China's GDP is Growing More than 3 Times as Fast as the US and China's Per Capita GDP More than 4 times as Fast
The latest US GDP figures, published on 28 September, confirm once more that China's economy has grown more than three times as fast as the US in the last year - 6.9% in China compared to 2.2% in the US as shown in Figure 1. Even more strikingly China's per capita GDP has grown more than four times as fast as the US - 6.4% compared to 1.5% as shown in Figure 2.
But don't bother to wait for corrections from those Western 'China experts' who were predicting a China 'hard landing'. As always they will try to hush up their wrong predictions.
NFL protests & victory of Steve Bannon's candidate in Alabama shows deepening US political polarisation
Two events in the US in last week - the victory of Steve Bannon backed candidate Roy Moore in the Alabama Republican Senate primary and the huge dispute around NFL players kneeling during the national anthem - confirm the deepening polarisation in US politics. The background which is driving this is the very slow growth in the US economy - the reasons for which are analysed in Why the US Remains Locked in Slow Growth.
Steven Bannon's candidate's victory in Alabama
As the US polling website FiveThirtyEight accurately summarised the first of these events: 'Senate Majority Leader Mitch McConnell and the Republican establishment had a terrible day on Tuesday. First, Senate Republicans’ latest effort to repeal and replace the Affordable Care Act was shelved. Then Republican Sen. Bob Corker of Tennessee announced he wouldn’t run for reelection in 2018. And finally, on Tuesday night, ex-Alabama Supreme Court Chief Justice Roy Moore defeated McConnell-endorsed Sen. Luther Strange in Alabama’s Republican Senate runoff.
'None of these outcomes were particularly surprising, yet all three point in the same direction: The GOP [Republican Party] establishment finds itself in a particularly uncertain moment — in control of all of government but unable to get anything done or control the forces that helped elect President Trump...
'Trump... is still well liked by Republican voters. National polls show his approval rating with Republicans at around 80 percent. Polls of Alabama Republicans showed something similar....
'Moore won, in large part, because he was the more Trumpian candidate in this race. Like Trump, Moore has a history of taking on the establishment. He ran against an incumbent Republican governor in 2006. Moore also has a history of making controversial and racially tinged statements, and was backed by a number of the most pro-Trump elements of the Republican Party, including Steve Bannon and Sarah Palin.'
Bannon, in a long interview with Charlie Rose on Bloomberg, made clear that he saw Moore's campaign as part of a long march of Bannonite forces to capture the Republican Party - the cutting edge of such forces is racism within the US and call for a US 'economic war' with China internationally.
Trump immediately attempted to align himself with the Bannonite forces by tweeting out support for Moore after his victory - despite Trump having supported Moore's opponent. Trump tweeted: 'Congratulations to Roy Moore on his Republican Primary win in Alabama. Luther Strange started way back & ran a good race. Roy, WIN in Dec!'
On the other side of the US political spectrum the campaign by US National Football League (NFL) players, and other athletes and artists, against police murder of black Americans, maintained and deepened itself against the tirade of abuse unleashed on Twitter by Trump and in pro-Trump media.
Again the situation was accurately outlined - this time by Paul Hayward in the Daily Telegraph: 'The demonic strategist in Trump’s head spotted an opportunity when Colin Kaepernick’s decision to drop to one knee for the Star-Spangled Banner began to catch on as a means of drawing attention to the shooting by police of unarmed black Americans. The nature of the protest, which stirred the country’s deepest sensitivities about the stars and stripes, allowed the White House to bury the original grievance under a tide of nationalistic and racially-framed indignation.
'As Americans discuss the weekend’s mass NFL protest with a fervour striking even by the standards of Trump’s volcanic reign, the most pressing need was to dig out those founding objections from the sludge of the president’s tirades...
