Transcription
And what's the very first thing that comes to your mind when I say on China?
[music]
Oh my god, China's grown a lot.
Isn't there like a very clear contractual commitment with the United States government that the one China means what it is?
I regard American foreign policy as extremely naive. The US is blinded [music] by ideology. China could look at the United States if not as an infant [music] as a child. China's a threat. Why a threat? Because they don't look like us. Don't they know this is a unipolar world led by the United States who had a unified Europe and a unified China. China kept its unity whereas Europe kept its fragmentation. China never invaded Japan. [music] I find that absolutely unbelievable compared to European history.
It's impossible to understand China without being a little philosophical and understanding the Confucian thought.
Great power tensions will revive. When China grows in power, the relationship between the US and China will [music] turn conflictual.
Jeffrey Sachs, thank you very much for joining me for this podcast on China.
I'm excited. Great to be with you folks. Thanks.
Well, thank you very much. Um Henry Kissinger wrote a book on China. It was very highly regarded in China. He was visiting China many many times including uh in a very very old age and and I was gone. And I'm wondering uh is there anybody uh of his stature from the West who can currently be compared uh to him in terms of stature and in terms of influence?
Of course uh you know Kissinger played a a very particular role in modern Chinese-US relations. So, I don't think that there's anyone exactly uh that meets Kissinger's description. Kissinger, of course, made the famous secret mission to China in the beginning of the 1970s to reopen relations between or to open, I should say, relations between the United States and the People's Republic of China, which did not exist after the PRC was established in 1949. The US had sided with the losing side of China's Civil War. Uh the US maintained diplomatic relations with the the government in Taipei in Taiwan today. Uh and um in the early 1970s, Richard Nixon and Henry Kissinger decided for a variety of reasons, but mostly uh to kind of triangulate the bipolar Cold War by bringing China in uh as a a friend of the US that would in the US competition or confrontation with the Soviet Union. Uh Kissinger made these diplomatic openings. It was a unique period. Um and so there is nobody today that has that historical uh background for China that was there at the crucial moment when the US and the People's Republic of China established relations and began a very different course from the one that had been set in 1949 where the US and Communist China, as the United States like to call it uh seem to be on a collision course for quite a long time. Now we're back not quite to the same collision course, but to uh rather sour relations. It would be good if there were a number of leaders that both the US and China felt are good intermediaries. I'm afraid we lack such people right now at at with that historical role.
And what's the very first thing that comes to your mind when I say on China? What's the first thing that you think of?
Well, right now there is a drumbeat in the US media and in the political narrative in the United States that there's a an intense struggle between the US and China who's number one. Who's going to run the world? Are we going to go to war? So when you say China in the US right now, you're talking about conflictual relationship that um pits two giants against each other. That's not the only thing that should come to mind, but that is what does come to mind in the US mass media and narrative right now.
But that's very unfortunate especially because of the role that the US played in the past. You mentioned the role of Kissinger and then Nixon, which essentially brought uh the PRC into the Security Council uh in the '70s and there was also a decisive role of the American administration in the '90s that helped uh see China accede to the WTO, which opened up the door for tremendous progress worldwide. So, what would it take now for somebody visionary and for somebody meaningful in the United States to do under the circumstances cuz what you're describing is actually very worrying being on the conflictual trajectory.
There's a a dominant narrative about the the waves of uh of China-US relations and it goes something like this. During World War II, the US and China were allies. That was under the Chinese Nationalist government led by Chiang Kai-shek. Uh China was regarded as one of America's main allies in the war against fascism. Of course, China was fighting Japan, which invaded China in the 1930s and uh caused a massive massive loss of life and bloodshed. And that conflict between Japan and China went back to the late 1800s, in fact, to the Sino-Japanese War of 1894-95. But, the point is during World War II, this was an alliance. Then, when [clears throat] the war in the Pacific and the war in Europe ended in 1945, China fell into a civil war between the communists and the nationalists. And in 1949, the communists were victorious led by Mao Zedong, of course. And Chiang Kai-shek and the Nationalist Army decamped to Taiwan and established the Republic of China as the counterpart to the PRC. Both sides, in fact, the People's Republic of China and the Republic of China, the one in Beijing, which controlled the mainland, the vast majority of China, and the one in Taipei, which ruled over Taiwan as of 1949, declared that there was one China, but a difference of view who ruled that one China. So, Beijing said, of course, there's one China and Taiwan belongs to us, the the China that's led by the Chinese Communist Party, the China that is ruled from Beijing. The Republic of China said, there's one China, but it is ruled from Taipei. We're temporarily pushed out of the mainland, but we will be back. So, that was the situation in 1949, and the United States basically sided with the Republic of China during the 1950s. That um Communist China's the enemy. The view, of course, in the United States was that there was a global Communist movement led by the Soviet Union, in which China was a junior partner, but a partner, and that the United States was fighting an implacable global Communist movement which aimed to take over the world. That was the US narrative. It was, in my view, profoundly naive and flawed in many ways, but the two ways that I think it was profoundly flawed is, first, it did not understand that by the mid-1950s, there was a Sino-Russian split. So, there was no common front, and it took the United States a long time to understand that very basic point because the US is blinded by ideology. If you said the word communism in 9 the 1950s, that was a unified global expansionist effort to take over the world. So, the idea that there could be a split within the communist camp was very hard for the American narrative to absorb. And that's also interesting for us here in Serbia, the idea of Yugoslavia's being a communist country but outside of this uh international effort to take over the world is a little bit beyond the the American simplicity, let's say.
