Introduction: This article is a preface to the book "Parallel and Competition: China's Governance in the Era of Dual Circulation". The author believes that "American globalization" has ended, and parallel eras are coming. The appearance of the era in the next 30 years depends on

Category：finance

2025-04-26

Introduction: This article is a preface to the book "Parallel and Competition: China's Governance in the Era of Dual Circulation". The author believes that "American Globalization" has ended, and parallel eras are coming, and the appearance of the era in the next 30 years depends on the equilibrium solution of the multi-subject game between China, the United States and several "third poles". Observer.com has been authorized to release.

[Text/Observer Network Columnist Zhai Dongsheng]

The so-called parallel refers to the continuous acceleration of the "de-embedding" process between the United States and China in various fields such as science and technology, economy and trade, and capital since the summer of 2010, and it has become increasingly resolute, resulting in the original unified world market system being gradually split into two parallel and competitive systems. The interaction model between the two systems of

still needs to be constructed and explored. Some peripheral countries are trying to maintain exchanges with the two cores at the same time. Should they adopt exclusive policies or be sufficient tolerant? Should we conceive competition based on the relative returns and zero-sum game or should we be satisfied with maximizing our absolute returns? Will the competition between the two sides focus on industry and technology or military and security? What will third parties who arbitrage between the two major systems be treated? The answers to these major era questions that shape the fundamentals of the mid-21st century do not depend on China's good wishes or the United States' unremitting actions, but on the equilibrium solutions found after the multi-subject game between China, the United States and several important third parties. The preface of

will systematically explain my understanding of the following three issues: Why should we bravely embrace parallel eras? Where will the competition for major powers in parallel eras go? How should China actively respond to competition among major powers in parallel eras?

1. Return to the parallel era

Looking at the comparison of national strength in today's world, the gap between China and the United States is narrowing, while the gap between the two and other powerful countries is widening. Judging from the specific national strength indicators, China and the United States are good at winning many indicators.

In many indicators, China has or is surpassing the United States. For example, the added value of manufacturing, the total export volume of goods and services, the number of economies with the country as its largest trading partner, the size of the middle-income group [there is a lot of debate in the academic community about the way middle-income groups and the middle class are defined. I think a study by the Carnegie Foundation in in 2015 is very inspiring to this issue: Any group with a family car or a similar standard of living belongs to the broad middle class. This definition method cleverly avoids the differences between countries and yearly differences in currency purchasing power, and has good international comparison functions. ], annual sales of automobiles, production and sales of smartphones, number of Internet users, scale of the online economic B2C market, number of students from the University of Science and Technology, scale of the domestic consumer market, consumption of energy and resources, number of top 500 companies in the world, hypersonic missiles, drones, and other weapons and equipment that shape a new generation of war forms, high-speed rail, 5G, digital currency technology, etc.

The United States remains in the lead in some indicators, while China is following closely behind. For example, the total amount of GDP, the number and market value of Internet giants, the scale of the online economic B2B market, the number of unicorn companies, the number of papers and technical level in the field of artificial intelligence, the number of top 10,000 universities in the world, the distribution of high cited scholars, the number of doctoral students, the number of cited papers and international patents, the total expenditure on R&D of the public and private sectors, the scale of fiscal expenditure of central government , the scale of military expenditure, the total tonnage of naval ships, the number of aircraft carriers and stealth fighters, satellite navigation systems, etc. Each of the above indicators is the United States first and China second, while other countries have (or are) widening a huge gap with the two.

White House spokesperson: The United States will contact China at all levels and emphasizes competition to avoid conflict. Image source: Visual China

Of course, there are some indicators that the United States ranks first in this regard, while China has not ranked second in even the second.In these indicators, some economies rank ahead of China, such as their attraction to international students (UK), their international currency share (Euro, pound, yen), their influence in international organizations (France), their voice in international public opinion (UK, Russia), the number of nuclear warheads (Russia), the design and production capacity of high-tech industrial finished products such as aircraft, advanced machine tools and chips (EU, Japan), etc. To summarize

, it is not difficult to find that in the arena of the great powers, players such as the EU, Japan and Russia can only rely on their old capital on individual indicators, and China has been regarded as an all-rounder of the same magnitude as the United States by most observers in the world. China's leading indicators are mainly concentrated in hardware, while the United States' leading indicators are mainly concentrated in software; China wins by scale, while the United States still has an advantage in high-quality field; China catches up with incremental volume, while the United States is good at stock; once there is economic, trade and technological decoupling between China and the United States, the current leading indicators of the United States will also collapse.

And more importantly, China has surpassed the indicators of the United States, and the possibility of being recovered by the United States in the future is very small; among the indicators of China lag behind the United States, many may catch up before 2035, such as total GDP, fiscal expenditure, military expenditure, high-tech investment, etc.

We have always hoped to have a multipolar situation, but the reality of the world may be evolving towards a dual-center pattern. The globalization we discussed in the past was the world economic integration with the United States as the core. However, the emergence of the dual-center pattern has made the original domestic and international conditions no longer exist.

In the summer of 2011, at a domestic academic conference, I reminded everyone too early that "'American globalization' has ended, and the era of anti-globalization is quietly coming", which was unanimously criticized by colleagues in the academic community at that time. In 2014, in a TV program on Phoenix TV, I advocated that China must actively and rhythmically "de-Americanize" and found that I had to experience the scene of "one person debates the whole audience" again. After 2016, due to the trade war unilaterally initiated by then-US President Trump, more and more scholars agree with my judgment. To this day, even the most determined believers in globalization have shaken their confidence, because after the Biden administration came to power, the policies pursued are still "disembarrassing" from China.

In fact, after reading World History , it is not difficult to understand that globalization is a historic trend, with twists and turns, advancing and retreating, and is accompanied by the rise and fall of dominant empires. The last round of globalization occurred between 1870 and 1914, when it was the heyday of the power of the British Empire. The gold standard, free trade and the advantages of the British Navy jointly supported the opening and prosperity of the world market system, but that was also a period of China's continued decline and poverty.

1914 to 1945, these 30 years were 30 years of anti-globalization. Not only did the proportion of global trade in GDP continue to decline, but the entire world has also experienced two world wars, one Great Depression and the resulting wave of trade protection.

From 1945 to 1979, it can be called the "hemispherical" era, that is, two parallel world market systems were formed: one is the Western capitalist system centered on the United States, and the other is the Eastern camp system dominated by the Soviet Union.

In the 30 years after 1979, the United States-centered system continued to expand, while the Eastern camp system declined and collapsed until it was absorbed by the former, entering the era of US dominance. This process can be called "American globalization", or the "Americanization" of the entire world.

The just-passed wave of globalization is accompanied by the global promotion of American liberal democracy and market economy . However, now there is a deviation between freedom and democracy within the United States, leading to the reversal of "American globalization".The wave of neoliberal globalization since 1979 was driven by British and American financial capital. The incremental wealth it created around the world was mainly obtained by Wall Street and City of London and high-tech institutions on the West Coast of the United States. However, some groups in this world have become the victims of interests, such as the white and blue-collar class of British and American: their nominal income has not increased much in the past 30 years, but the unemployment, divorce rate, bankruptcy rate, drug use rate, crime rate, and suicide rate have all risen sharply, which makes them feel that they are the losers of globalization.

After the global financial crisis in 2008, the US financial sector, as the culprit, was not punished, but instead earned more dividends with the help of quantitative easing, which aroused general dissatisfaction among other classes. In 2016, when the white and blue-collar group tried to express their dissatisfaction and change their destiny with the votes given by democracy, political events such as Brexit and Trump's victory occurred. World history tells us that trade wars are just a common symptom of the ebb of globalization, and there are usually complications such as polarization of thought, strong man politics, and even wars of great powers.

As we all know, China is one of the winners in the era of globalization. Because of this, many people are worried that the reversal of globalization will be detrimental to China's continued rise. In my opinion, this view belongs to a typical thinking of carving a boat and seeking a sword. China's success lies in keeping pace with the times and striving to reform, rather than what some people think China is developed with the help of the United States. Statistics of global economic system tell us that openness itself cannot bring prosperity and prosperity to developing countries , and there is no clear correlation between openness and per capita GDP.

The main value of opening up in East Asia's development path is that it has effectively promoted the reforms in its respective domestic areas, and China's domestic reforms often require "promoting reforms through opening up." In the era of globalization, we should of course carry out reform and opening up. At that time, the reform was to learn from the West and the market economy, and the opening up at that time was to open up to the United States and its allies. Now that the times have changed, we need to further deepen reform and opening up, but the reform in this new era is the self-improvement and independent exploration of the socialist market economic system, while the opening up in the new era is the global opening up. There are flowers in spring and moon in autumn, and cool breeze in summer and snow in winter. As long as we deal with it properly and keep pace with the times, every era can be a period of strategic opportunity.

