Derek Sivers
China’s World View - by David Daokui Li

China’s World View - by David Daokui Li

ISBN: 0393292398
Date read: 2024-03-10
How strongly I recommend it: 7/10
(See my list of 360+ books, for more.)

Go to the Amazon page for details and reviews.

Senior academic advisor to the Chinese Communist Party feels most political tensions come from a misunderstanding of China’s world view, hence the subtitle “demystifying to prevent global conflict”, and his intrinsic desire to explain. I love its insights and historical context, especially around “Respect-centered diplomacy” and how the CCP is structured.

my notes

Look at the world map - how many friends can China truly claim?
How many of its neighbors are truly comfortable and trustful with the rise of China?

Why should you trust me? The answer should come from understanding my motivation.
I wrote this book not for the purpose of obtaining fame or monetary returns, which I have much more effective and efficient ways to achieve.
Moreover, at a relatively senior stage of my career in China, I am no longer hungry for them.

The Chinese Communist Party is an alert, pragmatic, and adaptive party that is focused on nation-building rather than rigid ideology.

Main features of China’s sociopolitical governance and China’s world outlook:
all-responsible government
internal discipline in the ruling party
respect-centered diplomacy.

It’s most important to “finish homework before going to parties,” that is, to focus on solving domestic issues before spending much energy on global affairs. This means that Chinese leaders are mostly exhausted by domestic affairs.

The fundamental goal of foreign policy is to gain proper respect rather than tangible interests.

Chinese leaders are disciplined by their expectations of how they will be judged by history.

Most people in mainland China perceive the country’s modern history as starting with the Opium War (1840–1842), which was the start of the “century of humiliation.”
As a direct implication, the common view in mainland China is that Hong Kong and Taiwan have to be properly united with China in order to end the humiliation.

Chinese people are accustomed to having a long-term view and perceiving history in cycles.
In ancient Chinese history, it was common to have a powerful empire ruling the country for a few hundred years, followed by a period of civil war or foreign invasion, chaos, and breakup into small kingdoms. The cycle would then repeat as the country was reunited again, sometimes with the help of external invaders,
Most Chinese believe that today China is in the rising part of a cycle following the “century of humiliation” from 1840 (the Opium War) to 1945 (the end of the Japanese invasion).

China remained in disarray until the Communist Party assumed national power in 1949.
From this historical perspective, the Communist Party is recognized as a hero.

In a sequence of unequal treaties that ended lost wars, the Qing emperors gave up the island of Hong Kong to Britain, the city of Qingdao to Germany, Taiwan to Japan, and a huge area of land in the northern region as large as Germany, France, and the UK combined to tsarist Russia.

To the people in the mainland, Taiwan is a deep historical wound.

The Chinese Communist Party comprehensively governs the country from each village or city building to the very top.
To win and stay in power, CCP has to be pragmatic and adaptive.
The party is delicately organized and managed, drawing on thousands of years of Chinese history.
The party leads everything.

In the United States, political parties are mostly focused on getting their candidates elected as opposed to everyday governance.

Why put “communism” in its name?
The thought is, “If we drop Communism out of our name, many who supported us and believed in communism and made tremendous sacrifices will no longer side with us,”
In other words, dropping the term communism is a betrayal of the party’s history.

CCP history can be best understood by dividing it into three periods.
1921–1976 Mao Zedong
1977–2011 Deng Xiaoping
2012- Xi Jinping

To criticize Mao is to protect the party’s authority.
The two most severe and openly criticized mistakes were:
Great Leap Forward 1957-1958
Cultural Revolution 1966-1976

Over 10 million died during the Great Leap Forward.

Chinese population is becoming increasingly prosperous and well educated, with over 50 percent of young people attending college.
Middle-income group is now (2022) four hundred million, about one-quarter of the population.

CCP is easily the world’s largest and most powerful political party, having ruled the world’s largest country for over seventy years and boasting almost one hundred million members.

