divided world. This is a book every employer should listen to or read.

Books of Interest
Website: chetyarbrough.blog

Apple in China (The Capture of the World’s Greatest Company)

Author: Patrick McGees

Narrated By: Fred Sanders

Patrick McGee (Author, technology/business journalist, San Francisco Correspondent for “Financial Times”.)

Patrick McGee has written an important book about world trade. He reveals a shocking story about Apple and the risk of basing a corporation’s economic future on a singular aspect of its success, i.e. cost of manufacturing. This is a story of two companies and the world’s labor market. Foxconn and Apple look to China, Taiwan, South Korea, Ireland, and Asian countries that vie for the role of the cheapest and best labor markets in the world. Foxconn’s and much of Apple’s search and success as a tech company is based on finding the cheapest labor in the world for the manufacture of product. However, McGee explains how that view makes Apple and other international corporations vulnerable to the politics of nation-states that have a mix of economic and political agendas. McGee explains how politics can be a greater cost than benefit to a business enterprise because of nation-state’ politics.

The power of political leadership in business enterprise is on display in America today with Donald Trump and his doomed effort to return America to a 20th century manufacturing behemoth.

McGee’s story is about the impact of China’s government on Apple and Foxconn led by Tim Cook and Terry Gou. Tim Cook is the wunderkind hired by Steve Jobs before his death, and Terry Gou is the Taiwanese billionaire who founded Foxconn which is now headed by Young Liu who was educated in Taiwan and the United States.

Tim Cook (CEO of Apple Inc.)

McGee explains why and how Tim Cook became the CEO of Apple. Jobs who was known as a poor manager of people, needed a manager who emulated Jobs’ drive but understood how to manager an organization to become bigger while remaining profitable. Cook is characterized as someone who has a near photographic memory. His analysis of reports from subordinates could be used to advance company goals or change a subordinate’s understanding of anything they propose that is not practicable or goal focused. What McGee argues is that Tim Cook’s focus on the cost of manufacturing became an Achilles heel when he hires Foxconn to organize Apple’s iPhone manufacturing to be done mostly in one country, China.

To accomplish iPhone manufacture in China, Cook had to transfer thousands of American engineers to train laborers in the assembly of Apple products.

Cook needed a go-between which became Foxconn, a Taiwanese company that is the largest electronics labor contractor in the world. Foxconn is also China’s largest private-sector employer with over 800k employees. Foxconn employees assemble iPhones, semiconductors, and electronics for some of the largest American technology companies in the world, e.g. Apple, Microsoft, and Dell. Foxconn’s relationship with China is further complicated by the international relationship between Taiwan and China. Foxconn has built a lucrative business in the tech industry because of its labor intensity and the desire of tech companies to minimize overhead to improve their profits.

World trade has made Foxconn the leading international labor subcontractor in the world. They employ an estimated 800,000 employees in China alone.

The desire to bring Taiwan under the control of communist China is a background conflict between Xi and Terry Gou. It may be unlikely that Gou would ever be elected President of Taiwan, but his candidacy is a cloud of suspicion to knowledgeable Chinese, Taiwanese, and American leaders. McGee notes Foxconn’s tax audits and land-use investigations by Chinese authorities that some believe are politically motivated. Foxconn has been criticized for poor working conditions because of incidents of worker protests, suicides, and labor strikes. China’s posture on those working conditions is ambiguous and most American businesses are ignorant or uncaring. A China crackdown on labor conditions would have wide effects on the global tech industry.

For Apple to lower costs of iPhone assembly, Foxconn contracted China’s people at low wages, to support what would be unfair labor practices in America, to assemble iPhones.

This benefited Apple in the first years of their association with Foxconn in China. However, later in the transition President Xi spread false reports of poor and unfair warranty practices being offered Chinese consumers of Apple products. Contrary to Xi’s claims, McGee explains that Apple warranties were the same in China as they were throughout the world.

McGee infers politics were behind Xi’s false claims about iPhone warranties.

China’s economy benefited from Apple’s move for cheaper manufacturing costs. China gained an immense technology boost from the retraining of Chinese citizens by Apple’s experienced engineers. With iPhone manufacturing in China, Apple’s revenues rose from $24 billion in 2007 to $201 billion in 2022. Apple invested an estimated $275 billion in China’s economy over 5 years. However, with Xi’s lies and vilification of Apple’s warranty, Chinese smartphone giants like Huawei, Xiaomi, Oppo, and Vivo increased sales. One presumes, Tesla followed a similar cost and benefit reward with its labor and technology transfer to China’s electric vehicle manufacturers.

McGee notes the bad publicity for Apple in the Chinese market threatens Apple’s future in three ways.