'A colleague in America reports that within one hour of listening to a Boston radio station he heard the protesting NFL players called “thugs, morons, idiots and dummies.” Trump of course called every one of them a “son of a bitch” who should be hauled off the field and fired. He said it in Huntsville, Alabama, in the same deep south where he claimed there were some “fine people” at a Neo-Nazi demonstration in Charlottesville...
'When Stevie Wonder went down on one knee before a concert in Central Park, Congressman Joe Walsh tweeted that he was “another ungrateful black multi-millionaire.” ....
' Inequality, the mass incarceration of young black males, and police shootings, are seen by many as the next episode in that national story, and explain the feelings that just happened to find an outlet through Kaepernick and the NFL. Black males between 15-34 are nine times more likely to be killed by law enforcement officers than other Americans...
'the debate raged after this weekend’s protests, which are spreading across American sport... The Trump presidency is being acted out on many battlefields – North Korea, his relationship with Russia – but historians may yet trace its end in part to the time he set out to stigmatise athletes whose prime objective was to stop others from their communities being shot through the windows of cars by police officers routinely excused by the justice system.'
This radicalisation affecting US sport is reflecting the same processes that has led to an openly declared socialist, Bernie Sanders, becoming the most popular politician in the US - something which would have been inconceivable in the US twenty years ago.
Trump has no ability to create fast US growth
This deepening clash in the US will continue because Trump has no effective means to create fast growth in the US economy. This clash will be long and hard because history shows the US political establishment is extremely powerful and ruthless with numerous means at its disposal for dealing with opponents ranging from promotion of politicians who engage in progressive talk in order to disguise reactionary international and domestic policies, such as Hillary Clinton, through to assassinations
(Martin Luther King, Malcolm X, numerous African-Americans).
This clash in the US is of huge concern not only to Americans but to all countries in the world - given the persistent record of US military intervention abroad and the disasters that has created in Iraq, Libya and elsewhere. It also confirms why 'anti-Americanism' is one of the world's most stupid policies. In the fight against ruthless forces within the US political establishment those people in the US who are fighting against it are one of the world's most important allies. It is therefore a very serious mistake to refer to the 'United States', as though it were an undifferentiated force, without seeing the different groups within it.
Mao Zedong, constantly stressed that the people of the world, including the people of China, had no argument with the people of the US - unlike their very real difference with the US political establishment. Using the vocabulary of the 1960s he also expressed the situation clearly: 'The evil system of colonialism and imperialism arose and throve with the enslavement of Negroes and the trade in Negroes, and it will surely come to its end with the complete emancipation of the black people.'
Now, when very serious political struggles are taking place in the US, which will continue for a prolonged period, it is necessary simultaneously for people outside the US to abandon any foolish and counter-productive 'anti-Americanism' and support progressive forces in the US, and for progressive forces in the US to see powerful allies internationally precisely in countries which are the targets by the US political establishment.
Muhammed Ali in opposing the Vietnam war famously said: 'I ain't got no quarrel with them Vietcong. No Vietcong ever called me nigger.' The people of the US have no argument with China, Russia, or other countries that the US political establishment, and purely fake progressives such a Hillary Clinton, try to demonise. It is crucial that progressive forces in the US see the people of those countries as their friends, just as the people of those countries see progressive forces in the US as their friends.
The outcome of the 24 September German elections was dramatic itself. The Christian Democratic Union/Christian Social Union’s (CDU/CSU’s) 33% was its lowest percentage of the vote since the first election in West Germany in 1949. The German Social Democratic Party (SPD) result was even worse – at 20.5% it was the lowest vote ever recorded by the SPD in any election in West Germany or the reunited Germany. The extreme rightest Alliance for Germany (AfD) received 13.5% of the vote – the highest for an extreme rightest party in Germany since World War II. The radical left Left Party received 9.2% of the vote. The increasing fragmentation of German politics was seen in seven parties entering the German parliament by receiving more than five percent of the vote – complicating the question of how to form a government. But the German election result also strongly confirms a more general political trend – the great weakening of the Western political ‘centre’ under the impact of the prolonged economic stagnation in the Western economies since the international financial crisis.