CCP has an organizational presence at virtually every level in every aspect of society.
Every village has a party committee, every department of a university has a party branch, and even factories have a party branch.
Party committee members to hold regular meetings called democratic life meetings, during which they analyze their actions and areas for improvement through self-inspection and self-criticism.
Government and semigovernment agencies are all coordinated by the Communist Party, forming a sophisticated system of social-political governance.
In the United States, large organizations such as unions, YMCA, and United Way are independent. But in China, the party manages everything.
These nongovernment agencies are managed as government entities under the party.

China is the only major country that has not engaged in any warfare in the past four decades.

Local government officials have a much wider scope of operations, behaving like parents of local residents.
They act as the CEO of the local economy.
They closely manage issues of their local residents.
These officials are not elected, but are appointed by their superiors, who are like grandparents.
An implicit contract with local officials: You take care of my problems, and in exchange, I accept some of your intrusions.

To avoid nepotism, in Chinese politics, a city’s leader is usually not from the area. This has been the practice for thousands of years.

Government officials are usually not allowed to have assistants of a different gender.

Regulations are like laws, and good entrepreneurs in China have to behave like good lawyers, reinterpreting regulations while behaving like a businessperson as they actively search for solutions.
Chinese regulations appear extremely complicated on paper - making it look almost impossible to do business in China - and yet deals are finalized rather quickly.
Local governments are in a race against each other to help companies, especially multinational companies, bypass these regulations.

Corruption was an effective means for getting around cumbersome bureaucracy.
Fighting corruption has been Xi Jinping’s signature move.
Government officials are closely monitored.
Low-level government officials have been paid well.
The party is now following the strategies of Singapore and Hong Kong to institutionalize anticorruption practices.
From the Singaporean experience, China has learned that in order to avoid corruption, the salaries of officials must be greatly increased.

The government believes that it should behave like a parent, with the general public regarded as children who expect to be taken care of.
This philosophy can be traced back to Confucianism - Confucius argued that subjects should be loyal to their emperor, and, in return, the emperor must be benevolent toward his subjects.

Each level of Chinese government includes a department called the grievance agency. When people believe they have been mistreated.
They can line up at the agency’s door to have their voices heard.
This is different from a court, where the adversary system exists.
Even though China does have a court system, many still believe in the grievance system, where the government is the final renderer of justice.

Government intervention is based on the belief that the good of society takes priority over an individual’s welfare. Again, this concept can be traced back to Confucius’s political philosophy. On the global stage, the American political philosophy sits at one extreme, placing great emphasis on individual liberty.
Social stability and economic prosperity are more important than ensuring individual rights.

Since the early 1990s, all major cities in China have completely banned motorcycles.
Most highways prohibit motorcycles from entering. Why?
Motorcycles are unsafe for the riders, and intrusive for pedestrians and other vehicles.

The NDRC, the National Development and Reform Commission: China’s busiest central government agency, by far China’s most powerful agency.
Large investment projects are also under NDRC control.
The central government issues a ban on new projects in certain sectors when prices are too low or when the government believes the production capacity is already too high.
NDRC can quickly jumpstart the economy by loosening its control of projects.
Because multinationals usually have higher thresholds of profitability and environmental impact, so their projects usually pass the NDRC quickly.

In China, to sell a product on the market, the producer often must first gain approval from the government by passing a standard.
In the United States, producers can often begin selling immediately without approval, but if the product is later believed to be unsafe, the producer may face lawsuits.
In China, when a product is unsafe, consumers will go after the government (rather than the producer) via the grievance protocol.
China often has very high technical thresholds for consumer products, at least on paper.
China’s product standards are often among the world’s highest.
However, the implementation and enforcement of these standards is the problem.
Manufacturers send their best samples for inspection, later assembling substandard products for volume production.

When governments see too much production in an industry or when they try to promote an industry, they tend to choose some individual enterprises to cut or subsidize.
Local governments behave like an organizer of a sports tournament to stimulate firms to compete and then hand the trophy to the winner.

