Wei Jianing │ Neither the Cold War nor the hot war is advisable. China and the US should focus on co
On the morning of December 7, 2018, Wei Jianing, former deputy director of the Macroeconomic Research Department of the Development Research Center of the State Council, attended the forum on "International Trade Relations and the Restructuring of the Global Economic Governance System," jointly organized by the Center for International Finance and Economics Research (CIFER) and the Center for Monetary Policy Research of the National Institute of Finance at Tsinghua University. In his speech, Professor Wei expressed agreement with Professor Ju Jiandong's emphasis on the importance of China's economic growth; regarding currencies, East Asia could consider the "Chinese Yuan Concept" or the "Asian Yuan Concept" in addition to the Renminbi; and he believed that China and the United States should neither engage in a cold war nor a hot war, but only cooperation.
The following is the full text of Professor Wei Jianing's speech:
First, let me clarify that I haven't conducted in-depth research in this area, nor am I an expert. I only participated in the "Peaceful Rise" project led by President Zheng Bijian in 2002, and the "Comparative Study of Two Global Crises" project led by Director Liu He in 2012. In recent years, I also worked on a three-year basic research project for the Development Center—"International Economic and Financial Governance," for which I was the project leader, and the project was completed this year. Therefore, I can only offer some reflections based on my past research and on Professor Ju's research.
Firstly, regarding the three equilibria proposed in Professor Ju's research report, my feeling is that, given the current tripartite balance of power in the real economy, it would be very difficult to return to the US-led "Equilibrium B." It's highly likely that we will inevitably reach State C. In my view, State C may no longer be an equilibrium, but rather a state of imbalance, a state of disorder—perhaps a collapse. This is my opinion, and therefore I strongly agree with Professor Ju's view that Equilibrium A is the direction we must strive towards.
Furthermore, I agree with Professor Ju's emphasis on the importance of economic growth, especially the importance of China's economic growth. As I mentioned on another occasion yesterday, China's current actual economic growth rate is likely already lower than its potential growth rate, which should be a cause for serious concern. If this slowdown in growth is not curbed in time, we may face problems and difficulties. Therefore, I also strongly agree with Professor Ju's emphasis on the importance of growth.
Furthermore, regarding the balance between the monetary system and the real economy, I have a small suggestion. In East Asia, isn't focusing solely on the RMB a bit too weak? Your research group members know that I proposed the "China Yuan Concept" over a decade ago. My idea at the time was that mainland China, Taiwan, and Hong Kong should jointly build a China Yuan zone. Furthermore, some Japanese scholars have pointed out the importance of cooperation among China, Japan, and South Korea; if the GDP of these three countries were combined, it could rival that of the United States. Then there's Japan's "Asian Yuan Concept." In short, inclusiveness is key. The greater your inclusiveness, the stronger you can stand. This is my opinion on this research report.
In short, the most important thing in studying this issue is probably to first figure out how to define the relationship between China and the United States. Here, I would like to share a point that I have been making in my lectures at Tsinghua University for many years: there are only three levels of understanding in the relationship between China and the United States, and regardless of whether we are left, center, or right, we must discuss this issue in a realistic manner.
First, the first level, the most conservative level, is what Deng Xiaoping pointed out back then. In early 1979, when Deng Xiaoping visited the United States, Li Shenzhi, then vice president of the Chinese Academy of Social Sciences, asked him on the plane: Why do we attach so much importance to our relationship with the United States? Deng Xiaoping replied: If you look back at the history after World War II, all the countries and regions that maintained good relations with the United States have become rich, such as Japan, South Korea, Taiwan, Singapore, and Hong Kong.
Let me add something: what's the situation like for those countries that didn't maintain good relations with the US? For example, Cuba and North Korea. And what about those countries that used to have good relations with the US but later broke off relations? For example, what's the situation with Iran? Everyone knows, so I won't elaborate.
I originally thought this idea came from Deng Xiaoping, but later someone told me that it was actually Prime Minister Lee Kuan Yew who shared this view with Deng Xiaoping during his visit to Singapore in 1978. Therefore, after returning from Singapore, Deng Xiaoping immediately went to visit the United States. Think about it: in January 1979, the coldest time of year, visiting the coldest region of North America—what did that mean for a man in his seventies? It meant risking his life! A simple cold could have been fatal! But why was Deng Xiaoping so eager to improve relations with the United States? It was because he understood the underlying principles.
So what did we gain after Deng Xiaoping resolved the Sino-US relations? I think we gained the maximization of China's national interests.
To give just one example, consider the return of Hong Kong to China. Beijing Television's "Archives" program once aired a segment about Hong Kong's return, which recounted how Margaret Thatcher, after being rebuffed by Deng Xiaoping at the Great Hall of the People in Beijing, wrote to President Reagan, requesting his help to pressure Deng and China into making concessions on the Hong Kong issue. Everyone knows what the relationship between Reagan and Thatcher was—a close, almost platonic one. But what did Reagan do? He replied to Thatcher much later, saying: "Don't just focus on a small place like Hong Kong; you need to think about the bigger picture of China's reform and opening up"—effectively turning Thatcher's stance against him.