Rising Western political turbulence
This rising political instability in Western countries started in developing countries in 2010 with the outbreak of the ‘Arab Spring’ and destabilisation of a series of Middle Eastern countries. Since then, however, it has spread into the advanced Western countries, with the German election being therefore simply the latest illustration of the trend:
Therefore, it is clear that the result of the new German election is only part of the increasing political turbulence and continuing weakening of the political centre in the Western countries.
The Great Stagnation
The reasons for this weakening of the Western political centre is clear. Western economic growth is now actually slower than in the Great Depression after 1929 and, even according to the projections of the IMF, a pillar of Western economic orthodoxy, this trend will continue. The inevitable result is slowly deepening political instability in the West.
It is important to have a precise sense of proportion. Only in the ‘Anglo-Saxon’ countries, the US and UK, has this political instability reached the point where figures opposed by the dominant economic and political elites have come to office or their policies been adopted – Trump in the US and Brexit in the UK. In continental Europe the ‘centre’ forces, while significantly weakened by challenges from the right and left, have nevertheless managed to retain power so far. In France, while Macron crushed the traditional political parties in the presidential election, his pro-EU policies were not opposed by the traditional French political elite. In Germany, while the political centre was eroded, Merkel will remain Chancellor. In Britain while the Conservatives lost their majority in Parliament, and Corbyn’s Labour enjoyed a powerful increase in votes, Theresa May continued to hold onto the prime ministership of a minority government.
However, while there will be a limited Western economic upturn this year, there is no perspective, either from fundamental economic analysis or even according to IMF predictions, of a major medium-term upturn in the Western economies. Therefore, political instability and erosion of the political centre in the Western countries will continue and deepen.
In addition to the implications for citizens of Western countries themselves this is also clearly a development China must be aware of and take into account in its foreign policy. In previous periods of the existence of the People’s Republic of China, both during the Mao Zedong dominated phase from 1949-78, or during the Deng Xiaoping inaugurated reform period from 1978 up to the international financial crisis of 2008, China confronted Western economies which were growing relatively rapidly. This therefore was reflected politically in dominance by ‘centre’ political forces in the West. But the ‘Great Stagnation’ since the international financial crisis, the ‘new mediocre’ to use the phrase of IMF Managing Director Christine Lagarde, means a weakening of Western ‘centre’ political forces of which the German election is the latest example.
This new situation of slow growth in the Western economies since the international financial crisis is therefore accompanied by significant and so far deepening shifts in the configuration of political forces in Western countries.
Communist Party of China studying Mao Zedong's essays 'On Contradiction' and 'On Practice' ahead of Party Congress
One of the more inaccurate ideas in the 'Western' media is that China is a capitalist country in which socialism and Marxism is just for show - a hangover from the past. This error is echoed in some 'leftist' circles in the West.The economic error in such analysis, and the mistakes it leads to in predictions regarding China's economy has been analysed numerous times on this website - see for example 'Deng Xiaoping &John Maynard Keynes'.
However, another insight into the real situation in China come from the fact that the Communist Party of China (CPC) is preparing its 19th Party Congress later this year by studying two of Mao Zedong's most famous articles - 'On Contradiction' and 'On Practice'. What 'capitalist' country instructs its ruling party to study Mao Zedong?
Anyone who has read Xi Jinping's The Governance of China will also understand that Xi is a sophisticated Marxist.
The information in the following article from Global Times therefore gives a more accurate insight into the real political dynamics in China.
Party committees study Mao’s books ahead of 19th congress
By Zhao Yusha
Communist Party of China (CPC) committees in many cities are studying the books of Chairman Mao Zedong, a move hailed by experts as part of the momentum leading up to the 19th National Congress of the CPC that will help implement future Party policies.
CPC committees in several provinces and municipalities, including East China's Fujian, South China's Hainan and Guangdong, Southwest China's Sichuan and North China's Tianjing are studying On Contradiction and On Practice, which were written by Mao, new China's founding father, in 1937 after the War of Resistance against Japanese Aggression began in 1931, Shanghai-based Jiefang Daily reported Wednesday.
