China hasn't invented or discovered anything of significance in half a millennium, but the careless assumption that intellectual property is something to be stolen rather than protected shows why. If you're a resource-poor nation (as China is), long-term prosperity comes from liberating the creative energies of your people - and Beijing still has no interest in that.
Back at the beginning of this week, two very interesting articles appeared on the topic of whether this century will increasingly belong to the Chinese, or whether something else is fated for the Middle Kingdom. As Mark Steyn, author of the opening quotation and advocate for the latter alternative puts it, "when European analysts" -- or authors of US News articles -- "coo about a 'Chinese century,' all they mean is 'Oh, God, please, anything other than a second American century.'"
For all the hysteria generated over China's potential emergence as a check to American power, far too many questions remain to assure that this possibility is an inevitability. First, there is the issue that Steyn underlines so succinctly: China is resource poor, save for its human resources; and yet, their creative potential is rendered subservient to the State. Even though wealth is generated by the people under the Chinese system of capitalism cum communism, they reap its rewards only after it passes through the state apparatus. If one is to ask how this is fundamentally different than how our system works -- subject to income taxes, payroll taxes, etc. -- one need look no further than the other unique, which is to say contradictory aspect of Chinese "capitalism": state ownership. Property is an essential component in the creation of wealth under the capitalist model -- one works in order to gain a return. If this return is rendered uncertain by the possibility of state repossession, then the incentive to expend the time, energy and resources to expand wealth diminishes.
Of course one might then rejoined that the state will seek its best interest -- the formulation of wealth -- no less than the individual would. Well, actually no. The state's best interest is its continued existence. Imagine a media company in China who avers that it would be in their best financial interest to cater to disaffection with state ownership. Right, this is unimaginable in such a system because it threatens the power that the few -- the party -- exercise over the many. In fact, when the state does control property, then who is to stop the looting of said property by those who exercise these very controls. Look at it this way: you work your whole life in China to build up a product which is then stripped in part or whole by some bureaucrat who decides that they want a piece of the action. What are you to do, it doesn't belong to you anyways? Make no mistake, this uncertainty will ultimately deter investors every bit as much as it does entrepreneurs. What is your safe guard from theft when the law-making body controls your investment? After all, they can change the rules at any time. The same thing is currently happening in Russia under Putin.
Beyond this fundamental danger, China's future preeminence might just be slowed by a second important factor: China's accelerated collective aging. China's one child per family policy, in place since 1978, has begun to set the table for a major demographic crisis: that one child will be expected to care for both of their parents and all four of their grandparents -- just think about it. There is a reason that humankind has historically exceeded two children per household: the 2.1 (or whatever it is) children per family are the number needed to care for the aged when they are no longer capable of it. One of many insidious consequences of China's inhumane policy is the financial burden that caring for its old will place on China's young: they will have to care for these six additional persons beyond their own wife and child. Self-preservation will demand the reversal of this policy, but it might be too late: China might become old before it becomes wealthy, while other emerging nations proceed without this immense individual burden.
So yes, problems abound for the Middle Kingdom, leading me to guess that China's emergence as a second superpower might be a bit premature. Like Mr. Steyn I too suspect that the twenty-first will be another Anglosphere century, dominated not just by the US, but also increasingly by India, which for all its historic aversions to capitalism has shown a willingness to encourage its people's own creative energies. Steyn offers the following illustration:
India, by contrast, with much less ballyhoo, is advancing faster than China toward a fully-developed economy - one that creates its own ideas. Small example: there are low-fare airlines that sell £40 one-way cross-country air tickets from computer screens at Indian petrol stations. No one would develop such a system for China, where internal travel is still tightly controlled by the state. But, because they respect their own people as a market, Indian businesses are already proving nimbler at serving other markets. The return on investment capital is already much better in India than in China.
Let me add in closing that of course no nation has an eternal grip on power. With that said, there is no historical mandate that the United States will lose its this century: after all, the Barbarian invasions occurred four hundred years after the birth of the Empire. Perhaps America's lease on power will be shorter than Rome's, but China does not figure to be a likely successor, at least so long as it clings to its same economic and social policies. Then again, the end of American strength might just be met with a power vacuum (to match that of the early Medieval world), though that's a post for another time.
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