In search of an alternate Chinese system of trade

This is part 2 of 3 parts. You can read part 1 here.

Since the discovery of America, and most importantly since the establishment of Manila and the upsurge in trans-Pacific and trans-Atlantic trade in the 1570s, world trade and the global economy have been centered around America.

The Americans who now dominate global trade, economics and finance took over from the British-Dutch, who took over from Spanish-Portuguese domination.The present trade system is the progressive accumulation of centuries’ worth of experience, knowhow and rules that have been increasingly accepted by most of the world.

China didn’t try to be part of that trade in the 16^th century; it didn’t try to be part of it in the 19^th century; and it is only half-heartedly part of that trade now.

What can China do? Can it manage to establish its own alternative trade, economic and financial system? This would be objectively disruptive to the existing system. It would be similar to what the USSR tried to do after WWII – although with different ideas and rules – and therefore it would draw growing hostility from countries that are part of the old system.

In theory, in the 16^th century, it would have been easy for the powerful Ming state to take over Manila and the Spanish trade with Mexico. Moreover, the mighty Ming fleet – which had traveled to Africa, under admiral Zheng He, just a hundred years before – easily could have started trading directly with Mexico. It didn’t do so, for whatever reasons.

It would have been easy also for the Qing empire, which was far richer than the British and French combined, to start trading in tea leaves and whatever was necessary and useful for Chinese and global trade in the middle of the 19^th century.

Both the Ming and the Qing empires failed to act. Why? Possibly because they failed to see the world as a whole body, a global environment that China had to fit into, first, and then possibly try to dominate.

Can it do so now, when China is certainly poorer in absolute and relative terms than the Ming or Qing empires? Does China now have a global view? That is, does China know what it wants the world’s financial and economic system to be? Does it have a plan besides the legitimate goal of making China rich along with, at times, the simplistic idea of a win-win proposition?

China needs a global view that is accepted and welcomed by the rest of the world. This global view actually already exists. China can try to challenge and replace it with its own view, the way the Soviets tried with Communism, or it can accept the existing global view. The first choice of course would put China directly in contrast with the existing world, even without its openly stating so. But perhaps this time could be different from the past – thanks to the Marxist revolution.

Politics, religion delinked

The failure to see the modern world in the 17^th and 19^th centuries and the present half failure have come also from a deeper world view – the historical link between religious and political authority in the same person, the emperor. The beginnings of a break with this traditional view appeared in different phases. The first came with the May 4^th demonstrations of 1919, when the youth of Beijing protested in favor of science and democracy.

The movements of the 1920s and 1930s came along trying to establish Chinese thinking on completely different grounds. Hu Shi in The Development of the Logical Method in Ancient China (Shanghai, 1922) wrote the first history of Chinese logic, attempting to bridge the gap between Chinese and Western ways of thinking and pushing the Chinese way of thinking more toward a Western mold based on the idea of logic.

Feng Youlan in A History of Chinese Philosophy (1934) tried to give reasons for the differences in the traditions of Greece and China by looking at the history of their geography. China’s thought sprang from thorough control of a land of plains sprawling between rivers and forests, he argued, while Greece was a place of city states perched on cliffs on seashores inhabited by seafarers, traders and pirates.

But a fundamental blow to the old way of thinking came with the adoption of the West’s Marxist philosophy when the Chinese Communists came to power. Marxism rejected religion, and power was to be established only through real means without recourse to a metaphysical ideology making the leader the Son of Heaven and thus interpreter of the will of a deity governing the world.

Actually in the first 30 years of power things got confused because, although Mao didn’t claim to have the religious tradition of ancient China behind him, he still acted as an emperor/demigod of the past. The worship of his personality was the basis of his hold on power and there was an almost mystical faith in his power to divine world affairs.

Deng Xiaoping in the late 1970s rejected this worship and basically managed to gain support from the common people by making them rich and allowing them to strive for wealth. It was practical and it worked. Yet in the long run the lack of any idealistic and long-term cultural anchor tore apart the social fabric and brought about the systemic corruption that pushed the country to the verge of collapse in the early 2010s.

And now, although the anticorruption movement has started rebuilding some social structure, the ongoing campaign is still far away from answering the double question facing China: how to found a new social contract and culture in China and how to make this contract while engaging in positive, constructive communication with the rest of the world, abiding by rules very different from the Chinese tradition.

This goes to the basic issue: How will Xi Jinping hold on to power? Xi Jinping doesn’t have a religious claim, and the dimensions of the wealth he can promise are diminishing. Thus arise new challenges to his power and to China’s standing internally and externally.

For historical and philosophical reasons, the Western tradition quite early on separated religion and rational knowledge, categorizing them respectively, in the words of Greek philosopher Aristotle, as physics and metaphysics.

Truly, in Oriental kingdoms that dominated the Eastern Mediterranean around the birth of Christ, the two authorities, religious and non-religious, were meshed into one. This merging of two authorities was passed on to the Roman Empire. But with the recognition of Christianity as the official religion of the empire in the 3^rd century AD, the two authorities started to move apart.

Yes, in the early years of Christianity the emperor still had a lot of authority on theological matters, but even then he was not the ultimate authority. He had to discuss those matters with the bishops and patriarchs of the church. And gradually the two authorities moved in different directions, although they still had to find common ground.

It was on a philosophical basis, the culmination of a few centuries of philosophical debate in ancient Greece, that Aristotle concluded that knowledge should be separated between, on the one hand, physics and, on the other hand, meta-physics – what is beyond the reality.

That separation was of seminal importance for Western thought as it set thinking about reality apart from thinking about religion. From reality-focused thinking came a very logical and straightforward, formal way of thinking that gave rise ultimately to logic, mathematics and technological applications derived from them. Metaphysics meanwhile became more and more removed from physics and its laws.