But but look, speaking about taking over the world
Yes.
and you know, this narrative of threats. Is China a threat? Is China going to take over the world? Um if history is any guide uh is it fair to say that China has actually not threatened uh too many others in its neighborhood let alone in other parts of the world which cannot be really said for the European empires and the United States is a natural successor of the European um imperial uh footprint, global footprint.
Well, let me take that on by continuing briefly the history because when the US sided with the Republic of China was the anti-communist side. Then uh the Cold War between the US and the Soviet Union continued under this rubric of fighting global communism. Uh and in the early 1970s, even as the United States was making a detente with the Soviet Union, so easing the tensions with the Soviet Union, uh the idea of Nixon and Kissinger was open up another avenue of US diplomacy directly with China that would tell the Soviet Union, "Okay, you're a little bit cornered two to one. We won't get so chummy with the Communist China, but now we understand that there is a Soviet-China split and we'll use that tactically to say to the Soviet Union, "You should be very careful because you know, we're not fighting China anymore. We actually will form some kind of if not partnership, at least a normalization. So, just to bring the story to the present, in World War II alliance, then civil war, then US alliance with the Republic of China, then the Kissinger and Nixon opening to China in 1971 and 72. By the end of the 1970s, diplomatic relations with the People's Republic of China and ending formally the diplomatic relations with Taiwan. Certainly not ending the US role in Taiwan, we should be clear because while the diplomatic relations ended, the US security state remained very much engaged with Taiwan. And the US said, "We acknowledge China's one China principle, that's what the mainland calls it, but we'll call it our one China policy, leaving a little bit ambiguous what our relationship with Taiwan is, but we'll only have official diplomatic relations with
If there's one China policy, if if the US has a one China policy and has a diplomatic relations with Beijing, how can it be ambiguous? I know that some politicians are trying to make it ambiguous from time to time, but isn't there like a very clear contractual commitment of the United States government that um the one China means what it is.
Not quite. And it's interesting. I wasn't even aware uh I should have been more aware, but China doesn't call it the one China policy. China calls it the one China principle. And for them, that's very clear, unambiguous. For the United States, which uses the phrase one China policy, it says we reserve the right for some ambiguity. Not to have an ambassador in Taiwan, but we defend Taiwan in some sense. What does that mean? Well, we're not going to say exactly. We have strategic ambiguity. But we don't want any violent takeover by the mainland of Taiwan. That's one part. And we'll be ambiguous of how we're going to handle Taiwan. Now, I want to bring this up to the present to address this question about the China risk. In the American mentality, in the 1970s and '80s, China was useful as a kind of new flank against the Soviet Union. When the Soviet Union ended in 1990 one December, then the question was, well, what about US-China relations? And I would say the idea became then that China was no longer useful as a foil against the Soviet Union which didn't exist. But China's a good economic partner because at low cost they can make our phones. They can make our computers.
They can make everything.
They can make everything it turns out. But the idea in the 1990s was okay, we'll make money. We'll go invest in China low cost labor. We'll have assembly operations and what could go wrong from the US point of view? It's an impoverished [clears throat] country. There are hundreds of millions of poor people living in the villages. But they're coming to the cities and they're going to assemble our electronics equipment. They're going to make our toys. They're going to make our automotive components and we're going to make a lot of money out of this. So that was the attitude in the 1990s. There was a subtext again extraordinarily naive because I regard American foreign policy as extremely naive. But the idea was we'll have this good relationship. And China will become like us. You know, as China gets richer they'll fall into the US led world. They'll fall into the liberal order. We'll invite them into WTO. And over time as incomes rise China will democratize and it will become a country that follows the US made order. I always find this a little extraordinary as if the whole world's waiting to be led by the United States.
like somebody who has like a thousands of years of history of uninterrupted statehood.
Indeed. So the US is you know, roughly I 200
50
50 years old, roughly speaking. Uh if you date it to 1776, then uh it'll be 250 years in 2026. Uh and um China has at least 2,500 years, and you could date it even back longer. So, China could look at the United States if not as an infant, as a child. As a child that doesn't have so much civilizational experience and wisdom. And the United States can look at China and did look at China as a yet another country that would fall into the US-led order. Then the rhetoric changed. And this is very important for your question about what is China today in terms of the US? Is it an economic partner? Is it a place to make money? Is it a place to make investment? Is it an enemy? Is it a threat? Because starting around 2010, the American policy makers, again, I want to underscore naivete because I do believe that there's just a lot of naivete in the American retoric. But the Americans discovered, "Oh my god, that economy's growing." Well, by the way, if you were an economist and paying attention, you would have known that two decades earlier, and you would have been able to make projections that yes, it's going to grow a lot. But somehow, the policy makers discovered around 2010, "Oh my god, China's grown a lot." Uh it's been 30 years of growth uh at um about 10% per year growth from from 1980.
it good for everybody that China was growing that
Well, just to give you the the quantification of it, cuz I I want to also show how shocked the Americans were from 1980 to 2010, China averaged about 10% per year growth. That's a lot. It's extraordinary, especially for a country of 1.4 billion people. If you grow at 10% per year, your economy doubles every 7 years. So, if you do that for 28 years, that's four doublings. So, between 1980 and 2008, roughly speaking, 28 years, you had four doublings. That means a 16 time increase of the size of GDP. It took the Americans that long to understand, "Whoa, that's a big place. Now, that is a big economy." So, starting around 2010, American leaders got scared. "Holy heck, what did we create?" Cuz they thought it was their creation. Uh modern China. What did we create? It's big, but they're not exactly falling into line the way they're supposed to be falling into line. So, the new rhetoric starting around 2010 was first Obama's talk about the Asian pivot.