One, its loss of sales in China, two, a significant change in low-cost manufacturing advantages with rising Chinese labor cost, and three, Apple’ technology transfer to Chinese companies. Add to those lost advantages is Apple’s relocation costs to another country for iPhone manufacture.

GENERAL GEORGE C. MARSHALL (1880-1959)

An interesting comparison McGee makes between Apple’s $275 billion investment in China for iPhone assembly is that it is more than double the amount used in the Marshall Plan to rebuild Europe after WWII.

McGee notes Apple has a supply chain vulnerability from the Chinese government’s relationship with key suppliers of iPhone components wherever they are assembled. “Apple in China” is a message to the entire world about the risks of technological relocation solely based on reducing costs of labor in a politically and culturally divided world. This is a book every employer should listen to or read.

US/CHINA

The inference one draws from Rudd’s book is that peaceful co-existence will only come from a recognition and acceptance of the cultural differences between American democratic capitalism and Chinese authoritarian capitalism.

Books of Interest
Website: chetyarbrough.blog

The Avoidable War? (The Dangers of a Catastrophic Conflict between the US and China)

By: Kevin Rudd

Narrated By: Kevin Rudd, Rafe Beckley

Kevin Rudd (Author, Australian diplomat and former politician who served as the 26th prime minister of Australia. He is fluent in Mandarin and received honors in Chinese studies from the Australian National University.)

Kevin Rudd’s title, “The Avoidable War?” is a provocative book, evidenced by its audiobook title’s question mark. The greatest part of Rudd’s book has a neutral and non-committal view that almost makes one put the book down. However, Rudd’s knowledge of the languages of Chinese and English and his many diplomatic contacts with politicians in both cultures entice one to keep listening for a solution to fundamental differences. The last chapters of Rudd’s book are enlightening and have the ring of truth but imply irreconcilable cultures that make a question mark after the title of the book correct but unsatisfying.

Spheres of Influence.

The first part of Rudd’s book puts one off because it reinforces the aggressive warlike foreign policy beliefs of China and the U.S.

Rudd emphasizes China’s military buildup and its intent to expand its sphere of influence in the Pacific theater. Xi’s intention is to expand China’s power and influence. That intent gives one a sense of impending doom. One has to put that feeling aside to get to the last chapters of the book. Rudd explains the vulnerabilities of both America and China may avoid a nuclear war and its cataclysmic consequence but not offer peace.

XI JINPING (GENERAL SECRETARY OF THE COMMUNIST PARTY OF CHINA AND PRESIDENT OF THE PEOPLE’S REPUBLIC OF CHINA.)

Rudd explains the history of Xi Jinping’s rise to power and his actions assure his continuation as the General Secretary of the Chinese Communist Party and President of the People’s Republic of China. Xi served in the People’s Liberation Army for three years, beginning in 1979. Xi earned a bachelor’s degree in chemical engineering in 1979. He pursued a Doctorate in Marxist Theory and Law while working in the government. Xi rose to power in 2012 with his appointment as General Secretary of the Chinese Communist Party. He was elected by the National People’s Congress to the Presidency in 2013.

Rudd infers Xi is a committed believer in a socialist form of communism.

The picture of Xi that Rudd creates is of a leader who acknowledges the value of economic growth while firmly believing in a classless society that melds the strength of government authoritarianism with the skills of Chinese entrepreneurs. Xi maintains the direction of China’s economic growth by eliminating any political opposition from party members or influential entrepreneurs that get in the way of authoritarian socialist communism. Rudd believes Xi will be in power for many years to come.

The tariff war started by President Trump undoubtedly troubles Xi, but one doubts it will change Xi’s international frame of mind.

History has changed since Rudd wrote his book. In contrast to Xi who will likely be President for many years, America limits the office to two terms. This is particularly relevant to the authoritarian influence of Donald Trump in the next three plus years of his second term. Xi recognizes Trump will be replaced by a different President at the end of his last term in office. There will be negotiation on the tariffs, but Trump’s position is weakened by the limit of his term in office.

The faltering reduction of income for Chinese workers and families.

As noted by Rudd, the most important issues facing Xi’s administration is the reduction of income for Chinese workers and families. The immense improvements in average incomes of families in China came from its opening to capitalism which created a more socialist form of communism. That capitalist opening increases pressure on Xi to ameliorate Trump’s U.S. tariff policy. Putting aside President Trump’s false reasoning on creating an international tariff war, one hopes Xi’s need to grow the Chinese economy will aid Trump’s negotiation on tariffs.

Much of Rudd’s book is about China’s economic growth and its intent to acquire Taiwanese territory.

As is well known, the U.S. is ambivalent about Taiwan with many Americans who say “who cares” about their fate and others who believe every nation should be free to choose their own form of government. Now that China has experienced the value of introducing capitalism to communism, Taiwan would be a valuable addition to the Chinese economy. In the history of Mao’s defeat of Chiang Kai-shek in the Chinese Civil War, Taiwan became an island nation in 1949. The nation of Taiwan was built by refugees from mainland China who chose to become an independent capitalist country that eschews communism.