If we follow the previous path of "American globalization" and integrate into the world market system shaped by American power, will the great rejuvenation of the Chinese nation be realized? I think it's about fishing for a tree.

In Indian mythology, everyone in the world is an illusion in the dream of Brahma . This analogy is very suitable to explain globalization and the "US imperial" system. The main body of dreaming is the "U.S. imperialist", and the dream is the dream of neoliberal globalization, while all other countries, enterprises, families, and individuals are just a role or scene in this dream. In the "American globalization" system based on US dollar credit and the US consumer market, all the progress and efforts of other economies will make the purchasing power of the US dollar stronger, and the creation of US dollar credit is infinite. The real beneficiary of credit expansion is the "US imperialist".

reserves USD has costs and limits, while the expansion of the Federal Reserve's balance sheet can be infinite. Compared with infinite, the greater absolute value is actually close to zero. Therefore, as long as this system continues to operate, other countries will not be able to truly surpass the United States in scale and quality. This is determined by the structure and division of labor mechanism of the global game.

After in World War II, neither the Soviet Union nor the European Union had the economic scale and competitiveness that could surpass the United States. This is the reason. Under normal circumstances, a challenger cannot defeat the hegemonic country that occupies the center of the system, because what you challenge is not the people and territory of the hegemonic country itself, but the power and resources of the entire world capitalist system, including yourself.Many people exaggerate the benefits of globalization to China, but do not understand that East Asia's export-oriented development model has its natural structural defects and growth ceiling, and they intentionally or unintentionally ignore the long-term costs and political security risks brought to the Chinese nation and its ruling party by "American globalization".

I often tell my friends who believe in globalization that following the US-led globalization and making profits from it is like investing in a high-interest Ponzi scheme . What you are greedy for is the interest he pays you, but what he likes is your principal.

The strength of the world market system is that it can bring better benefits and more trading opportunities to followers in the short term, but in the long run, it will "digest" heterogeneous civilizations among peripheral followers, including their systems, languages and organizational systems. Back then, the United States hoped to peacefully evolve China through contact with policies, and this strategic confidence was not unfounded.

Like the system of ancient Roman period, the elites of the peripheral countries must be proud to speak Latin (English) and to be able to immigrate to Rome (USA) as their family dream. It is also very difficult to break out of this system, because most governments and leaders find it difficult to withstand the risks and difficulties of leaving the system. Therefore, as long as we maintain a neoliberal globalization system based on US dollar credit and American alliance structure, the great rejuvenation of the Chinese nation will be just a moon in the water and a flower in the mirror.

Before 2012, after only 30 years of integration into the US system, some people in the class that became rich in China transferred their assets and changed their nationalities one after another; if they continued to go with the flow for 300 years, the existence of Chinese characters may be questionable, let alone social stability. Whenever I think about this, although I have shared many of the benefits of the globalization era as a typical international elite, I always worry about the national prospects.

In this sense, the Trump administration's anti-globalization behavior actually opened a window of opportunity for the great rejuvenation of the Chinese nation. The essence of the political economy of the empire is leverage , and Trump’s actions are to take the initiative to deleverage the “US imperialist”. He attacked the whole world with a suicide madness, and used his complacent breaks his promise to create uncertainty to gain the short-term benefits of negotiations, and used various withdrawals and reversals to make this era mark. I call it a "breach of contract dividend": if you borrow a credit card and don't pay it back, you will get a bonus, but the long-term cost will be expensive.

His backward actions are equivalent to a sharp wake-up service for people who have done the "American Dream" all over the world. It is under such stimulation that the originally US-centered convergence structure is undergoing rapid changes, and the pattern of competition among major powers is likely to return to the era of two parallel market systems competing with each other, or the "histophical era". In a new era where two parallel systems compete with each other, it is possible for China to be economically independent and surpass the United States, and only globalization centered on me can have opportunities. The gift is unyielding. Compared with such a strategic opportunity, what are the local losses?

2. A new pattern of competition among great powers

"The destiny is impermanent, only those with virtue occupies it." From the perspective of civilization development, Western civilization originated from the marine civilization of ancient Greece and Rome, and rose in the era of great navigation with Protestantism and the Holy See. Afterwards, the Western world captured land and controlled the oceanic waterways and the vast colonial market, and based on this, it nurtured industrial civilization and brought about a historic increase in per capita output to the world. This is the contribution made by the West to the world. It is precisely because of this "virtue" that they have had the dominance of a global empire for 300 years. The center was in London in the first 200 years and moved to Washington, DC, North America in the next 100 years. This is similar to the relationship between Western Han Dynasty , Eastern Han Dynasty or Northern Song Dynasty , Southern Song Dynasty in Chinese history.

However, all systems will increase entropy and , and all dynasties will age.Western civilization brings not only the blessing of industrialization, but also humanitarian disasters and heavy costs: trafficking of slaves and opium, killing North American and Australian indigenous people, enslavement and exploitation of Indian continental , offshore checks and balances of European countries, and the division and governance of the Islamic world. In the rising period, the empire does not seem to have to bear the price for these evil deeds. Once the empire is at the end of the empire, all negative consequences and revenge forces will gather together and become a torrent that destroys the empire's foundation. The aftermath of the hegemony cycle of

is still trembling with the competition of major powers in the era of globalization. It will also set off major changes in the competition of major powers with the arrival of parallel eras.

The convergence structure and Grossus The ideological tradition once made the Western world lead in global competition, but it also laid the foreshadowing of blind confidence for itself, so that it failed to detect the risks of equality with returns - just like Montesquieu saw the unfavorable development of the Roman convergence system and the assimilation of civilization, but failed to see the dangerous path to the Thucydides trap behind the hegemony leverage.

A retired American diplomat once discussed the international situation with me. He emphasized that the United States relies on the strength of the camp rather than its own single battle. It can mobilize the overall resources of allies around the world rather than the capabilities of 340 million local people. I replied to him: "The US ally system essentially uses its own strategic credit to leverage its national strength, and leverage comes at a cost. Once you fail to fulfill your security commitment to a certain ally, you will lose your strategic credit to other ally. It is likely that there will be a situation of being betrayal overnight, similar to the leverage break of financial investment institutions and forced to close their positions (Margin) Call) scenario.

A group of small and medium-sized countries follow you to make a big noise and can boost your momentum. This is OK in a relatively peaceful period, but when the risk of confrontation increases significantly and the victory or loss is difficult to predict, especially when the absolute risk of war using nuclear weapons and biochemical weapons enters people's vision, it is difficult for them to believe that you can "cover", so you can't expect them to be willing to win the fire for you. Therefore, the function of this alliance system is similar to giving yourself a placebo and sedative, and its function is to make the United States encouraged by false confidence and move towards the grand strategic trap of duels of great powers."

And the Groxius ideological tradition was a temporary victory in the struggle with Kant ideological tradition - from the struggle between ancient Greece and ancient Persia to the institutional competition between the two superpowers of the United States and the Soviet Union in the 20th century and the Cold War, which made Western countries not enterprising in institutional improvement, and ignored the systems and values that have always existed in the history of human civilization, and have a distinct continental color, which also have practical value.

Individual value principle is manifested in political terms as election politics and separation of powers, economically, private property rights and free markets, focusing on bottom-up free choices; collective value principle regards society or state as a living organism, advocates that individuals should obey the needs of the whole, and emphasizes top-down control, distribution and mobilization. The former has an advantage in market competition, while the latter has an advantage in war and crisis response.

The former appeals to the greedy and profit-seeking characteristics of human nature, and promotes survival of the fittest and overall welfare improvement through market division of labor and competition guided by the situation; the latter appeals to the harm avoidance instinct in human nature and collectivist identity consciousness, and stimulates the maximum combat effectiveness of a group through organizational mobilization. During the Spring and Autumn Period and the Warring States Period in China, this contradiction was once manifested as a competition between Qi and Qin: Qi's Guan Zhong's reform advocated the use of market forces to achieve peaceful rise, while Qin's Shang Yang's Regulations emphasized that severe punishment and farming war were the basis. In the end, the result of the evolution of China's history was that the Qin State unifies the world.