Mhm.
We need to stop worrying about Europe. We got China rising. That was number one. Second, China's a threat. Why a threat? Because they don't look like us. We define goodness the United States. China refuses to fall into line. Don't they know this is a unipolar world led by the United States, the liberal order? And yet they don't look like us. So, that's they cheated somehow. They stole our technology. They did this. They did all these bad things. Why did we let them in WTO? That became the next part. By 2015, this had consolidated into a view, we need to contain China. Why? Well, China's now a threat to us. What kind of threat? A threat to our dominance, a threat to our hegemony. China threatens to kick us out of Asia. China threatens even eventually to claim or challenge us worldwide. So, there's a fascinating article. I think it's very good in its clarity. I think it's awful in its substance, but it does define US foreign policy. And it's a paper by a former colleague of mine, Robert Blackwell, distinguished American diplomat. I I've liked him very much as a colleague at Harvard when I was at Harvard. He then became ambassador to India and many other senior positions. And Dr. Ashley Tellis, who's a foreign policy expert. And they wrote a paper for the Council on Foreign Relations in 2015 called something like Revising America's Grand Strategy to China. And the usefulness of this paper is its clarity. Because it says at the outset, America has always had a grand strategy. Primacy. America has always from the first day, from the landing of the pilgrims, had the idea that this is a special place that has a world destiny. And originally in the 19th century, the destiny was to control North America. But by the middle of the 20th century, it was to have primacy in the whole world. And Blackwell and Tellis write in March 2015, "China threatens American primacy. So, we need a new strategy towards China." And the new strategy says, "China's rise no longer serves America's purpose." To me, rather extraordinary, but we view the 1.4 billion people of China purely instrumentally. What are they doing for us in the US?" And the answer is, "They're threatening us. They're threatening our primacy." So, Blackwell and Tellis lay out around 10 specific steps that the US should take. Interestingly, dusting off the US foreign policy playbook vis-à-vis the Soviet Union. In other words, we need a new Cold War to contain China. What should we do? We should limit trade. We should establish trade relations with Asia that exclude China. Very weird idea because how can you exclude the biggest trading country of Asia? But that's listed in the
biggest trading country of about 120 countries in the world.
Yes. And Obama actually proposed something absurd called the Trans-Pacific Partnership, which said, "This will be a trade relation of the United States and Asian partners Trans-Pacific that won't include China because we'll make the rules." Turned out it died in the US on political grounds because the US turned more protectionist than having such a relationship. But to me, the whole idea was an absurdity. How could you have a trans-Pacific trade relationship excluding China out of spite saying, "That doesn't exist on the map. That's not part of the trading system." But, that was one criterion. Another is stop exporting high technology, build up the military along China's rimland, bolster the diplomacy of American allies in Southeast Asia and Northeast Asia. Well, what I find fascinating about the article is its clarity, it's basic statement, maybe realist you could say or ultra-realist. Uh China we view China how it affects us and our primacy and here's our containment policy and during the next 10 years this is actually what America has followed.
think Do you think it's it's fair to say that it was some kind of Brzezinski-like
take completely on
on China Brzezinski thinking of the Soviet Union and Russia, but in the same way like a playbook for how to crush someone in a Cold War.
It was exactly that and I want to give a shout-out to our common friend John Mearsheimer who I regard as a great political scientist with whom I have some disagreements on this particular issue, but he wrote his famous book The Tragedy of Great Power Politics, which is a a great book written in 2001. And in the beginning I preface or introduction he says, "Great power relations seem to be calm and stable right now, but great power tensions will revive and when China grows in power, the relationship between the US and China will turn conflictual. Now, as a description, it's amazingly accurate. Uh and um because this is exactly what happened. China rose in power, the United States looked at China and said, "Oh my god, threat to our primacy." Rolled out the containment playbook and said, "We'll make a new cold war because China refused to join the American-led order." And that's what's happening right now. Where I disagree with the John is he says, "Look, that's inevitable and I correctly predicted it." And I say to John, "It's amazing that you predicted it because I would not have predicted it in 2001. All kudos to you, but John, it's a self-fulfilling prophecy. We decided to view China." And he said, "Well, yes, that's how politics works." And I said, "But John, it shouldn't work that way. We shouldn't enter into a self-fulfilling crisis."
If you look at the historical experience of China, um at least my impression is that um Okay, let's not talk about the thousands of years of history, but let's talk about a hundreds of years of history. Let's say the last 500 years. Which were, you know, the beginning of the European and by extension American primacy in the world. From the Columbus discoveries and and Vasco da Gama. The historical experience of European empires uh was constant war and constant you know, recurrence of this theme of this John's
The the the any success of the other is a threat to us.
to us. Whereas, if you look at the historical experience of China and Asia in that particular period,
Yeah.
you would see that it was a far more peaceful place, Asia. Actually, prior to the arrival of the Europeans into the Pearl Delta River.