Think about it, was Margaret Thatcher a pushover? Why did she attack Argentina and the Falklands? She even threatened to use nuclear weapons during the Falklands campaign, but was stopped by the United States. After the Falklands victory, Thatcher came to Beijing to negotiate with Deng Xiaoping. Why? Simply to use the momentum of the Falklands victory to pressure China! But she didn't expect Deng Xiaoping to be uncooperative, and she certainly didn't expect President Reagan to not support her! So, if Deng Xiaoping hadn't managed the Sino-US relationship, could Hong Kong have returned to China smoothly without firing a shot?! I remember when I was studying in Japan in the 1980s, I personally heard Japanese analysts say: on the Hong Kong issue, with British political influence and American military strength, the Chinese would definitely have to make concessions, but what they didn't expect was that President Reagan wouldn't support Thatcher!
Therefore, I say that because Deng Xiaoping managed Sino-US relations well, our national interests were guaranteed. This is the first level.
Regarding the second level, I know some will say, "That's 40 years ago. Things are completely different today. We're the second largest economy now, on par with the Americans." I say, being on par is possible! It's not impossible, the question is how you do it? Confrontation? Or cooperation?
There are only two options for confrontation: a hot war or a cold war.
We've also seen some people online who seem eager for a hot war with the Americans, even a full-blown conflict. The question is, why did we have the Cold War in the first place? Because we couldn't afford a hot war! What would a hot war between two nuclear superpowers mean? It would mean the destruction of the Earth countless times over! Who could bear that responsibility?!
If a hot war is unthinkable, then a cold war is the only option? But what would a new Cold War mean? What's the biggest difference between a new Cold War and the last one? During the last Cold War, the Soviet Union was the big brother, acting as our shield while we hid behind, and then the Americans pulled us in to bring down the Soviet Union. If we start a new Cold War this time, wouldn't it mean we have to be at the forefront, acting as Russia's shield? And then the Americans, with Russia's help, would bring us down?! Therefore, I believe a new Cold War is also unfeasible.
A hot war is unthinkable, a cold war is unprofitable, and confrontation leads nowhere. Therefore, there is only one path left: cooperation. How to cooperate? Consider the Hu-Wen administration: during that period, both US government officials and experts proposed the concept of "G2," the so-called Sino-US co-governance. Personally, I believe that if such a vision could be realized, it would be a boon to the world—because realism argues that the world's biggest problem is anarchy; without a world government, there will be constant wars and endless deaths.
Let's imagine what it would mean if two complementary superpowers were willing to cooperate. What are the characteristics of the United States? – Hard power, being the world's number one military power. And what are the characteristics of China? – Soft power, Confucian culture, emphasizing "harmony is paramount." So, if any country goes too far astray, the Americans will step in to deal with it. But force cannot solve all problems! Therefore, when the Americans cannot handle the situation, the Chinese will step in to mediate and coordinate. Wouldn't it be a blessing for the world if these two superpowers, one with a soft power and the other with a hard power, worked together to maintain world order?
This is similar to a family. In a family, there's either a kind father and a strict mother, or a kind mother and a strict father. The same applies to governing a country. Why did Beijing have Chongwen Gate and Xuanwu Gate in the past? This reflects the philosophy of governance. Chongwen Gate emphasized the importance of valuing culture, while Xuanwu Gate emphasized the importance of demonstrating military strength. Governing a country requires a balance of both, a combination of firmness and flexibility. I remember during Jiang Zemin's era, the People's Daily published a short article discussing how, in Chinese history, it was either the ruler was content and the ministers were sour, or the ruler was sour and the ministers were content. They were all talking about the same principle.
If this principle applies to national governance, then it also applies to global governance. If two major powers, one militarily strong and the other assertive, cooperate and coordinate with each other to maintain world order, how many wars could be avoided? How many lives could be saved? This is the second level I want to discuss.
Regarding the third level, some people may still be unsatisfied. We've also heard more radical views, essentially saying that the US is declining while China is rising daily, so we should replace the US and become the world's hegemon. I say, it's not impossible! If that day truly came, as a Chinese person, I would be quite happy. But the problem is, let's look at world history: to date, how many times has the second-largest power successfully replaced the largest to become the world's hegemon? —It's not that there haven't been any, there have been, but we can only see one example: the US replacing Britain as the world's hegemon. But the question is, how did the Americans do it?