200 years ago, the loyal believer of liberalism, Britain opened the door to markets around the world with its strong ships and cannons, and based on this, it sounded the clarion call of the first industrial revolution in Britain (my friend Professor Wen Yi has already made a very sufficient and convincing discussion on the relationship between the market and the industrial revolution).

The first industrial revolution. Data picture

The lucky one of globalization The United States has inherited and developed this system, and expanded and deepened the global open market through a series of agreements such as the WTO (World Trade Organization ) agreement. At the same time, through the cultivation of a strong dollar policy and consumerist culture, the domestic US market has become the world's largest market. This market's huge appetite for all kinds of novel and expensive commodities has become the source of power for American technological innovation, because no matter how expensive a novel product is, it can find enough buyers in this market.

The countries that followed the United States and the Soviet Union during the Cold War all caught the ride-hailing of technological innovation, but those countries that were away from the two camps were relatively poor and difficult. This phenomenon occurs because the existence of superpowers is reasonable: the center of each system is actually a symbiotic relationship. Although the outer world will suffer from some form of exploitation and suppression from the center, part of the resources drawn by the center will be transformed into knowledge progress, scientific and technological innovation and industrial upgrading, and then feed back to the outer areas through trade, investment and technical assistance.

In other words, the reason why peripheral countries are willing to follow you is because you can constantly lead them to improve their productivity level. From this perspective, the key to determining the competitiveness and vitality of a system lies in whether it can provide continuous scientific and technological progress and innovation. Innovation is a high-risk and high-cost thing. Therefore, talking about innovation before industrialization and capital accumulation is completed, just like requiring children to do heavy physical work for adults. They cannot achieve results, and are not conducive to physical development and growth.

In the international division of labor in the era of globalization, or in the international division of labor that the West can tolerate, global R&D innovation activities were previously concentrated in the center or quasi-central areas of the world market system, including the United States, Northwest Europe, Japan, Israel, Singapore , South Korea, Taiwan, etc., while peripheral countries are responsible for the mid- and low-end production links.

Therefore, young and middle-aged laborers transferred from rural areas in developing countries get jobs in workshops, while most young people in the West can get decent jobs in office buildings after graduation. In this division of labor, university graduates from peripheral countries, especially high-end talents, are actually useless in China. Therefore, if some of them want to use what they have learned, they will either have a hard time living in the number of military-industrial state-owned enterprises and scientific research institutions that have greatly reduced the number of outstanding scientific and technological talents in India and Russia, or flow to the West one after another.

The contribution of global powers to the entire system is not only reflected in its scientific and technological and knowledge innovation capabilities, but also in its provision of an open market for the world. Based on this, it integrates human, material and intelligence from all over the world to form a global division of labor and sharing mechanism. Therefore, the large domestic market in the United States has also become the primary policy leverage for US diplomatic forces, because countries around the world are counting on obtaining the US dollar, a global currency through continuous exports to the United States.

Of course, in order to obtain and maintain this status, the United States also paid a price, changing from the largest industrial country to the largest consumer country, savings rate dropped significantly, trade and fiscal double deficits continued to strengthen, and white people's employment and industries became victims.

is also because of this. In the post-crisis era, the US market began to gradually turn to closedness. First, it was to exclude China's TPP, and then it was to implement high tariff policies, undermining the stability and reliability of the global supply chain and hindering the operation of the WTO mechanism. The United States, originally an advocate and maintainer of the global open market, is now becoming an opponent and disruptor.

Post-Cold War Era, from the perspective of military expenditure, the military expenditure of the United States is the sum of the military expenditure of the five or six countries that rank behind. Although China follows closely behind, even from a broad perspective, military expenditure in 2020 is only 40% of that of the United States. It is necessary to point out that if we do not stay at the absolute value comparison of the existing stock, but instead examine the center of gravity and growth trend of military expenditure, then we will obtain a very different judgment.

[Text/Observer Network Columnist Zhai Dongsheng]

1. Return to the parallel era

White House spokesperson: The United States will contact China at all levels and emphasizes competition to avoid conflict. Image source: Visual China

2. A new pattern of competition among great powers

is still trembling with the competition of major powers in the era of globalization. It will also set off major changes in the competition of major powers with the arrival of parallel eras.

The first industrial revolution. Data picture

For thirty years, the U.S. military's spending has been mainly to maintain its long and useless war in the Islamic world, rather than to prepare technically and equipment for the upcoming competition for great powers. Perhaps because "they will be outside, and the king's orders are not accepted", the US military's procurement system seems to be far more corrupt than the civil affairs department: purchasing coffee pot used on ships at a unit price of more than $2,000, or frequently and meaninglessly mobilizing warship so that the major general in charge of logistics can get more cigars and sexual bribes from the contractor of the port supply business of Philippines . Some of the more than 700 billion military spending each year are indeed spent on equipment research and development, but the focus of US military research and development is how to minimize casualties on its own side in counterinsurgency operations.

As we all know, the reason why the US military retreated in shame in the Second Vietnam War from 1960 to 1972 was not because of the failure of any battle, but because the casualties of the US military exceeded the limits that the American people were willing to bear, thus causing their expeditions to risk losing their domestic political foundation.

Vietnam War American soldiers with low morale. Image source: The Paper

Because of this, among the front-line troops of the US military's war, there are a large number of non-American soldiers from all over the world. Their motivation for risking service is mainly to obtain American nationality. The US military also had serious passive war avoidance in , Afghanistan, and other places. It usually huddled in giant fortresses and paid local tribal armed forces for protection. This phenomenon reminds people of the process of barbarianization of the army in the late period of the Roman Empire.

As we all know, war is not just a competition of equipment, but more important factors are people, including the abilities, morale and experience of generals and officers and soldiers at all levels, as well as the organizational model, strategic thinking and logistics support capabilities of the army. The US military has been fighting for 30 years in the post-Cold War era, and seems to be experienced and has a good running-in between personnel, equipment and logistics.

But in my opinion, the six military operations that the US military experienced in the 30 years after the Cold War targeted weak and small countries with huge technological advantages are not so much a war, but rather a hunting. When hunting, hunters basically don’t have to worry about the ability to counterattack the prey. If they really don’t work, they can just leave. But the fundamental difference between fighting and hunting is that your opponent may have a longer history of war, higher intelligence and more accurate shooting skills than you. The U.S. military is accustomed to wars of aggression against weak and small countries. These experiences may be helpful in the early stages of the war and at the tactical level, but are also very likely to form fatal misleading at the strategic level.

Judging from the structure of US fiscal expenditure, there is a serious lack of room for US military expenditure growth in the future. Since World War II, the proportion of US military expenditure in its federal fiscal expenditure has continued to shrink, which is inconsistent with the mass media's claim that "US imperialism" is over-expanding or militarizing.

If the "US imperialist" really loses strength due to excessive expansion, he only needs to give up expansion and recuperate and recover. However, my research found that the reason why the "US imperialist" was exhausted was not over-expansion, but that several "malignant tumors" were growing on its "internal organs", which continued to occupy an increasingly large proportion of the physical energy, squeezing the resources needed to maintain the operation of the "empire".

One of the world knows that the "tumor" growing in the United States is the Wall Street financial sector, which is entrenched in the "brain" of the "US imperialist", and the financial bubbles and crises caused by the expansion of the US federal debt and the Federal Reserve's balance sheet by trillions of dollars respectively. But the United States has also developed a less noticeable but more deadly "tumor", that is the United States' medical-medical insurance-medical system.

If the scourge brought by Wall Street is a pulsed bubble and crisis, then the US medical-medical insurance-medical system makes the United States feel like it is suffering from chronic poisoning: the proportion of US federal fiscal expenditures is increasing, seriously squeezing the fiscal resources needed by the US federal government to maintain its technological advantages and global hegemony.

is very ironic that the two major public and private sectors in the United States have such a large expenditure on medical care-medical insurance-medical products, but their output is disappointing, because the average life expectancy in the United States is one of the lowest in the countries of OECD (OECD).Therefore, it is not surprising that among the industry rankings of domestic political campaign donations in the United States, medical and pharmaceutical companies are ranked first, and Wall Street is ranked second.

After the Biden administration came to power, the United States' policy toward China has been adjusted, but this is just a style switch rather than a direction reversal. They further confirmed that China was a strategic competitor and tried to form a global anti-China alliance to deal with China. The trade and technical sanctions on China have changed from "sweeping a large area" to the so-called "small courtyard and high walls" and have a precise strike.

For a while, Japan, the EU and India seemed to have responded. This situation has made some friends feel panicked, worried that we will be isolated internationally and isolated from the world market from now on. But in my opinion, the new pattern of competition for big powers is coming, and the world returns to an era of two parallel market systems competing with each other. This is not only the general trend of historical operation, but also the inherent need of the process of the great rejuvenation of the Chinese nation.