Exactly. So, here's the interesting story. I need to take it back one one step. Uh another couple thousand years. Uh but quickly.
Huh.
China unified as a a state that we would recognize as China uh traditionally dated to 221 BC. Uh the so-called Qin Dynasty. Uh and Qin Shi Huangdi was the first emperor of a united China. And his rule, the Qin Dynasty, was very short-lived, but it was followed by the Han Dynasty from 206 BC to 220 AD. And that was roughly 400 years of China's unity. If you look in Europe at the same time, that was the Roman Republic and the Roman Empire. So, the Roman Republic up to uh 27 BC when Augustus creates the Roman Empire and then onward in the Roman Empire. So, you had a unified Europe and a unified China. And they were roughly the same size, and they traded with each other a lot, by the way, because the European the Roman aristocratic families loved silks. They loved what China had to offer. So, a Silk Road routes were created and trade was over the vast Eurasian space 2,000 years ago. We know in the West the Roman Empire collapsed crumbled under the repeated invasions of Germanic tribes and the usual date is put to 476 AD with the fall of Rome. In China there were similar periods where after the Han Dynasty there was disintegration and then competition and war. But the huge difference of Europe and China is Europe never ever again integrated. Never recreated a Roman Empire until maybe maybe maybe and this is you know one of the the other questions a union that's being attempted right now and a very fragile one.
Fragile one and not in the whole of the continent.
Yes, but the Roman Empire never came together again. There were moments, there were would-be unifiers there was Charlemagne, there was Napoleon, there was Hitler. There were attempts by force of very different kinds of regimes to dominate Europe. But nobody dominated Europe again after the fall of the Roman Empire. We should remember the Roman Empire also didn't include all of Europe and never conquered Germania for example. But in general most of Europe and most of the cities including the city where we are today, Belgrade, was part of the Roman Empire. The Western Roman Empire. China kept its unity for 2,000 years with short periods of fragmentation, but never long periods of fragmentation. Whereas Europe kept its fragmentation for 2,000 for 1,500 years, let's say, from the fall of Rome. And that fragmentation meant basically non-stop war. Europe is just a you know, palimpsest of war. Britain and France fighting for hundreds of years. Of course, with the rise of Germany, Germany and Britain, Germany and France fighting for
Everybody fighting Russia.
Everybody fighting Russia. Everybody fighting each other. That's the European scene. The Thirty Years' War. An incredibly incredibly bloody war from 1618 to 1648. Devastating in Europe. Like a world war scale. Devastation. Everyone fighting so much you can't really even figure out who's on which side because there was a kind of scramble and free-for-all, in fact. China very, very different. And this, I think, is so interesting and for me a key point. First, why? And I think there are two reasons. Although this now gets us into almost philosophical
No, but I love it.
space, but
it's it's impossible to understand China without being a little philosophical and understanding the Confucian thought.
Yes. Well, I think that there are three things that make China a a very very distinctive as a civilization at this huge scale of hundreds of millions and now 1.4 billion. But one is geography. China is kind of a box. On the north is the dryland regions. So, the steppe regions. That's where the Mongols would invade or the Manchus would invade. But, it's dry. It's not densely settled. Uh, and you can't have rice farming there or even wheat farming there. That's where the horsemen come in galloping from the north. Then, on the west you have the Himalayas. Impenetrable, the highest mountains in the world. Then, in the south you have the tropical rainforests. So, China once in a while would try to invade Vietnam, for example, centuries ago. But, they were driven back partly by malaria. Just impenetrable rainforest. Then, on the east you have the Pacific Ocean. So, you have a box. And it's not so easy to expand beyond the box. And it's not so easy to invade. The only invasion route was from the north, actually. From conquest by the Mongols, for example, or from the Manchus. But, other than the fight between the basically settled densely settled, uh, rice and wheat and millet-growing areas of mainland China and the, uh, horse empires of the north, the nomadic empires of the north. You had this large region that was, uh, geographically consistent. Two great rivers, the Yellow River and the Yangtze River, meaning an east-west orientation, a very densely settled population. But, the geography was compact and it made sense. And it supported hundreds of millions of people. That's point number one. Second point, very hard for us to understand. China is a multiplicity of ethnicities. Many different languages. We sometimes say that they're dialects of Chinese. But, they're very different and mutually unintelligible often. But for 2,000 years, the character system could be used as one common written language. Even with spoken languages being very different.
right.
This is amazing, by the way. This is very different from an alphabetic system. In Europe, people are divided by language. Ethnicities are defined by language. And so, even though the Slovaks and the Czechs, well, the language is almost the same. Ah, we're very different. We speak Slovak. They speak Czech. And if it's more than that, if it's the Germans and the French and the Italians, everybody is different because of their language. Whereas [clears throat] China invented this system, very difficult for us on the outside. And you have to memorize thousands of characters if you were, you know, an ancient Mandarin in the courts helping to govern China. But there was a written system that was common across that whole box that I described. So, that was a second piece of this. A third piece is amazing from a cultural point of view, and you mentioned it, and that is Confucianism. Confucius, of course, was a uh Well, he was a would-be politician that failed during his life because he was an itinerant politician for hire, going state to state in Shandong province, trying to convince the local princes, "Hire me. I'll give you good advice. And I'll teach you proper respect, proper manners, and and proper rituals, and so forth." And most of his life, like many great great philosophers, he failed practically as a politician because, you know, generally local potentates are not so interested in high-minded things and Confucius was trying to tell them something very important about what decent rule is and he failed as a practical politician in the same way that Plato failed as a practical politician when he tried to advise the Syracusan leaders in Syracuse, Sicily. Okay, that's another story, but the point that's interesting is by the time that Confucius was 70, he said, "Okay, I'm done with this travel. I'm going to sit down with my followers, my students." And he started to have seminars. They took the notes. That became the Analects of Confucius. Then generations of students of students of students like great thinkers like Mencius, who was a kind of grandchild of Confucianism, wrote wonderful texts about a moral basis for governance. Really amazing. Very different from a lot of Western thought. Very different from
Machiavellian and the like.