As Dean Zhu Min mentioned earlier, and Professor Li Daokui also brought it up, the US had already surpassed Britain in per capita GDP by 1905. But what did the Americans do? They helped Britain fight the war. After World War II, British industry was devastated, while American industry was the world's leading industrial power; Britain's economy was in ruins, while America's economy was the world's strongest; Britain was heavily indebted, while the Americans held a massive amount of debt; Britain's treasury was empty, and where did all the gold go? It all went into the US treasury. Then, as Dean Zhu Min and Professor Li Daokui just mentioned, during the Bretton Woods Conference, when discussing the post-war international monetary system, who proposed the best solution? It was the famous British economist Keynes's proposal, the so-called "Banker Plan," which proposed determining the international monetary system based on international trade conditions. But what was the result? Keynes's plan was not adopted; instead, the US Treasury's "White Plan" was adopted, resulting in an international monetary system dominated by the US dollar. Why was this? Because by this time, Britain had lost its voice.
Therefore, the only successful case we can see is the United States replacing Britain as the world's superpower. The key is how they did it! The principle is actually very simple. If you are the second-in-command at your workplace and you want to take over from the top leader, do you think you have a better chance of succeeding by challenging him or by cultivating a good relationship with him? The logic is self-evident.
So what I'm trying to say is that regardless of whether you're left-wing, right-wing, or centrist, you must take the relationship with the United States very seriously. Once the fundamental issues are clear, all other issues become tactical. That's all I have to say; it's just for your reference.
The following is Professor Wei Jianing answering audience questions:
Audience Question:Based on Professor Ju's explanation of the ABC equilibrium, and the points raised by the previous speakers regarding Sino-US relations, the power to choose which solution to pursue may not be in China's hands. In the 20th century, the US didn't want to be the leader, but was ultimately forced into it. However, the US president during World War I was a scholar, the president after World War II was a politician, and Trump is a businessman who prioritizes "America First." He may want to prioritize "America First" without considering global development, making other countries work for the US. How can we resolve the current Sino-US trade conflict under such circumstances? I agree with Professor Wei's point about a dual-governance structure between China and the US, but how can such a situation be facilitated?
Wei Jianing:I'd like to add something. Besides the fact that the US itself isn't monolithic, another crucial aspect is that it's a two-way interactive game. As I mentioned earlier, during the previous administration, American scholars and officials proposed the concept of "G2" (US-China co-governance), but we didn't take it on. Initially, we thought it might be out of modesty, feeling it wasn't appropriate to take on that responsibility. However, it later became clear that we were starting from scratch. In that case, what do you think the other side would think?
In social psychology, there's a phenomenon called the "mirror effect," which states that when B views A as an enemy, this perception will unconsciously seep into B's speech and manner. Sooner or later, A will become aware of this and react accordingly. Thus, through this interactive game, A ultimately becomes B's true enemy.
I recall that before the "Sunnylands Summit," I attended a dialogue between Chinese and American think tank experts, spearheaded by the International Department of the Central Committee of the Communist Party of China, to discuss what the two leaders should discuss. Some suggested the North Korean issue, others the South China Sea issue, and so on. Since I was the only economics major among the participants, I suggested that the two leaders should discuss reform, reaching a consensus on reform, much like the reforms of the 1980s. This included reforms led by Margaret Thatcher in Britain, Reagan in the United States, Deng Xiaoping in China, Gorbachev in the Soviet Union, and Nakasone in Japan—because in the 1980s, major world powers reached a consensus to promote reform, which led to the subsequent global economic boom. My viewpoint was highly praised by the head of the American delegation.
I still maintain that China and the US should promote a consensus on reform. Not only should the Chinese people understand that trade wars cannot solve problems, but reforms are necessary; similarly, the American people should understand that trade wars will not solve America's problems, and reforms are also essential.
This reform includes not only domestic reforms in China and the United States, but also reforms in international organizations.
For example, regarding the WTO reform mentioned earlier, I personally believe we cannot focus solely on the WTO itself when discussing reform. If China and the US can reach a consensus on reform, they can jointly promote the reform of international organizations. For instance, in WTO reform, China could make concessions and cooperate with the US in advancing reforms; while in the reform of the IMF and World Bank, the US could cooperate with China to appropriately increase China's share and voting rights. Of course, the premise is that we cooperate, not confront, not challenge, and not adopt a posture of war.
On the internet, we're constantly spreading propaganda about how this missile can reach Washington and that missile can reach New York. If you keep spreading this kind of propaganda, how can Americans not be afraid?
For example, as I mentioned earlier, we conducted a research project on "Peaceful Rise" in 2002, which was reported to the then Politburo Standing Committee in 2003. Later, I discovered that we didn't actually implement it seriously as a national strategy. If it were a national strategy, all our propaganda should be consistent, like a company's brand. For instance, regarding "Peaceful Rise," we established Confucius Institutes abroad, which I think is a good thing. But what do these Confucius Institutes actually teach? They don't teach Confucian culture, but rather Shaolin Kung Fu, creating the impression that "Chinese Kung Fu" implies that Chinese people are aggressive and combative—this shows that our brand design and image design are inconsistent.
Therefore, I think we should first figure out the fundamental strategic issues ourselves. All tactics and propaganda should be designed and implemented in accordance with our overall strategy, instead of always looking for reasons in others when we have problems.