State-owned enterprises are enterprises in which the government holds the largest number of shares. This gives the government the authority to appoint the chairman of the board, fill top management positions, and approve key decisions.
About 130 state-owned enterprises are under the direct control of the central government. However, just twenty of them account for 50 percent of the total profits of all SOEs. These SOEs include China Mobile, Bank of China, China Unicom, China Telecom, Construction Bank of China, Agricultural Bank of China, and the Industrial and Commercial Bank of China (ICBC).

The government used to require companies like BMW to form joint ventures in order to produce in the country. However, this regulation is gradually phasing out.

In the city of Beijing, McDonald’s restaurants are all SOEs that have franchise agreements with the McDonald’s corporation. They are actually owned by the Beijing Capital Agricultural Group. Why? When McDonald’s entered China in the late 1980s, the municipal government was the largest landlord, so it was easiest for McDonald’s to let a Beijing SOE figure out the tricky job of renting store space. McDonald’s has been very profitable, so the city of Beijing has not allowed it to privatize.

Why do State-owned enterprises exist? The simplest answer to this question is “history.” That is, many SOEs are legacies of the command economy era before China’s reform and opening up. At the founding of the PRC in 1949, the original view was that enterprises and production assets must be owned by the government - a defining feature of a socialist economy.
Shenyang used to have six thousand industrial SOEs; by 2021, fewer than twenty still existed.
The process of privatization can be summarized as “let go of the small and hold on to the large.” That is, small and unprofitable SOEs were either sold to individual private owners or liquidated.
Another reason for the existence of SOEs is to stabilize public finance.
It can use these assets as collateral to issue debt or simply sell some of the shares to help balance the budget.

Recent Olympics have proven to be enormously unprofitable and can burden a city with debt for many years. However, in the case of Beijing, the municipal government was actually able to turn a small profit. How was this possible? The simple answer is that the Beijing municipal government, with the help of the central government, made numerous requests to state-owned enterprises - such as to build a special power plant near the Olympic Park. In addition, SOEs were asked to rush deadlines for building facilities and roads, and were even requested to assist in ceremony rehearsals.
Chinese governments find it increasingly unnecessary to own SOEs to help solve their problems.

Xi Jinping is very ambitious, aiming to become one of the world’s most progressive leaders.
Against the trend of antiglobalization, he has demonstrated that China under his leadership wants to be a leader in globalization.

There will be several TEMASEK-type funds in every city.
Managed almost entirely with open market principles, with the main purpose of making a profit.

Confucian values place businessmen among society’s lowest classes.

When the central government issues a policy, some people act contrary to its edicts because they believe that the government is incapable of controlling the trend. In response, the central government apprehends a few high-profile offenders to exert its authority and emphasize that it is still in control.

To do business in China, get close to the government, but stay away from politics.

In late 2020, the Chinese government started a campaign to control monopolies of internet platforms and the disorderly expansion of capital. Internet platform companies such as Alibaba (retail), Baidu (search engine), (retail), and Tencent (social network and games) were fined for behavior such as forbidding suppliers from working with other platforms and for not properly reporting merger and acquisition deals in the past. Moreover, internet platform companies were placed under government restrictions when expanding into banking and media businesses.
The government is worried that the extensive and expanding influence of the internet platform companies will erode the government’s control of social and political affairs.

Education is perhaps the single most revealing window to gain an inside look and deeper understanding of Chinese culture and society.
Deeply rooted in Confucian doctrine: parents and children are bonded for life.
A successful child is obliged to take care of their parents and grandparents.
This is why their children’s education is the most important investment a family can make to ensure long-term prosperity.
The college entrance exams the gaokao is treated as the most important exam of a person’s life.

Top leaders pay more attention to sharp criticisms, and often write comments on such articles. Their comments are treated as orders to take actions by lower-level officials.
Today, at each level of the government, one of the top five officials is solely responsible for news and media or publicity work in general.