Very different from Machiavelli who told the prince, you know, you lie and cheat the way you have to to keep [clears throat] power, but Confucius and Mencius are saying the only way to rule, the only way to have the mandate of heaven is to rule by morals and then you don't need to use force the same way you don't you can keep power a different way. Well, what's so interesting is that in the Han Dynasty around 125 BC, the emperor said, "I adopt Confucianism as a kind of state philosophy and I'm going to hire our civil service of a unified state already 2,000 uh 2,000 100 and some years ago, I'm going to hire them based on an examination of their knowledge of the Confucian texts and the other major ancient wisdom texts. And so, Confucianism became the doctrine of power, but as an ethical doctrine, and all of these civil servants for almost 2,000 years had a Confucian background. They were what we call the mandarins, but they were Confucian trained. Now, Confucianism is an amazing ideology, I think. We need to understand it more for one particular current reason, which is that it's in vogue in modern China People's Republic of China.
[clears throat]
If you ask Xi Jinping about Confucianism, yes, this is one of our great civilizational heritages that is important for China today. We must learn from our ancient wisdom. And that's actually done in a very practical set of ways. But for almost 2,000 years with a very notable gap in the early period of Mao, who was anti-Confucian,
Mhm.
who when the communists said Confucianism, that's a a feudal a feudal belief system that held us back. So, there was a short period of a few dozen years of rampant anti-Confucianism, but now Confucius is back.
This is why Mao today is 70% good and 30% bad.
The 30% bad was his rejection of Confucianism
Exactly.
So, there is in Chinese history a serious philosophical current of governance that is not imaginable to the Western mind unless you're trained in it. And unless you study it, unless you understand it, unless you see this is not a slogan, this is real.
And this is why there were not so many wars.
And when it comes to
waging wars.
When it comes to statecraft this is so interesting and John and I debate this and
John Mearsheimer, right?
John Mearsheimer and scholars debate this. But there's a period that is called the Confucian peace. And what it is is ostensibly a period of hundreds of years of peace between neighboring countries where China was dominant culturally. But it didn't use its dominance to conquer the other countries. It didn't use its dominance to wage wars. It didn't use its dominance to make new colonies. It didn't use its dominance to extract privileges or better terms of trade or primary commodities. It used its dominance to say you respect us because we are the home of essentially the celestial uh emperor and
Emperor. Uh we are
the cultural hub of a Confucian world. Because Confucian teaching went to Japan. It went to Vietnam. It went to Korea. But those were really what we would look at even today, they were nation-states. They were political systems that had a kind of modernity already a thousand years ago. Uh which is not quite true of the map of Europe. But China, Vietnam, Korea, and Japan were not only nation-states, but they were Confucian culture. And what's incredible is how peaceful the relationship was among them. I can't get over the fact, if I have my history right, and I'm pretty sure that I do, China never once invaded Japan. Now, China's the major country. It's the dominant power. Here are these lush islands off the coast. If you were Britain, you'd say, "We own that." If you're Donald Trump, you'd say, "Come on, that's ours." But China never invaded Japan. Now, I have to make one quick footnote for people who say, "That's not quite true, Professor Sachs. There were two attempted invasions of Japan by the
Mongols.
by the Mongols when they ruled China 17 uh 1274 and 1281 AD. So, this is already seven centuries ago. Uh and they failed uh on both occasions, supposedly because the winds came, the typhoons came, which which uh in Japanese belief were the kamikaze winds that that saved them from the Mongol invasions.
Other than that, China never invaded Japan. I find that absolutely unbelievable compared to European history, where any morsel of a a a great territory, someone invaded it every 20 years, every 50 years. Who could leave some place as beautiful as Cyprus untouched by invasion or Crete or where we are today in the Balkans or they fought nonstop but not in East Asia. And so this is my argument with the realists and my argument also with the the the Sinophobes the people who really say China's the great danger. I say China is not a great danger of any sort actually for many reasons. One, China can't defeat the United States in a nuclear age anyway. Second, China hasn't the slightest idea of trying to defeat the United States. Third, China's statecraft is different. And then, no, it can't be different. They're going to behave just like us. How could they be different? But I think they are different. I think 2,000 years of world outlook makes China different. So that's that's that's where I come down on this.
that is really an amazing amazing reflection. Um but I would like to to shift to to your field uh which is economy and and development.
Yeah.
Um is it fair to say that um the last 40 years uh since um the beginning of the reform and opening up uh under Deng Xiaoping is it fair to say that uh this is uh uh the most successful experiment in the history of human development?