Anglo-Saxon nation is good at suppressing challengers from Eurasia and continents. The rise and fall of nations such as France, Germania, Japan and Russia constitute the main line of world history over the past 300 years. The Western world has also had many opportunities to weaken and suppress China's development, but as China's national strength increases, their conspiracy fails. After 1949, China encountered a wonderful opportunity: in the first 30 years, we learned the Soviet Union's mobilization system and social organization capabilities, and in the last 30 years, we learned the US market economy, thus achieving the miracle of today's economic growth in China.

By learning the Soviet Union's mobilization system and social organization capabilities, the poor and weak China suddenly showed strong combat effectiveness, and reported frequent military conflicts with geostrategic opponents such as the United States, Britain, France, India, the Soviet Union, and Vietnam. Some of the battles are classic cases in the history of world strategic. Through learning the experience of the market economy development of the United States and its allies, China has become the world's largest industrial country, largest trading country, largest creditor country and largest consumer market.

Of course, these two institutional genes learned from the outside still have certain rejection reactions between each other. Therefore, the third 30-year domestic task of the People's Republic of China is to push socialist market economic system to a higher level, and to harmonize the "yin and yang energy" between the Soviet Union and the United States with the doctrine of the mean, thereby realizing the dialectical relationship between the "topic, anti-topic and joint topic" between the Soviet system, the American system, and the Chinese system.

In 2001, the US Bush administration formulated a strategic plan to contain China, but the 9/11 terrorist attacks diverted its strategic focus; around 2011, the US Obama administration also formulated a very clever TPP and a policy of returning to East Asia, trying to squeeze China out of the East Asian supply chain with high standards of trade agreements, but Trump's sudden victory led to the TPP failure, and the RCEP, China-EU Bilateral Investment Agreement and the "Belt and Road" initiative launched by China as a countermeasure, achieved the first comeback.

Behind Trump's sudden takeover is the anger of the white middle class in central America and the technical support of external forces. If God doesn't take it, he will suffer the consequences. Now, facing the rise of China, the world's largest manufacturer and consumer country, the Western world has lost its 20-year strategic opportunity period.

Ministry of Commerce: China has become the world's second largest consumer market and the largest trading country. Image source: Visual China

China is a latecomer in the world market system dominated by Britain and the United States. Its foreign economic policies were initially mainly imitating the export-oriented model of Asian neighbors. However, since 2013, China has begun to abandon the mercantilist elements in this development model, which is reflected in the undervalued and low volatility policies of the RMB exchange rate have been quietly replaced by the equilibrium floating exchange rate policy. As the People's Bank of China's normalized intervention in the foreign exchange market has basically withdrawn, foreign exchange reserves have no longer increased.

The negative list of foreign capital entering the financial industry has gradually been cleared, and the control of capital projects is also gradually relaxing. The proportion of trade surplus in GDP gradually fell from nearly 10% to 2%, and even a quarterly deficit occurred.The Shanghai Import Expo is a world-first, sending a clear signal to the world that China welcomes goods and services from countries around the world to enter the Chinese market, and China is the new defender of the principle of market opening.

From the demand side, China has made substantial wealth redistribution to the country, allowing the poor to obtain more wealth. On the one hand, many corrupt people were brought to justice, and the capital related to it was liquidated in bankruptcy; on the other hand, nearly 100 million poor people at the bottom of Chinese society have achieved full poverty alleviation. The marginal tendency of consumption for the poor is much higher than that of the rich, so this redistribution is very conducive to expanding domestic total demand. In the fourth quarter of 2020, China surpassed the United States to become the world's largest consumer market.

A series of factors in the future will further amplify the scale of China's domestic consumer market. First, China's economy continues to grow at a medium speed; second, the continued appreciation of the RMB exchange rate against the US dollar, driven by China's faster technological progress and industrial upgrading compared with the United States; third, the further expansion of China's higher-educated middle class; fourth, the further sinking and penetration of e-commerce into rural areas.

These factors will make China's market size continue to expand compared to that of the United States and the European Union. At some stage between 2035 and 2050, China's domestic market size will be equivalent to the sum of the United States, the European Union and Japan. Such a prediction sounds exaggerated, but in fact the logic is simple: the consumer market mainly depends on the size of the middle-income group, and the middle-income group in China who have higher education or have similar labor capacity will reach more than 700 million people in the future, which is equivalent to the sum of the same population sizes of the United States, the European Union and Japan.

It is precisely because China has cultivated the world's largest consumer market and gradually completed capital and technology accumulation in various manufacturing fields that our scientific and technological inventions have shown a boom in recent years: the number of scientific research papers published by Chinese people every year exceeds that of the United States, the number of highly cited papers and international patents is close to that of the United States, Shenzhen has become a global hardware innovation center, and large enterprises such as Huawei, Alibaba and State Grid are among the forefront of global innovative companies.

Huawei's successful overtake in the industrial track made them suddenly find that they have come to the no-man's land, so they have to invest huge amounts of money to carry out cutting-edge basic scientific research. However, this does not deny the rationality and necessity of its initial reverse engineering and imitation of American and European companies. Instead, it just shows what changes will happen to a latecomer's scientific research and innovation activities in the process of gradual upgrading.

The policy of expanding enrollment in colleges and universities since the new century is also bearing fruit. The number of science and engineering graduates with about 4.7 million annually is approximately equal to the total number of science and engineering graduates in economies such as the United States, the European Union, Japan, Russia, and India. Moreover, the teaching quality of our colleges and universities is also steadily improving. The supply of young engineers and senior technicians of such a huge scale will bring a new round of engineer dividends to the Chinese economy, effectively improve the design quality, product quality and user experience of China's tradable goods (including finished products and some services), and will also bring a large number of tasteful and picky middle-class consumers.

From the horizontal comparison of engineers from various countries, the United States, the EU and Japan still have advantages in stock, but China has the upper hand in incremental production; in terms of engineer skills, the United States, the EU and Japan still have advantages, but China has the upper hand in quantity. In the post-crisis era, the rapid development of China's Internet software and hardware enterprises has enabled a large number of top Chinese talents to no longer have to travel across the ocean to wander other countries. They can find professional and well-rewarded jobs in cities such as Beijing, Shanghai, Shenzhen, and Hangzhou. It is precisely because of this that China's patents and innovative products have risen to the forefront in the past decade.

With the continuous growth of economic development level and scientific and technological innovation achievements, the strategic opportunities of parallel competition have gradually tilted towards China. As the competition for major powers begins, China does not have the burden of alliance leverage, and the US's leverage ratio is already very high, which is due to the independent and peaceful foreign policy we have adhered to since the reform and opening up.Under the guidance of the international exchange principle of "partnership and non-alignment", bilateral relations that are familiar to everyone have been born, such as China-North Korea "brotherly friendly cooperation and mutual assistance relations", China-Pakistan "all-weather strategic cooperative partnership" and China-Russia "comprehensive strategic cooperative partnership in the new era". Our "circle of friends" is getting bigger and bigger, and the "partner network" covers the world. Once it is necessary in the future, we are far greater than the United States in terms of the space for "leverage".

And the United States has brought China and Russia together again, but has brought Japan and India to its side. This is the biggest mistake the United States has made in the diplomatic and grand strategy. Strategists during the Cold War had many thoughts and discussions about the triangular relations between China, the United States and Russia. Judging from my own research, the key to winning in the strategic triangle is not absolute power, but security and freedom of movement brought by the structural identity of "relatively small threats".

In the past 50 years, many strategic thinkers in the United States have pointed out that in the future, there should never be a passive situation where the United States will deal with both China and Russia at the same time. However, the United States in the post-Cold War era experienced serious ideological arrogance and strategic arrogance, which forced China and Russia, two neighboring powers with feuds, into a "back-to-back" strategic cooperative relationship.

There are many lessons in the history of the great strategy: an arrogant great power starts from its own religion or ideology rather than from a calm and pragmatic realist strategic thinking, which ultimately leads to strategic disasters. Today's United States is making the same mistake.

For the US national destiny, the addition of Japan and India is harmful and unhelpful. Japan has a unique spirit of loyalty: it is always loyal to the most powerful country, so after 2035, with the changes in the power comparison between China and the United States, Japan is likely to become a key variable that triggers the "deleveraging" of the "US imperial" system. India's strategic tradition comes from its strategic classic - "On the Political Affairs" written by Kautilier. The important concept is to use the contradictions between other countries to maximize their own interests and demand benefits from both sides.