With continued economic development and improvement in social management, Chinese leaders will become more confident and will be less afraid of domestic and international criticisms.
As confidence builds, government policies regarding the news media and internet will be gradually relaxed.
This will be a very popular and welcome reform in China.

The Chinese government’s top five priority areas for national progress are:
economic development,
social welfare,
cultural affairs,
and environmental protection.

As China becomes richer, the population is increasingly more concerned about the environment.
Chinese top leadership has identified environmental protection as a top priority to showcase its capacity of good governance to the world, since China’s centralized governance system gives it the ability to be particularly effective on this issue.
Most projects in environmental protection and recovery require coordination and collective action, such as relocating factories and enacting policies that may sacrifice short-term profits. Such efforts also require the adoption of new technologies. Fortunately, these two areas are the forte of Chinese institutions.
One likely intention behind Xi’s focus on environmental protection is to demonstrate that Chinese sociopolitical institutions can surpass those of many democracies.
Xi made a surprising pledge to peak China’s carbon emissions by 2030 and make the country carbon neutral by 2060.

Beijing drivers must enter an incredibly competitive lottery to obtain a valid license plate, and they have a much higher chance of winning if they have a purely electric car as opposed to a conventional one.

As the world’s biggest tree planter, China is one of the very few large countries to have significantly improved its forest coverage, from 14 percent to 23 percent between 1977 and 2019.

China’s period of largest and fastest increase in population was between 1500, the middle of the prosperous Ming Dynasty, and 1840, the beginning of the Opium War of the late Qing Dynasty.
China was relatively stable, with significantly fewer wars than other regions.

Confucianism promoted the idea that a filial son should have as many children as possible.
In 1980, Deng Xiaoping adopted a policy of “one child per family.”
In rural areas, however, peasants tried various ways to evade it.
Peasants would choose not to register their baby girls with the local government so they could get a second chance at producing a baby boy.

In 1979, Jimmy Carter hosted Deng Xiaoping to persuade China to abolish the one-child policy.
In his usual concise and dry style, Deng Xiaoping replied by saying, “Mr. President, I have a proposal for you: We abolish the one-child policy, but the US agrees to accept ten million immigrants from China each year.”

The one-child policy caused a huge sacrifice for people born between 1950 and 1980.
When they get old, as there will be proportionately fewer young people to take care of them.
Elderly care will be increasingly expensive.

The one-child policy has now been phased out.
When Deng Xiaoping announced the one-child policy, he said it would only last for thirty years.

The average income level in China is still only about 20 percent of that in the United States, and yet the average levels of education and health of the population are not too far away from those in the United States.

The Moscow subway, built in 1933, was a symbol of the Soviet Union’s triumph over the capitalist West; the Soviet economy was growing vigorously and was positioned to overtake the West. Indeed, it was during the Great Depression that the Soviet Union experienced its extraordinarily rapid economic emergence, and many economists wrote that central planning was not only working but superior to a market economy.
Yet, by 1992, the Soviet Union had collapsed.

The Chinese economy is facing substantial challenges. The GDP growth rate in 2010 was 11 percent. Since then, it has been steadily declining, from 11 percent, to 9.7 percent, to 7.8 percent, to 7.4 percent, and finally to 6.1 percent in 2019
This slowdown happened despite several rounds of mini-stimulus packages implemented by the central government.

China is still a growing and urbanizing economy.
Only 61 percent of the Chinese population was living in cities as of 2020.
A 2012 policy restricting the purchase of new properties: people without local residency in a city are prohibited from purchasing property there unless they can provide evidence that they have paid local taxes for the past five years.
Local residents cannot purchase more than two units of property.
This policy has proven to be extremely effective in lowering speculative demand for housing.

China’s income inequality is at least as great as that of the United States, which is among the highest in the developed world.

Beijing is rich enough in public finance to afford making all buses free for everyone. But would never implement such a policy because it would set a bad example of pleasing the poor at the expense of long-term public investment, and it would attract an unsustainable number of additional people to Beijing.