From a quantitative economic point of view, it's uh unparalleled in its success. China in 1980 uh was an impoverished country where if you look at the conventional measures of poverty, for example, that the World Bank put out. China had an 80% extreme poverty rate. In other words, it was it was viewed also by the West as this place barely subsists, it's rice-growing villages pretty pathetic. And who knows what's going to happen to it.
[snorts]
But that was the view in 1980. I first went to China in 1981, actually. So, I saw China just at the beginning of the reforms that Deng Xiaoping instituted beginning in 1978. And China I only went to the cities in on that first visit, Beijing and Shanghai. But that was a very poor place. You could not see one private automobile, for example. There were a few trucks, everyone else walking around bicycles. There was one suit, which we called the Mao suit. There was no color. There was nothing. You go into the shops that were the few special shops for tourists. There was nothing that you wanted of interest. This was just poverty. The food for the tourists was awful. So, everything was this was a very very poor place. Today, if you go to China, you can't even imagine. I go usually several times a year. Yes. And
And it's changing every time you go. You can see the difference.
Even 20 years ago, by the way, we had an experience which for me defined China. This is already almost 25 years ago. I was asked by the Chinese government in 2000 2001 to visit the western cities in China because the Chinese takeoff to rapid growth started in the coastal areas in the east.
it's the special areas.
And and that's normal. That's where the investments were. That was the special economic zones. That's where trade was easiest.
The access to it.
go into the interior, it lagged behind catching up and if you go farther west, it lagged even farther behind. So the government very nicely asked me, "Professor Sachs, take a visit." So we spent two summers in 2000 and 2001 visiting cities in western China. Even then, Vuk, we went to one city that was in the central area, skyscrapers everywhere. And we looked in the shops and there were Italian shoes that we couldn't afford and you know, it was already pretty fancy. This is a quarter century ago. And I said to my wife, to Sonia, that um gee, it's not only amazing but we never even heard of this city. You know, this morning. This is
10 million people.
Yes, and it was I think 7 or 8 million people at the time. Now, China has well over 100 cities of more than a million people. Most of us know almost very few at most of those places. And the transformation is absolutely well, it is astounding and un unparalleled at anything like this scale. And I'll just give one more little example of this. Today, of course, Shanghai is one of the lead cities of the world and it was always from the 19th and 20th century a leading edge of Chinese commerce and industry even when it was basically under European imperial control at the beginning of the 20th century. Yeah, the concession areas. But uh there's a region of Shanghai called Pudong which is uh you know, skyscrapers and built area. And in 19 94, as late as that, uh it was still basically the beginning of a mass construction site. And we were taken to a building that showed what Pudong would be. And it was a architect's model, uh but an elaborate large model. And uh we went in and it looked like Manhattan, all these skyscrapers, and you looked out the window and there was nothing there. And um I
You thought it was too good to be true, right?
I smirked, honestly, to tell you the truth. I
Saying like, "Yeah, right."
Look look who thinks they're going to make Manhattan.
Yeah.
And you go back 10 years, 15 years, it's Manhattan plus.
Fantastic.
And now we go to one of the places that I regard as maybe objectively it is the most amazing place on the planet economically right now, Shenzhen.
Shenzhen.
Shenzhen, just north of Hong Kong.
Yes.
Fisherman village 40 years ago.
Yeah. 23,000 people by the official count and I think in 1980 or 81, and now 25 million people. Okay, you don't see that very often. And now Shenzhen is rated number one on the list of innovation clusters in the world that's kept by the UN. The UN agency, the World Intellectual Property Organization, WIPO,
Mhm.
makes a list of the 100 innovation clusters of the world. And number one is Shenzhen, Hong Kong, Guangzhou. It's a called the Greater Bay Area. And Silicon Valley is number four on the list. So, Silicon Valley defines for the world in the short phrase the innovation ecosystem. But it's only fourth on the list right now. Uh and two of the top three Number one is Shenzhen, Guangzhou, Hong Kong. Number two is Tokyo-Yokohama Corridor. And number three is Beijing. Uh so, Beijing is you know, absolutely a an innovation hub of absolute world standard. So, you ask me, you know, is this unprecedented? You'd say, absolutely yes. Were there role models for it? Interestingly, yes. And that's but just at a smaller scale. The country that really pioneered this whole path of very rapid development was Japan.
During Meiji?
Yes, exactly. So, Japan was the only uh Asian country to industrialize at the end of the 19th century. It brings us back to geopolitics because starting in 1868, Japan began rapid industrialization alone in Asia. And they did it through, you could call it a capitalist revolution, actually, because it was a feudal state. But then under the threat of Western uh imperialism, the some Japanese leaders said, "We have to save ourselves from the Western barbarians. So, we have to learn from the West but keep our power and our sovereignty." And they made a revolution of institutional changes and began a period of rapid industrialization by essentially taking the best practices of
Others
Europe and the US and saying, "We'll do that." And they were very so successful that by the 1890s, they were the only industrial nation in Asia. And they became imperialists. Starting in 1894, they launched a war against China. And there's a wonderful another book that I recommend by my late colleague Ezra Vogel, who was a great scholar at Harvard of both China and Japan. And he wrote a book, it was his last book uh before he passed away called uh China and Japan Facing History. And he tells the story of the bilateral relationship between China and Japan over a thousand-year period. And at the end of the 19th century, European imperialism was coming to Asia, both to China and Japan. Japan reacted and fought it off and had this revolution, this which is called the Meiji Restoration, kept its sovereignty, and became an industrial power, and then invaded China. And not only invaded China, took two colonies. One, Taiwan, which was a Japanese colony from 1895 to 1945, and Korea, which became an informal colony in 1895 and a formal colony starting in 1910. And when the Japanese invaded the Chinese, Ezra Vogel tells an anecdote of two leading diplomats, like you and your counterpart. Uh they may have even been the foreign ministers, respectively. But a leading Japanese and Chinese diplomat meet in the context of this Sino-Japanese War. And the Chinese diplomat is crestfallen. He says to his counterpart, who was his friend before, "Why are you invading us? We're being threatened by these barbarians
from the West.