Therefore, Indian elites summarize their foreign policy in this way: dealing with India is like peeling an onion. Peeling it layer by layer will make you feel hopeful and touched you to tears, but in the end you will have nothing. Financial common sense tells us that the United States faces huge reversal risks in the future, because leverage has costs. The longer the time, the more "interest" the allies will ask the United States for. When other countries intentionally put pressure on the weak in their ally system, or take full advantage of the conflicts between their ally, the United States will pay far more than the benefits it receives from its ally.

"Shangshu" says: "Heaven sees oneself, the people see, and the heaven listens to oneself." "What the people want, the heaven will follow it." The "thought of destiny" with materialism in traditional Chinese political philosophy concisely illustrates the decisive role of the people's hearts facing backwards to politics. This is true within a country, and so is the international community, because competition among global powers will inevitably have a wide impact on the world market system, international political stage and global geographic pattern. In parallel eras, countries that hold a few young followers to show off their power are nothing more than clowns. Only countries that win the hearts of the people of the world can be invincible in this competition.

3. Use self-improvement to develop, and strive for peace through struggle and great power competition in parallel eras is a comprehensive competition in politics, economy, science and technology, society and culture. Therefore, we need to strengthen our confidence, change our thinking, and learn from "neighbors".

First of all, if the era of parallel competition will last for 30 years, then in the first 15 years we should actively strengthen our courage to participate in competition and our confidence in winning, and in the next 15 years we should be cautious, be humble and cautious, and pay attention to leaving room for our opponents to survive.

In the past, there were some unconfident people in Chinese society. On the one hand, this was negatively affected by some ulterior motives and respecting the United States and fearing the United States. On the other hand, it may also be related to our "not being a big brother for many years". Since the fall of the Ming Dynasty, the main population of the Chinese nation has not taken the helm for more than 300 years.

1911 After the abdication of the Qing emperor, the land of China fell into a de facto separatist state; after the founding of the People's Republic of China in 1949, although it restored its initial unity and sovereignty, it did not become the center of an independent camp, but was on the edge of the world stage. Most of the time, it could only learn from others honestly and follow others' directions step by step. The long-term marginal state makes most elites in this country lack the confidence and vision shown by the Chinese ancestors.

Now the Chinese nation is returning to the center of the world stage. We have already possessed the corresponding material and ability foundation. What we are short of now is the confidence, vision and mind that matches it, which is what Comrade Mao Zedong called the "power of the heart" in his early years. Therefore, before 2035, when China is still at a relatively disadvantage on the surface, we should work harder to muster up the courage to face competition and risks.

In my opinion, the early stages of competition do not require too many policy innovations and strategic alternatives, but should fully learn from the experience and lessons of the United States and the Soviet Union. It is just that we are larger than them, higher in quality, faster than them, and fewer mistakes (due to the latecomer advantage) than them. As I detailed in the first chapter of the book "Why China has a Promising Future", there has been a dialectic of innovation and diffusion in the process of power change in the past 500 years.

When the next generation of leading countries replaces the previous generation of overlords, they basically learn the core content of the latter's innovation, but can overwhelm or marginalize the other party at a scale of 5 to 10 times. As for the Chinese nation's great contribution to the progress of human history, such as science and technology and civilization innovation, it is a natural thing after gaining the status of a dominant power.

In the later stage of competition, we need to maintain a modest and cautious attitude towards a great country, because I estimate that by around 2035, China's relative national strength will undergo an accelerated explosion, while our competitors may experience a chain "deleveraging" stage in various aspects such as internal affairs, diplomacy, economy, and currency. If things really develop like this, we need to shout the slogan "The Pacific is broad enough" again to show our mind and pattern.

In history, in the early Ming Empire, the Ming Chengzu's clearance of the remnants of the Yuan Dynasty, Tatars (Arutai tribe), etc., destroyed the balance of power in the northern grasslands, cleared obstacles for the rise of the Oirat tribe, and thus laid the groundwork for the subsequent long-term strategic dilemma and the final collapse of the Ming Empire. We must learn from the lessons learned deeply.

The world political pattern we should pursue is a "messing on me" big power balance and symbiotic relationship, rather than a jungle state where we are enemies of everyone else, nor is it a way to transform other countries with our ideology or institutional model, nor is it a refreshing feeling when defeating our opponents.

Secondly, we need to change our understanding of money and wealth and get out of greedy and short-sighted mercantilism as soon as possible.

What is money? Only by understanding this problem from the underlying logic can a system dominant country make appropriate top-level designs to achieve the domestic and international cycles that are mainly self-centered and mutually promoted. Before 1971, money was precious metals, and the production cost of precious metals was very expensive. Therefore, in the era when precious metals are the currency standard, creditors have binding powers over debtors.