In recent years, some Chinese exchange students in the United States felt that they were discriminated against, and they turned more supportive of the Chinese government after returning from abroad.
My generation went to the United States and other Western countries as students at a time when China was “closed.”
Everything in the West seemed miraculous to us, and we thought China would never be able to catch up in its social and economic development.
We believed that everything in the United States was much better than in China.
The current younger generation is much more self-confident about China for the main reason that they grew up in a rising China, in which they witnessed a drastic improvement in living standards and social order.

When I was a child, there was no such thing as queuing in a line when waiting for a bus; people had to fight to get on, with the polite having no chance.
Within a decade, this changed, and people are now much more relaxed and patiently queue for a bus.
This is because there are now more buses, and the attitude is, if you miss a bus, the next one is coming in a few minutes, so why fight?

Western democracy has not been doing a good PR job among the young and educated Chinese population.
They witnessed the chaotic situation created by the policies and tweets of President Trump.
They were turned off by the president’s policy of America First, often bullying less powerful countries and violating international rules.

The Chinese approach to sociopolitical governance:
all-responsible government
with a matching social mentality,
internal discipline within the government,
and respect-centered rather than ideology-centered or interest-centered diplomacy.

Taiwanese leader Chiang Ching-kuo famously asked his advisor in 1979: “Now that the US has abandoned us and established formal diplomatic relations with mainland China, how can we protect ourselves?”
His advisor said, “Clearly, the only option is to become a democracy so that the US will protect us.”

China is too large, too proud, and too independent to conform to the Western model. China was a unified, self-governing country for most of the past thousands of years. Unlike Japan, Korea, and Taiwan, mainland China has never been under US protection and there is no need to prove itself as a genuine friend of the United States by importing Western political and economic systems.

Confucianism has been the dominant sociopolitical philosophy in China for over two thousand years.

For the sake of improving public relations with the rest of the world, many scholars have suggested that the party should remove the word communist from its name. However, popular Chinese culture favors continuity, and due to domestic considerations, the title of “communist” has been kept.

Under President Xi Jinping, the political pendulum seems to have swung toward more government responsibility, as the government has become more ambitious in tackling many social problems, including inequality and environmental protection.

The fundamental principle of China’s diplomacy is to gain and maintain international respect for China, the people, the Party, and the government.
Respect is even more important than real interests.

Respect-centered diplomacy:
The Belt and Road Initiative - which is a program to build infrastructure projects and industrial parks in countries from China all the way to Africa - is not necessarily commercially profitable, but has great potential to garner respect from the leaders of relevant countries.
The key motivation of the Belt and Road Initiative is for China to gain international respect through its economic capacity.

Western observers worry that the Belt and Road Initiative is a form of Chinese neocolonialism, but this is not true.
Colonialism of any form requires political control or influence and China does not intend to have them.
Each year, a Chinese Belt and Road Initiative project has suffered from a major loss because the host country has had a change of government and the new government has turned unfriendly to China.
China does not have any prowess to influence let alone control these countries.
The best examples are Kazakhstan and Ethiopia. Both countries went through regime changes around 2021 with China watching from far away.

Despite India’s claims that it enjoys noisy harmony in a diversified society, many Chinese elites perceive the Indian case as chaotic, dangerous, and lacking basic law and order.

Solving Chinese domestic problems inherently makes a tremendously positive contribution to the rest of the world.

For most practical policy matters, history starts with 1949, when the founders of the People’s Republic set the principles.
Mao and Zhou set the tone in the first years of the founding of the People’s Republic.
This also explains why China is not going after issues that had been settled by 1949.
Today’s Chinese government never asked the UK to apologize for the Opium War of 1840–1842.
In contrast, the issue of whether a few islands near Taiwan belong to Taiwan had not been settled by 1949. Neither had the issue of whether Japan needs to apologize to or compensate China for the invasion.
Most of China’s current foreign policies can be understood from this perspective:
The current Chinese government is not willing to deviate from previous policies established by Mao and Zhou Enlai.
One exception is that many foreign policies during the Cultural Revolution are not followed, such as supporting revolutions and revolts in foreign countries, since the whole episode of the Cultural Revolution has been denounced.