from the West, and you're invading us." And the Japanese diplomat says to him, "I'm so sorry, but we have joined their club."
[laughter]
And that's literally the phrase. We became part of them.
And [laughter] that it ended up not working too well.
No, it didn't.
Uh after the Second World War, of course. Uh I mean, because of the Second World War. Uh but also in the aftermath, um when Japan rose again and peaked in the '80s. And um there was a lot of talk, I remember, about uh oh, is Japan going to, you know, overtake
You're right. Exactly.
States of America and so on and so forth. And then um America came to Japan, uh if I'm not mistaken, and then gave them some good advice, {quote} {unquote} good advice as to how to change things in their economy. That my opinion is that Japan has not recovered since
excellent advice.
And is it not like something that you know the the Western authorities are trying to say to China how they should change this obviously exceptionally successful development model into something that would essentially break the Chinese economy like it broke the Japanese economy and brought about the decades or more of stagnation.
It's exactly the right analogy. What happened was China uh I'm sorry, Japan had exceptional growth uh in the end of the 19th century then it had this period of imperialism very devastating. By the 30s it became really fascistic [clears throat] and the war against China in from 1931 to 1945 we don't remember or know much about it but it took more than 10 million Chinese lives. It was a devastating war like the German invasion of of the Soviet Union took 27 million lives it was on that scale basically devastating. So at the end of the war Japan was occupied by the United States and raised up again by the way under a pacifist constitution so-called but raised up again as an economic power not as a military power and the military spending was supposed to be kept at 1% of GDP or below only a self-defense forces not not forces that could be used aggressively but the United States took Japan under its wing even though Japan had been the enemy. But it occupied Japan and rebuilt Japan helped Japan to rebuild. And Japan had another phase of astounding growth, especially in the 1960s. The 1950s was reconstruction, which went very fast. But then came what is called the the doubling GDP era.
Like in China.
Yes, exactly. They pioneered it again.
With sustained annual growth.
Exactly. So Ikeda was the prime minister and he announced they will have a decade of doubling GDP, but it went much faster than a decade. So Japan rose up again. And in the late 1970s, Ezra Vogel, whom I mentioned, who was wonderful scholar and a very wonderful man and I got to know him when I was a student and young professor at Harvard. He wrote a book called Japan is number one, which you can imagine became a best seller in Japan. You know, it was the favorite book of all time, maybe. But in in any event, he said, "Look, Japan has a system so successful, it's amazing. We should learn from it." And by the end of the 1980s, the United States was viewing Japan not exactly the way it views China, cuz it views Japan it did not view Japan as a military threat, but it did view Japan as an economic threat. And they introduced what I would call a soft containment policy as well, which is they told Japan "You will stop your exports to
us. You will run not on export growth, but on large budget deficits, domestic spending. You will overvalue your currency."
>> So basically the same things that the Americans are now saying to the Chinese.
>> And I once asked a very, very leading Japanese policymaker, whom I knew well, who I know well, why did you go along with this? And he said to me, because we had to. You know, Japan was >> Occupied. >> still occupied >> Occupied. >> by the US with the military bases, with the overall political control, with this supposed security umbrella, which cuts both ways. We protect you, but you must abide by our demands. Now, China is not in that category. It doesn't have to abide by American demands.
>> like the the first uh salvos in the in the tariff war done by Trump was responded by by China quite uh vigorously, and it soon became very obvious that you can't really have that kind of conversation with China.
>> And and not only did China match the tariffs, but uh the US said, you can't buy Nvidia chips. And China said, okay. Okay, you can't buy rare earth magnets. Now, if you were like me, I had no idea what a rare earth magnet was. So, I had to go look it up.
>> into everything. You can't make anything without >> Exactly. Then I then I found out, oh, that's actually quite important, thank you. And it took about 2 days for the United States to understand, okay, we can't just bludgeon our way forward. And this is where we are right now. There are hotheads in the United States that say, we have to rearm, we have to regroup, we have to get ready for the war with China. This is the big showdown. We're still number one, but they're close to us, and we're going to have to have a showdown. And then there are others who say maybe we're just going to need a balance of power. Maybe there's a better way. And then there's me who says come on, what are you worried about? This is not a zero-sum struggle and China's not about to take us over. And so take a deep breath, get a grip, stop making these lists of who's number one and who's number two and get on with life.
>> So what is in your opinion the most uh uh the biggest misconception about Chinese economy right now?