China News Service: Boao Forum for Asia held a sub-forum on "China's New Development Pattern with Dual Circulation". Image source: Visual China
However, after gold demonstration in 1971, the source of money became sovereign debt denominated in the local currency of a major country, and the relative status of creditors and debtors was reversed. In the era of no anchor currency, local currency bonds are not a problem, but an important channel for taxing other countries. Poor countries accumulate more and more reserves, and rich countries have higher debt ratios, which are not subject to any constraints from creditor countries. The key is that the pricing currency is the debtor's own currency.
people owe people, and the money you earn must be the debt of a certain entity. As long as the debtor is unwilling to increase his debt, the whole world will not make money, so the last debtor is the master of the whole world.The success of a system-dominated power is to allow governments, enterprises and individuals of other nations to exchange the accumulated wealth and future hopes into the credit currency issued by the power, thus binding the fate of others to themselves.
If it was the gold standard or gold and silver replica era before 1971, the country would have its policy value to save more gold and silver, after all, the value of gold and silver is relatively stable. However, in the era of anchorless currency after 1971, using the labor and life (time) of young people in your own country, and using local resources and environment to exchange for money that other countries can create infinitely in zero costs. This behavior is not greed but stupidity, because you accumulate the sovereignty credit of other countries. Then the more you accumulate, the more you become a vassal or even a colony of other countries.
If China is a small country and has to accept the rules of the game set by others, then for the sake of convenience, it is still reasonable to reserve some US and European government bonds. But as a country recognized by the United States as a strategic competitor, continuing to reserve US Treasury bonds on a large scale is an irrational act.
Foreign exchange reserves are not gold reserves, they are not muscles or symbols of strength, but edema caused by poor bloodlines. I have called on many occasions that China should reverse its thinking, return its foreign exchange reserves to zero or exchange them for precious metal reserves, and then replace the United States and the European Union as the world's most important debtors. Of course, the pricing currency of our debt must be RMB rather than US dollar, euro or gold.
There are at least two rounds of damage caused by poverty; the first round is the pain caused by scarcity; the second round is the distortion of behavior caused by psychological fear of scarcity. Some people irrationally accumulate money but bring risks to themselves. After the initial development of many countries, people generally gain weight. In fact, it is the second round of harm caused by the former sense of lack. This is true for individuals, and the same applies to the country. The obsession with the illusion of wealth of mercantilism and the goal of economic development is the main manifestation of the secondary harm this once-deprived sense of lack to the country.
Once you are willing to accept the moderate fiscal deficit denominated by local currency, once you are willing to give up the trade surplus of hundreds of billions of dollars per year, and once you get rid of the constraints brought to us by mercantilism, the scale of China's domestic market will expand several times. How to make good use of this continuous expansion market force? I think it is necessary to consciously incorporate as many non-U.S. economies as possible into the trade and investment track with me centered on the larger international markets as open to our high-tech goods and capital as possible.
It is necessary to point out that the opening of the market is usually two-way rather than one-way. If we want to focus on developing, we must strive to obtain global market access in this field. In an open market system, this also means that we will actively or passively abandon the production of certain relatively minor tradable goods.
Considering China's huge and rapidly aging national conditions for its special population, and considering our international commitment to "strive to achieve carbon peak by 2030 and carbon neutrality by 2060", we will sooner or later give up many resource-intensive, labor-intensive and emission-intensive industries.
If we act against market laws and comparative advantages, we will not only waste huge financial resources and opportunity costs, but also cut off our own life: the countries you follow cannot get benefits from your relationship with you, and even if they have to stay in your system due to political or security reasons, they cannot consume your high-tech products and services because you are unwilling to leave some business for them to do.
Some friends lack understanding of social science, especially market principles. With simple feelings, they wishfully believe that as long as Chinese entrepreneurs work hard enough and as long as the policies given by the Chinese government are good enough, we can take over all high, middle and low-end industries and keep them all in China. This kind of thinking is like thinking that you can ascend to the spot by pulling your hair up vigorously enough.
In the final analysis, the competition between China and the West is compared to which system has a larger overall market size, which system has more internal engineering, and which system has faster technological progress. The competition between the two systems is not a one-on-one duel between the two leading brothers, but a team confrontation between the two teams. Those Mavericks stars who like personal performances, although they have worked very hard and excellent throughout the season, their teams cannot win the championship in the end because they do not understand the meaning of team competition and do not know how to lead the team.
China should take the industries and core technologies that lead the technological progress of the entire system in its own hands, and let the rest of the countries that buy our high-tech products do it. Of course, for the mid- and low-end manufacturing industries, we do not let it go and give it up, but we must allocate them all over the world through the overseas industrial new city where "sovereignty lies with people and governance lies with me", to drive the development of peripheral areas, so as to make our friends more and make our external market bigger. This is the application strategy for the industrial chain editing capabilities I proposed in 2005.
Finally, the long-term competition between major powers is largely comparable to the health and stability of their respective domestic political and economics. On the one hand, we must continue to promote comprehensive deepening of reforms and continuously improve the modernization level of China's domestic governance system and governance capabilities; on the other hand, we must learn from the lessons of other countries and overcome domestic contradictions and structural defects in governance.
The US political and economic system has many defects, and the Chinese academic community has already conducted relatively sufficient research. In my opinion, the most noteworthy aspects are the following aspects: First, the special racial structure of the United States. They call themselves ethnic melting pots, but in fact they are a racial "salad plate". The various components are only mixed together by wealth and ideology "salad dressing" and have not really "melted" into one.
I think it is not the black group that will really lead to the division of American society in the future, but the Latino group, because the latter has its own language and religion, and its growth rate is much higher than that of other ethnic groups. The mass bases of the two parties in the United States have become increasingly distinct: Republican supporters are basically white, while people of color in the Democratic Party play the lead role.
Second, the kidnapping of US public policies by interest groups such as finance and medical care and blood-sucking of federal finance has led to the deterioration of the US fiscal situation and the intensification of the gap between the rich and the poor.
Third, the two parties in the United States are controlled by some big investors through various "Political Action Committees" and non-government networks, such as the Koch brothers behind the Republican Party and Soros behind the Democratic Party. The manipulation and game of these people greatly reduce the quality of the US national governance system and the level of policy output.
4 is the historical high-level gap between the rich and the poor and the historical process of Internet media replacing mass media, which has led to the prevalence of populism in American society. Ordinary people generally believe that the elites in American society are using various conspiracies to exploit themselves. Therefore, the contradiction between the two parties has further complicated it into conflicts between four factions: the Republican populist led by Trump, the Republican establishment represented by Bush, Cheney and McConnell, the Democratic populist led by Sanders and others, and the Democratic building party represented by Biden and Hillary.
Many people are used to keeping low profile. This strategy was certainly necessary at the end of the 20th century, but in today's situation, if you believe that you can be as quiet and safe as you are, you will be too self-righteous, too unilateral, and too engraved to seek a sword. I advocate using both soft and hard, offense and defense, and letting go of others and daring to do what they do, because history has repeatedly told us that only by seeking peace through struggle can we achieve sustainable and decent peace.
is the preface of this book. It is necessary to add some introduction. The main content of this book originated from the cooperation column "Political and Economic Qi Zhai" between me and Guan Video during the global COVID-19 epidemic in 2020. In the column, I used 40 video programs to explain to netizens the political economy and strategic ideas I have gradually formed over the years.My student Wei Zilong made a preliminary compilation of the text materials of the program, and Wang Xueying drew the data charts of this book; the Economic Editorial Department of Oriental Publishing House has put in great effort to publish the book, repeatedly polishing the manuscript, and thanking them here.

"Parallel and Competition: China's Governance in the Age of Dual Circulation", author: Zhai Dongsheng.
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Therefore, it is not surprising that among the industry rankings of domestic political campaign donations in the United States, medical and pharmaceutical companies are ranked first, and Wall Street is ranked second.
After the Biden administration came to power, the United States' policy toward China has been adjusted, but this is just a style switch rather than a direction reversal. They further confirmed that China was a strategic competitor and tried to form a global anti-China alliance to deal with China. The trade and technical sanctions on China have changed from "sweeping a large area" to the so-called "small courtyard and high walls" and have a precise strike.
For a while, Japan, the EU and India seemed to have responded. This situation has made some friends feel panicked, worried that we will be isolated internationally and isolated from the world market from now on. But in my opinion, the new pattern of competition for big powers is coming, and the world returns to an era of two parallel market systems competing with each other. This is not only the general trend of historical operation, but also the inherent need of the process of the great rejuvenation of the Chinese nation.
Anglo-Saxon nation is good at suppressing challengers from Eurasia and continents. The rise and fall of nations such as France, Germania, Japan and Russia constitute the main line of world history over the past 300 years. The Western world has also had many opportunities to weaken and suppress China's development, but as China's national strength increases, their conspiracy fails. After 1949, China encountered a wonderful opportunity: in the first 30 years, we learned the Soviet Union's mobilization system and social organization capabilities, and in the last 30 years, we learned the US market economy, thus achieving the miracle of today's economic growth in China.
By learning the Soviet Union's mobilization system and social organization capabilities, the poor and weak China suddenly showed strong combat effectiveness, and reported frequent military conflicts with geostrategic opponents such as the United States, Britain, France, India, the Soviet Union, and Vietnam. Some of the battles are classic cases in the history of world strategic. Through learning the experience of the market economy development of the United States and its allies, China has become the world's largest industrial country, largest trading country, largest creditor country and largest consumer market.
Of course, these two institutional genes learned from the outside still have certain rejection reactions between each other. Therefore, the third 30-year domestic task of the People's Republic of China is to push socialist market economic system to a higher level, and to harmonize the "yin and yang energy" between the Soviet Union and the United States with the doctrine of the mean, thereby realizing the dialectical relationship between the "topic, anti-topic and joint topic" between the Soviet system, the American system, and the Chinese system.
In 2001, the US Bush administration formulated a strategic plan to contain China, but the 9/11 terrorist attacks diverted its strategic focus; around 2011, the US Obama administration also formulated a very clever TPP and a policy of returning to East Asia, trying to squeeze China out of the East Asian supply chain with high standards of trade agreements, but Trump's sudden victory led to the TPP failure, and the RCEP, China-EU Bilateral Investment Agreement and the "Belt and Road" initiative launched by China as a countermeasure, achieved the first comeback.
Behind Trump's sudden takeover is the anger of the white middle class in central America and the technical support of external forces. If God doesn't take it, he will suffer the consequences. Now, facing the rise of China, the world's largest manufacturer and consumer country, the Western world has lost its 20-year strategic opportunity period.

