The Investment Scientist

Another Professor Speaking on US – China Relationship

Posted on: November 7, 2013

JingToday I went to listen to Professor Jing of Renmin University speaking about US – China relations. The last time I went to listen to the same subject, it was Professor Mearsheimer of the University of Chicago speaking. His theory predicts that the US and China will come into conflict inevitably. I was curious to hear a Chinese perspective.

When I told Professor Jing about Dr. Mearsheimer’s theory and prediction, I was surprised to learn that the two professors are friends. In fact, Dr. Mearsheimer teaches at Dr. Jing’s Renmin University as a visiting scholar.

Dr. Jing does not agree with Professor Mearsheimer’s theory and prediction.

He does however agree that the rivalry between China and the US will intensify in coming years. In his words, “This is structural.” No matter how hard the leaders of the two nations try, the most powerful nation on earth and the second most powerful will always be suspicious of each other.

However, Professor Jing believes this rivalry need not result in open conflict. “Both the US and China are nuclear states. Should war break out between us, only cockroaches will survive.”

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Instead, Dr. Jing believes the competition will remain mostly in the socio-economic realm. A victory will be determined not by military power but by,

1. which country can solve its domestic problems better;

2. which country can create the next innovation or new industry.

“The United States of America cannot be defeated by outside forces, it can only be defeated by itself; so is it for China,” Professor Jing observes.

Therefore whichever country can better avoid self-defeating behaviors will do better in the competition.

On the ability to solve domestic problems, Professor Jing gives the edge to China. “Ever since it won the cold war, the US has become arrogant, and lost sight of its own failings. Politicians of both parties have become increasingly ideological. They have lost the ability to solve problems. Chinese politicians are far more pragmatic and flexible.”

On the ability to innovate and create a whole new industry, Professor Jing gives the edge to the US.

The good professor does not deny that China is a technology copycat. “Out of 100 patents, only 3% become useful. As a late developing country, why should China reinvent the 97% that won’t work. Of course we are going to copy the 3% that work.”

But in ten years, “..there will be nothing left to copy. China will have to learn to innovate.” And herein lies my major disagreement with Professor Jing.

Dr. Jing believes the innovation gap can be closed by dumping money into R&D. He notes that China’s R&D expenditure is already half that of the US, going up 15 times in ten years. I believe our innovative edge is less to do with money, but more to do with our freedom.

Despite the inevitable rivalry, “The Boss likes America!” Professor Jing was referring to the new President of China and head of the Communist Party, Xi Jinping. During his short stint in the US as a young man studying agriculture, he stayed in the house of a farmer in Iowa and fell in love immediately.

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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



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