>> I think that there are uh obviously two utterly contradictory visions. There's the uh wishful thinking which I consider to be a kind of therapy for American neurotic syndrome against China, which is China's about to collapse. Look at all those problems. Real estate, uh uh so much apartment building built, bankrupt city governments. It's all about to collapse. Uh that's a pretty frequent meme. The other meme is of course exactly the opposite. Oh my god, they're about to take over. They're going to win. They're going to have world world domination. So I find both of these uh absurd, but um they both exist because they both are uh useful if you're Chinaphobic. Uh and if your basic point, which is a deeply held American view, that America's dominance is the core of our safety. And China in one way or another is a threat to that. You Then you're led to a a uh Sinophobia, Chinaphobia. And you need to then have an answer to that, which is oh, don't uh listen to them, they're on the verge of collapse. Our system is better. That's a kind of uh PR effort uh and it can be useful and important uh to Americans officials talking to the Middle East, for example, or to Serbia. Why are you playing with them? We're the ones.
This >> maybe 10 or 15 years ago or 20 years ago, um one would have tried to to present a high moral ground, especially after the end of the Cold War and the supremacy of superiority of democracy, elected democracy. But But now, with um with everything going on right now in the world, in the United States, with things happening in Europe, right? Um is it really um easy to um to claim superiority uh of a system of governance that is the one that you have in the West in comparison to the system that you have in China, which are different?
>> Yes. So, I think there is at least Trump, which is uh to our benefit in some weird way, drops the mask. Uh and Trump is, you know, famous for saying things that others don't say out loud. Uh and uh he is >> and and Biden were actually doing and not saying.
>> They were doing a lot of nasty things, but they were all doing it under Western values Western values. Trump doesn't have those values and it doesn't proclaim them. But he does proclaim American superiority and he wants that and he wants to have deals and do whatever he can in that regard. But values that doesn't play very well. He wants to beat up on those he can beat up on and and extract the concessions from those he can squeeze and make deals with others and so on. And when it comes to the actual debates about what's going on my first uh point is that the rhetoric that I read all the time in our newspapers or in speeches by Congress are clearly by people who don't know anything about China. If you go several times a year, if you have students, if you have colleagues, if you have fascinating meetings, if you visit Shenzhen, if you visit as I have now all parts of China many many times in in many cases all of the the narrative right now rings hollow. Second Western behavior is so bad in certain ways that the idea that there are values attached to it plainly absurd. I'm deeply deeply unhappy with the and worse than that I but I won't use the language with Israel's behavior in Gaza for example where they have slaughtered tens of thousands of people. And I personally regard it as a genocide according to the the standards of the 1948 Genocide Convention. That That's a term of law. And I believe Israel has committed a genocide. But even to this moment, the US narrative says, "Oh, we can't deal with China. Look at the genocide against the Uyghurs." Genocide against the Uyghurs? Are you kidding? Have they documented a killing, a single killing?
>> Yeah.
>> Whereas they've just been a party to the deaths of 80,000 or 70,000, I think is the latest count.
>> most civilians, women and children, a majority of that in Gaza. And they talk about it like this. Well, then you can see how thin the propaganda is. So, I want us to move beyond the propaganda. I also happen to believe that places have their political cultures that are quite deep. And I think that China's system this system of governance not only has produced these remarkable economic results that we've been talking about, but is also a system that is recognizable going back to the Han Dynasty. Uh and that's interesting. And if you look at Xi Jinping, and I say this with a a a matter of respect, uh you'd say he looks like an emperor in a lot of ways. By the way, the emperor wasn't a one-person rule. Uh there was a court of scholar mandarins. There was a professional process. This was a vast administrative state that was absolutely capably managed.
>> Because they were they were appointed through a very >> Through a rigorous examination system. By the way, were a >> Which by the way happening in the in in today's China as well as well. Exactly.
>> A kid from rural China with no family background, no nothing in you know, 100 AD could make it to the court if they passed the exam.
>> And today >> Well, and today exactly the same way. If you want to go to the top universities, pass the exam. It doesn't matter who you are. And so China has abided by a system that is extremely impressive in so many ways. And it's their system. And it's a system that is I think in many many ways 2,000 years old and with extremely impressive features to it. So to just denigrate it or to name it this or that or to claim that that's the enemy is extraordinarily naive.
>> I think I think it's worse than naive. I think it is outright dangerous.
>> Very dangerous, self-fulfilling disaster. But I also find it fascinating this question of political culture because I've worked in well over 100 countries around the world
>> [clears throat]
>> in more than four decades and you know the world so well. I find in technology and in economics, technologies are used everywhere. Things look very familiar. Inside a factory, you'd find a lot of similarity. But politics is very cultural.
>> Yeah.
>> It's got long, deep characteristics. I don't think it's completely wrong to say again, it's not said with any opprobrium or denigration. But Putin seems like a czar in many ways. Xi Jinping seems like an emperor in some ways. That's not denigration.
>> No.
>> That is culture.
>> history
>> Yes, and an American and Trump is like a president, which is not praised by the way because most of our presidents have not been impressive at all.
>> [laughter]
>> So
>> What's your favorite Chinese dish?
>> Oh, well, I'll tell you my my favorite is Peking duck. But yes, but since I have turned mostly pescatarian, a a good steamed fish.
>> [laughter]
>> Jeffrey Sachs, thank you very much. It was a great conversation on China. Learned a lot.
>> so great to be with you, Volk. Thanks.