Ministry of Commerce: China has become the world's second largest consumer market and the largest trading country. Image source: Visual China
China is a latecomer in the world market system dominated by Britain and the United States. Its foreign economic policies were initially mainly imitating the export-oriented model of Asian neighbors. However, since 2013, China has begun to abandon the mercantilist elements in this development model, which is reflected in the undervalued and low volatility policies of the RMB exchange rate have been quietly replaced by the equilibrium floating exchange rate policy. As the People's Bank of China's normalized intervention in the foreign exchange market has basically withdrawn, foreign exchange reserves have no longer increased.
The negative list of foreign capital entering the financial industry has gradually been cleared, and the control of capital projects is also gradually relaxing. The proportion of trade surplus in GDP gradually fell from nearly 10% to 2%, and even a quarterly deficit occurred.The Shanghai Import Expo is a world-first, sending a clear signal to the world that China welcomes goods and services from countries around the world to enter the Chinese market, and China is the new defender of the principle of market opening.
From the demand side, China has made substantial wealth redistribution to the country, allowing the poor to obtain more wealth. On the one hand, many corrupt people were brought to justice, and the capital related to it was liquidated in bankruptcy; on the other hand, nearly 100 million poor people at the bottom of Chinese society have achieved full poverty alleviation. The marginal tendency of consumption for the poor is much higher than that of the rich, so this redistribution is very conducive to expanding domestic total demand. In the fourth quarter of 2020, China surpassed the United States to become the world's largest consumer market.
A series of factors in the future will further amplify the scale of China's domestic consumer market. First, China's economy continues to grow at a medium speed; second, the continued appreciation of the RMB exchange rate against the US dollar, driven by China's faster technological progress and industrial upgrading compared with the United States; third, the further expansion of China's higher-educated middle class; fourth, the further sinking and penetration of e-commerce into rural areas.
These factors will make China's market size continue to expand compared to that of the United States and the European Union. At some stage between 2035 and 2050, China's domestic market size will be equivalent to the sum of the United States, the European Union and Japan. Such a prediction sounds exaggerated, but in fact the logic is simple: the consumer market mainly depends on the size of the middle-income group, and the middle-income group in China who have higher education or have similar labor capacity will reach more than 700 million people in the future, which is equivalent to the sum of the same population sizes of the United States, the European Union and Japan.
It is precisely because China has cultivated the world's largest consumer market and gradually completed capital and technology accumulation in various manufacturing fields that our scientific and technological inventions have shown a boom in recent years: the number of scientific research papers published by Chinese people every year exceeds that of the United States, the number of highly cited papers and international patents is close to that of the United States, Shenzhen has become a global hardware innovation center, and large enterprises such as Huawei, Alibaba and State Grid are among the forefront of global innovative companies.
Huawei's successful overtake in the industrial track made them suddenly find that they have come to the no-man's land, so they have to invest huge amounts of money to carry out cutting-edge basic scientific research. However, this does not deny the rationality and necessity of its initial reverse engineering and imitation of American and European companies. Instead, it just shows what changes will happen to a latecomer's scientific research and innovation activities in the process of gradual upgrading.
The policy of expanding enrollment in colleges and universities since the new century is also bearing fruit. The number of science and engineering graduates with about 4.7 million annually is approximately equal to the total number of science and engineering graduates in economies such as the United States, the European Union, Japan, Russia, and India. Moreover, the teaching quality of our colleges and universities is also steadily improving. The supply of young engineers and senior technicians of such a huge scale will bring a new round of engineer dividends to the Chinese economy, effectively improve the design quality, product quality and user experience of China's tradable goods (including finished products and some services), and will also bring a large number of tasteful and picky middle-class consumers.
From the horizontal comparison of engineers from various countries, the United States, the EU and Japan still have advantages in stock, but China has the upper hand in incremental production; in terms of engineer skills, the United States, the EU and Japan still have advantages, but China has the upper hand in quantity. In the post-crisis era, the rapid development of China's Internet software and hardware enterprises has enabled a large number of top Chinese talents to no longer have to travel across the ocean to wander other countries. They can find professional and well-rewarded jobs in cities such as Beijing, Shanghai, Shenzhen, and Hangzhou. It is precisely because of this that China's patents and innovative products have risen to the forefront in the past decade.
With the continuous growth of economic development level and scientific and technological innovation achievements, the strategic opportunities of parallel competition have gradually tilted towards China. As the competition for major powers begins, China does not have the burden of alliance leverage, and the US's leverage ratio is already very high, which is due to the independent and peaceful foreign policy we have adhered to since the reform and opening up.Under the guidance of the international exchange principle of "partnership and non-alignment", bilateral relations that are familiar to everyone have been born, such as China-North Korea "brotherly friendly cooperation and mutual assistance relations", China-Pakistan "all-weather strategic cooperative partnership" and China-Russia "comprehensive strategic cooperative partnership in the new era". Our "circle of friends" is getting bigger and bigger, and the "partner network" covers the world. Once it is necessary in the future, we are far greater than the United States in terms of the space for "leverage".
And the United States has brought China and Russia together again, but has brought Japan and India to its side. This is the biggest mistake the United States has made in the diplomatic and grand strategy. Strategists during the Cold War had many thoughts and discussions about the triangular relations between China, the United States and Russia. Judging from my own research, the key to winning in the strategic triangle is not absolute power, but security and freedom of movement brought by the structural identity of "relatively small threats".
In the past 50 years, many strategic thinkers in the United States have pointed out that in the future, there should never be a passive situation where the United States will deal with both China and Russia at the same time. However, the United States in the post-Cold War era experienced serious ideological arrogance and strategic arrogance, which forced China and Russia, two neighboring powers with feuds, into a "back-to-back" strategic cooperative relationship.
There are many lessons in the history of the great strategy: an arrogant great power starts from its own religion or ideology rather than from a calm and pragmatic realist strategic thinking, which ultimately leads to strategic disasters. Today's United States is making the same mistake.
For the US national destiny, the addition of Japan and India is harmful and unhelpful. Japan has a unique spirit of loyalty: it is always loyal to the most powerful country, so after 2035, with the changes in the power comparison between China and the United States, Japan is likely to become a key variable that triggers the "deleveraging" of the "US imperial" system. India's strategic tradition comes from its strategic classic - "On the Political Affairs" written by Kautilier. The important concept is to use the contradictions between other countries to maximize their own interests and demand benefits from both sides.
Therefore, Indian elites summarize their foreign policy in this way: dealing with India is like peeling an onion. Peeling it layer by layer will make you feel hopeful and touched you to tears, but in the end you will have nothing. Financial common sense tells us that the United States faces huge reversal risks in the future, because leverage has costs. The longer the time, the more "interest" the allies will ask the United States for. When other countries intentionally put pressure on the weak in their ally system, or take full advantage of the conflicts between their ally, the United States will pay far more than the benefits it receives from its ally.
"Shangshu" says: "Heaven sees oneself, the people see, and the heaven listens to oneself." "What the people want, the heaven will follow it." The "thought of destiny" with materialism in traditional Chinese political philosophy concisely illustrates the decisive role of the people's hearts facing backwards to politics. This is true within a country, and so is the international community, because competition among global powers will inevitably have a wide impact on the world market system, international political stage and global geographic pattern. In parallel eras, countries that hold a few young followers to show off their power are nothing more than clowns. Only countries that win the hearts of the people of the world can be invincible in this competition.
3. Use self-improvement to develop, and strive for peace through struggle and great power competition in parallel eras is a comprehensive competition in politics, economy, science and technology, society and culture. Therefore, we need to strengthen our confidence, change our thinking, and learn from "neighbors".
First of all, if the era of parallel competition will last for 30 years, then in the first 15 years we should actively strengthen our courage to participate in competition and our confidence in winning, and in the next 15 years we should be cautious, be humble and cautious, and pay attention to leaving room for our opponents to survive.
In the past, there were some unconfident people in Chinese society. On the one hand, this was negatively affected by some ulterior motives and respecting the United States and fearing the United States. On the other hand, it may also be related to our "not being a big brother for many years". Since the fall of the Ming Dynasty, the main population of the Chinese nation has not taken the helm for more than 300 years.
1911 After the abdication of the Qing emperor, the land of China fell into a de facto separatist state; after the founding of the People's Republic of China in 1949, although it restored its initial unity and sovereignty, it did not become the center of an independent camp, but was on the edge of the world stage. Most of the time, it could only learn from others honestly and follow others' directions step by step. The long-term marginal state makes most elites in this country lack the confidence and vision shown by the Chinese ancestors.
Now the Chinese nation is returning to the center of the world stage. We have already possessed the corresponding material and ability foundation. What we are short of now is the confidence, vision and mind that matches it, which is what Comrade Mao Zedong called the "power of the heart" in his early years. Therefore, before 2035, when China is still at a relatively disadvantage on the surface, we should work harder to muster up the courage to face competition and risks.
In my opinion, the early stages of competition do not require too many policy innovations and strategic alternatives, but should fully learn from the experience and lessons of the United States and the Soviet Union. It is just that we are larger than them, higher in quality, faster than them, and fewer mistakes (due to the latecomer advantage) than them. As I detailed in the first chapter of the book "Why China has a Promising Future", there has been a dialectic of innovation and diffusion in the process of power change in the past 500 years.
When the next generation of leading countries replaces the previous generation of overlords, they basically learn the core content of the latter's innovation, but can overwhelm or marginalize the other party at a scale of 5 to 10 times. As for the Chinese nation's great contribution to the progress of human history, such as science and technology and civilization innovation, it is a natural thing after gaining the status of a dominant power.
In the later stage of competition, we need to maintain a modest and cautious attitude towards a great country, because I estimate that by around 2035, China's relative national strength will undergo an accelerated explosion, while our competitors may experience a chain "deleveraging" stage in various aspects such as internal affairs, diplomacy, economy, and currency. If things really develop like this, we need to shout the slogan "The Pacific is broad enough" again to show our mind and pattern.
In history, in the early Ming Empire, the Ming Chengzu's clearance of the remnants of the Yuan Dynasty, Tatars (Arutai tribe), etc., destroyed the balance of power in the northern grasslands, cleared obstacles for the rise of the Oirat tribe, and thus laid the groundwork for the subsequent long-term strategic dilemma and the final collapse of the Ming Empire. We must learn from the lessons learned deeply.
The world political pattern we should pursue is a "messing on me" big power balance and symbiotic relationship, rather than a jungle state where we are enemies of everyone else, nor is it a way to transform other countries with our ideology or institutional model, nor is it a refreshing feeling when defeating our opponents.
Secondly, we need to change our understanding of money and wealth and get out of greedy and short-sighted mercantilism as soon as possible.
What is money? Only by understanding this problem from the underlying logic can a system dominant country make appropriate top-level designs to achieve the domestic and international cycles that are mainly self-centered and mutually promoted. Before 1971, money was precious metals, and the production cost of precious metals was very expensive. Therefore, in the era when precious metals are the currency standard, creditors have binding powers over debtors.

