Text: Žikica Milošević
China was the most advanced civilisation in the very beginning of the mankind, and all of the inventions from pottery to print are Chinese. Only after the mindless decision in the beginning of the 19th century to close to the outside world „because it was so advanced and the interaction could only deterirate China“, it fell down. Now it is turning the table.
China has always been a benevolent power, and even when it could colonise the whole of Asia, it only sent the ships to trade and collect data. Which cannot be said about the West. And now, it is rising once again, soon to take over the world’s economy. And it was a tricky way, since Deng had to avoid the problem Mikhail Gorbachev faced. Gorbachev lived up to his utter failure, destroying in the process of reforms the whole country. China decided to make „perestroika without glasnost“ and succeeded – otherwise there would have been millions and millions of dead. And now China is here to change the world for better, quite opposite from what The Economist predicted.
NON-PREDATORY INVESTMENT + INFRASTRUCTURE
When there’s nothing else to be said, some people insist on Chinese „predatory loans“, but hey, where are your loans, West? The bankers can say more about that, but basically, the Chinese, once again repeated, invest where no-one else would, or where West intended to invest with political or economic reforms that undermine the autonomy of the local governments. Chinese don’t take sides – the build exactly the same things everywhere as they do in China – it is shocking for Black Africans to see the apartment blocks in Africa mirroring those in China, and the railways with the same quality. With their infrastructure collapsing from the colonial times, this is a real refreshment. As for the One Belt – One Road, since the American Railroad projects with construction of trans-Pacific links, or Transsiberian Railways, there has been no such and achievement (perhaps what the Brits did in East Africa and Australia can match it). Contrary to some pessimistic projections, it is not the railways what „exhausted“ America – it will not exhaust China. The links, like railways, only helped the prosperity of the USSR, UK, Spain, France, Germany, Japan or so. The countries relying on individual, and not collective ways of transport are lagging behind, and the official American liberal mantra still repeats that „collective transport leads to the failure, while individual mobility gives economic freedom“. Maybe in America, but even there we cannot see it. Look at Japan.
In order to end the dollar dominance in oil trade, China decide to launch so-called petroyuan, replacing petrodollar. As oil can now be traded with yuan-denominated contracts, the petrodollar monopoly is about to eclipse, China hopes. Nowadays, the US$ and the euro still dominate more than 85% of international payments, followed by the GBP, Japanese yen, the Swiss franc, Canadian dollar and Chinese yuan (1%). But it is about to change now? In late March, yuan-denominated oil contracts began trading in the Shanghai International Energy Exchange (INE), for the first time. That will foster the rise of petroyuan, which could cause a dramatic shift in global asset allocations as institutional investors begin to diversify into China’s onshore bond markets. We will see the future of it, but since China is the single biggest oil consumer and wants to trade in its own currency, it is significant. Some analyst even predict the collapse of dollar and American hegemony, the others predict that it will be like in the late 1980s when everyone thought that Japan is consuming West and that in the 20 years everything will be Japanese – yet Japan’s growth is stuck and the country has been in secular stagnation for some three decades. Yes, you got it – they think China will hit the same wall and start its stagnation. Those who are more objective think it will be something in the middle.
XI’S HERE TO STAY
But with heavy investment in its own infrastructure, the infrastructure of other countries, opening for tourism, registering UNESCO sites at the unprecedented pace, and firm control from one centre, Xi’s China seems to plan to get to the top and stay there. There’s another problem: will the other just sit and watch it happening? Seems that Trump is pretty furious about China and its economy, so he started a small trade and tax war. Where there’s fear and rage, there must be a reason for it. We’ll see the outcome.