CHIANG KAI-SHEK (CHAIRMAN OF THE NATIONAL GOVERNMENT OF CHINA 1943-1948)

Taiwan’s growth as a tech giant has made them a capitalist economic success. Xi undoubtedly sees the potential of Taiwan’s economic benefit to China’s faltering economy. One concludes from Rudd’s book that the history of Chiang Kai-shek’s followers and their departure from China irks Xi, both from an historical as well as economic perspective.

The primary subject of Rudd’s book is the issue of war with China.

What Rudd is driving for is a rational appreciation of what America should do with the growing international power of China. Rudd implies China will become the equal, if not superior, of the American economy. He believes China will return to its former hegemonic influence, like that of its former dynasties. Rudd acknowledges Xi faces the immense task of returning China’s economy to its recent economic success. He implies Xi will succeed by carrying on with his view of how economic success can be returned with prudent authoritarian control of capitalism with the objective of creating a classless society idealized by communism.

The fundamental point Rudd is making is that China has a culture founded on authoritarianism and chooses to use capitalism in a way that is not democratic.

The surveillance technology of today allows Xi and future China rulers to influence Chinese culture in ways beyond the theoretical interest of democratic governments. The inference one draws from Rudd’s book is that peaceful co-existence will only come from a recognition and acceptance of the cultural differences between American democratic capitalism and Chinese authoritarian capitalism.

Harmony and pragmatism undoubtedly remain important characteristics of Chinese society. Time will tell whether societal harmony can be maintained by an increasingly authoritarian leader.

Books of Interest
Website: chetyarbrough.blog

The Chinese Looking Glass (The most illuminating book yet written on China and her enigmatic people.)

By: Dennis Bloodworth

Dennis Bloodworth (1919-2005) Author, journalist, British writer at The Observer, first British journalist allowed to visit China in 1955.

“The Chinese Looking Glass” is a whirlwind journey across the vast history of China by the first British writer allowed to visit China in 1955. It is a primer for a general understanding of China that was originally published in 1966 and updated in 1980. The author’s marriage to Liang Ching Ping adds credibility to his view of Chinese culture.

One reads Bloodworth’s book and is somewhat overwhelmed by its breadth. So many generations of Chinese culture are too much to cover in a 400+page book.

The author manages to give a broad understanding of a Chinese worldview that is shaped by Confucian and Taoist history, a collective identity that often conflicts with the Western culture of individualism. He notes Chinese traditions are based on filial piety (meaning duties, respect and devotion of children to their parents). Bloodworth notes, through many generations of Chinese culture, behavior and decision-making there is a focus on social harmony. Both Confucianism and Taoism play significant roles in shaping Chinese society.

Bloodworth notes Confucianism and Taoism shape Chinese society.

Piety, respect for hierarchy, education, and a focus on societal harmony were philosophical foundations of Chinese governance. Piety led governance toward strict rules and centralized authority. Historical figures like Confucius, Laozi, and Sun Tzu influenced Chinese culture and thought. The spiritual tradition of Buddhism reinforced the teaching of these cultural influencers. Buddhism emphasizes the suffering of life is caused by desire, and attachment. Buddhist teaching is that desire and attachment must be replaced by understanding and rejection of both through meditation and mindfulness.

Because democracy focuses on individual rights and freedoms, the ideals of collective harmony, hierarchical structure, and centralize authority make communism a better fit for Chinese culture.

Mao Zedong (1893-1976)

Mao unified China after decades of war and instability. Bloodworth suggests Mao Zedong had a nuanced impact on China.

However, Mao’s centralized power resulted in big economic mistakes like the famine of the Great Leap Forward that caused misleading food production reports meant to please the government when production was much less than what was needed to sustain life for Chinese citizens. With famine, the Cultural Revolution is unleashed, and China’s growth and stability were set back. Bloodworth had observed China’s governing always included pragmatism and adaptability to their drive for cultural harmony.

Though Bloodworth mentions Deng Xiaoping in the last chapters of his expanded edition of “The Chinese Looking Glass”, he does not foresee the opening of the Chinese economy and its rapid economic expansion.

The pragmatic realization that collectivization of farming led to misleading information about production compelled Deng to open agricultural production to a more market-driven incentive to preserve social stability. Deng was an authoritarian as is evidenced by his decision on the Tienanmen Square crises.

Though Bloodworth did not live to see the next iteration of China’s leadership, an element of recidivism enters with Xi’s control of the government.

Harmony and pragmatism undoubtedly remain important characteristics of Chinese society. Time will tell whether societal harmony can be maintained by an increasingly authoritarian leader.

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