When provoked or insulted, the Chinese tend to become very nationalistic.
When treated with respect, they tend to be open to working together.
Think of respect for China as a nation the same as economic and other interests to a Western country.

China has not exported its ideology and political system to any other countries.
China has not sought to overturn any foreign regime.
China has taken care of the welfare of its large population and has not exported poverty or refugees to the world.

Pakistan is as solid as steel as a friend and the friendship is weatherproof.
No matter who becomes the leader on each side, the relationship is always well maintained.

Many young Chinese are not willing to study overseas, and those who do intend to return home as early as possible after earning their degrees.
80 percent of Chinese students who studied abroad from 2010 to 2020 have returned to China, rather than staying in foreign countries.
THe ultimate dream was to return home to China to be respected by the Chinese people.

“Home sweet home”:
The Chinese word for China literally translates to “Middle Kingdom.”
This does not necessarily refer to a political concept, but rather expresses the idea of home - central to the mindset of many Chinese.
This is why most of the Chinese dynasties of the past two thousand years were not expansionary.

When a Chinese leader plans to visit developing countries, Chinese businesses would always line up business deals.
Flights would be full of business executives accompanying Chinese leaders, and they would later sign business deals in the presence of the leaders.
Behind this pattern of Chinese behavior is the philosophy that economic development should be promoted across countries.
Chinese leaders often argue that opportunities to participate in economic development is as important as political freedom and freedom of speech.
The foundation of political freedom is economic development, and economic development emanates from international collaboration and investment.

In Chinese philosophy, one has to push for economic growth first; political development will come later as a consequence of a higher quality of life.
It is wrong, the rationale goes, to first demand that a foreign country obey certain political rules, develop rule of law, and adopt democracy before agreeing to do business.

High-tech companies such as Huawei began working on a contingency plan that they internally referred to as the “spare tire,” intending to establish their own operating systems and computer chips just in case the United States were to cut them out of the computer technology ecosystem.

For the past four decades, the US White House has reassured the Chinese government that Taiwan is part of China.

A theory called the Thucydides Trap:
When a new power rose, the incumbent power felt challenged and as a consequence, wars between the new and the incumbent powers broke out.
When China grows bigger and stronger, China will face pushback from the United States.
World War I was fought between Germany, a rising power, and the UK, the incumbent.
China is under a non-Christian and nondemocratic political regime.
China has not been siding with the United States on issues such as sanctioning Iran, Russia, North Korea, and Syria.
The Thucydides Trap theory is based on internal competition within Western civilization.
Intra-civilization and civil conflicts are often much more fatal and brutal than inter-civilization conflicts and international wars.
For the past five hundred years, most wars were fought among Western nations.

Why have a tributary system rather than territorial expansion?
A simple reason is the Confucian doctrine of peaceful coexistence. That is, avoid fighting with neighbors.
Winning the heart brings eternal peace while winning a war brings only temporary peace.

Whenever there are international crises, whether with Iraq, Iran, North Korea, or Syria, China has always called for the UN to play the most prominent role in resolving these issues rather than through unilateral actions by the United States and its allies.

China does not try and has not tried to cultivate its own satellite countries.
China does not have and has not attempted to build any military base overseas.

Taiwan has been recognized as part of China by almost all countries except for a dozen small ones.
Most importantly, mainland China and Taiwan still have a good chance to negotiate some kind of peaceful union in which Taiwan has the utmost autonomy, including keeping its military force, and is much more independent than Hong Kong and Macao.
This would allow mainland China to claim that it has accomplished the mission of reunification, therefore ending the so-called Century of Humiliation.

It cannot be emphasized enough that one needs to avoid the mistake of stereotyping people according to culture and nationality.
All Chinese people are different, just as all Americans, Europeans, and Indians are different.
One must be open-minded and patient in understanding a country or a culture.