China News Service: Boao Forum for Asia held a sub-forum on "China's New Development Pattern with Dual Circulation". Image source: Visual China
However, after gold demonstration in 1971, the source of money became sovereign debt denominated in the local currency of a major country, and the relative status of creditors and debtors was reversed. In the era of no anchor currency, local currency bonds are not a problem, but an important channel for taxing other countries. Poor countries accumulate more and more reserves, and rich countries have higher debt ratios, which are not subject to any constraints from creditor countries. The key is that the pricing currency is the debtor's own currency.
people owe people, and the money you earn must be the debt of a certain entity. As long as the debtor is unwilling to increase his debt, the whole world will not make money, so the last debtor is the master of the whole world.The success of a system-dominated power is to allow governments, enterprises and individuals of other nations to exchange the accumulated wealth and future hopes into the credit currency issued by the power, thus binding the fate of others to themselves.
If it was the gold standard or gold and silver replica era before 1971, the country would have its policy value to save more gold and silver, after all, the value of gold and silver is relatively stable. However, in the era of anchorless currency after 1971, using the labor and life (time) of young people in your own country, and using local resources and environment to exchange for money that other countries can create infinitely in zero costs. This behavior is not greed but stupidity, because you accumulate the sovereignty credit of other countries. Then the more you accumulate, the more you become a vassal or even a colony of other countries.
If China is a small country and has to accept the rules of the game set by others, then for the sake of convenience, it is still reasonable to reserve some US and European government bonds. But as a country recognized by the United States as a strategic competitor, continuing to reserve US Treasury bonds on a large scale is an irrational act.
Foreign exchange reserves are not gold reserves, they are not muscles or symbols of strength, but edema caused by poor bloodlines. I have called on many occasions that China should reverse its thinking, return its foreign exchange reserves to zero or exchange them for precious metal reserves, and then replace the United States and the European Union as the world's most important debtors. Of course, the pricing currency of our debt must be RMB rather than US dollar, euro or gold.
There are at least two rounds of damage caused by poverty; the first round is the pain caused by scarcity; the second round is the distortion of behavior caused by psychological fear of scarcity. Some people irrationally accumulate money but bring risks to themselves. After the initial development of many countries, people generally gain weight. In fact, it is the second round of harm caused by the former sense of lack. This is true for individuals, and the same applies to the country. The obsession with the illusion of wealth of mercantilism and the goal of economic development is the main manifestation of the secondary harm this once-deprived sense of lack to the country.
Once you are willing to accept the moderate fiscal deficit denominated by local currency, once you are willing to give up the trade surplus of hundreds of billions of dollars per year, and once you get rid of the constraints brought to us by mercantilism, the scale of China's domestic market will expand several times. How to make good use of this continuous expansion market force? I think it is necessary to consciously incorporate as many non-U.S. economies as possible into the trade and investment track with me centered on the larger international markets as open to our high-tech goods and capital as possible.
It is necessary to point out that the opening of the market is usually two-way rather than one-way. If we want to focus on developing, we must strive to obtain global market access in this field. In an open market system, this also means that we will actively or passively abandon the production of certain relatively minor tradable goods.
Considering China's huge and rapidly aging national conditions for its special population, and considering our international commitment to "strive to achieve carbon peak by 2030 and carbon neutrality by 2060", we will sooner or later give up many resource-intensive, labor-intensive and emission-intensive industries.
If we act against market laws and comparative advantages, we will not only waste huge financial resources and opportunity costs, but also cut off our own life: the countries you follow cannot get benefits from your relationship with you, and even if they have to stay in your system due to political or security reasons, they cannot consume your high-tech products and services because you are unwilling to leave some business for them to do.
Some friends lack understanding of social science, especially market principles. With simple feelings, they wishfully believe that as long as Chinese entrepreneurs work hard enough and as long as the policies given by the Chinese government are good enough, we can take over all high, middle and low-end industries and keep them all in China. This kind of thinking is like thinking that you can ascend to the spot by pulling your hair up vigorously enough.
In the final analysis, the competition between China and the West is compared to which system has a larger overall market size, which system has more internal engineering, and which system has faster technological progress. The competition between the two systems is not a one-on-one duel between the two leading brothers, but a team confrontation between the two teams. Those Mavericks stars who like personal performances, although they have worked very hard and excellent throughout the season, their teams cannot win the championship in the end because they do not understand the meaning of team competition and do not know how to lead the team.
China should take the industries and core technologies that lead the technological progress of the entire system in its own hands, and let the rest of the countries that buy our high-tech products do it. Of course, for the mid- and low-end manufacturing industries, we do not let it go and give it up, but we must allocate them all over the world through the overseas industrial new city where "sovereignty lies with people and governance lies with me", to drive the development of peripheral areas, so as to make our friends more and make our external market bigger. This is the application strategy for the industrial chain editing capabilities I proposed in 2005.
Finally, the long-term competition between major powers is largely comparable to the health and stability of their respective domestic political and economics. On the one hand, we must continue to promote comprehensive deepening of reforms and continuously improve the modernization level of China's domestic governance system and governance capabilities; on the other hand, we must learn from the lessons of other countries and overcome domestic contradictions and structural defects in governance.
The US political and economic system has many defects, and the Chinese academic community has already conducted relatively sufficient research. In my opinion, the most noteworthy aspects are the following aspects: First, the special racial structure of the United States. They call themselves ethnic melting pots, but in fact they are a racial "salad plate". The various components are only mixed together by wealth and ideology "salad dressing" and have not really "melted" into one.
I think it is not the black group that will really lead to the division of American society in the future, but the Latino group, because the latter has its own language and religion, and its growth rate is much higher than that of other ethnic groups. The mass bases of the two parties in the United States have become increasingly distinct: Republican supporters are basically white, while people of color in the Democratic Party play the lead role.
Second, the kidnapping of US public policies by interest groups such as finance and medical care and blood-sucking of federal finance has led to the deterioration of the US fiscal situation and the intensification of the gap between the rich and the poor.
Third, the two parties in the United States are controlled by some big investors through various "Political Action Committees" and non-government networks, such as the Koch brothers behind the Republican Party and Soros behind the Democratic Party. The manipulation and game of these people greatly reduce the quality of the US national governance system and the level of policy output.
4 is the historical high-level gap between the rich and the poor and the historical process of Internet media replacing mass media, which has led to the prevalence of populism in American society. Ordinary people generally believe that the elites in American society are using various conspiracies to exploit themselves. Therefore, the contradiction between the two parties has further complicated it into conflicts between four factions: the Republican populist led by Trump, the Republican establishment represented by Bush, Cheney and McConnell, the Democratic populist led by Sanders and others, and the Democratic building party represented by Biden and Hillary.
Many people are used to keeping low profile. This strategy was certainly necessary at the end of the 20th century, but in today's situation, if you believe that you can be as quiet and safe as you are, you will be too self-righteous, too unilateral, and too engraved to seek a sword. I advocate using both soft and hard, offense and defense, and letting go of others and daring to do what they do, because history has repeatedly told us that only by seeking peace through struggle can we achieve sustainable and decent peace.
is the preface of this book. It is necessary to add some introduction. The main content of this book originated from the cooperation column "Political and Economic Qi Zhai" between me and Guan Video during the global COVID-19 epidemic in 2020. In the column, I used 40 video programs to explain to netizens the political economy and strategic ideas I have gradually formed over the years.My student Wei Zilong made a preliminary compilation of the text materials of the program, and Wang Xueying drew the data charts of this book; the Economic Editorial Department of Oriental Publishing House has put in great effort to publish the book, repeatedly polishing the manuscript, and thanking them here.

"Parallel and Competition: China's Governance in the Age of Dual Circulation", author: Zhai Dongsheng.
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