This year marks the 80th anniversary of the publication of these two books.
Mao wrote these books because China entered a "news stage" with the war, the newspaper said, adding that the books aimed to provide officials a world view and methodology of Marxism, and to form a new consensus within the Party.
Zhang Xixian, a professor at the Party School of the CPC Central Committee, told the Global Times that this is meant to welcome the forthcoming 19th National Congress of the CPC. "Looking back at history is also important for the building of a better society," Zhang said.
The 19th National Congress is important to the key stage of "building a moderately prosperous society in an all-around way and socialism with Chinese characteristics," thus unifying the Party members' thinking is vital at the moment, he said.
"Theories written in the books say that specific conflicts should be analyzed to identify the major conflicts in our society, and lay the philosophical foundation for the contemporary world," Zhang said.
CPC members and government officials around China, especially those at the grass-roots level, are also studying Xi Jinping: The Governance of China, in preparation for the national congress.
A Communist Party of China (CPC) Congress is always a major event, but even by that standard the 19th CPC National Congress, presumably starting October 18, will be of unusual significance. This is because since the 18th CPC National Congress in 2012 China has faced a new situation in its history and the CPC has therefore been tested in how to respond to this major turn.
Reduced to underlying essentials, never before has China faced the combination of a prolonged international period of very slow growth in the Western economies combined domestically with China's transition toward a high-income economy. Domestically, China's target is to achieve moderate prosperity by 2020 and soon after China will become a high-income economy by World Bank classification. The achievement of the CPC since the 18th CPC National Congress has been to successfully deal with this new situation.
The new situation following the 18th CPC National Congress, providing the backdrop to the 19th Party Congress, can be clearly understood by contrasting it to previous periods in China's development. In 1949, devastated by a century of foreign interventions, China was one of the world's poorest countries. Only 10 countries had a lower per capita GDP than the China the CPC under Mao Zedong took leadership of.
The first period of New China's development, in 1949-76, then saw the greatest social achievements in world history. Reflecting gains in education and health, and having ended foreign invasions, China's life expectancy rose by 31 years in a 27-year period, with China's life expectancy rising from 73 percent to 105 percent of the world average. No other major country has ever achieved such a rapid increase in life expectancy in human history.
But stunning social successes, far outpacing world performance, were not matched by equivalent economic outperformance. China achieved 4.9 percent annual average GDP growth in 1950-78 but the world economy also grew at a fast 4.6 percent. By 1978, although economic progress had been made, by international classification China remained a "low-income" country.
In a second phase after 1978, with reform and opening-up, China's economy far outperformed other countries. From 1978 until the international financial crisis in 2007, China's annual average GDP growth was 9.9 percent compared to 2.8 percent in the Western economies. China achieved transition from a low-income to an upper-middle income economy by international classification.
Regarding these two earlier periods as Chinese President Xi Jinping put it: "The two phases - at once related to and distinct from each other - are both pragmatic explorations in building socialism … We should neither negate the pre-reform-and-opening-up phase in comparison with the post-reform-and-opening-up phase, nor the converse." The gigantic improvement in the lives of China’s people in the first phase was a precondition for the second phase.
But the international financial crisis in 2008 ushered in a drastic change in the international situation which the 18th CPC National Congress had to confront. Previously Western economies grew rapidly - China grew faster but aided by international economic expansion. After the international financial crisis, Western economies drastically slowed - from 2007-16 annual average growth in advanced economies was 0.9 percent. On IMF predictions by 2021 growth in Western economies would be slower than in the Great Depression after 1929. By the 18th CPC National Congress it was clear Western economies would not return to rapid growth. In transition to moderate prosperity, China faced severe headwinds from the Western economies instead of being aided by their growth. This confronted China with a "new normal."
The international achievement of the CPC since the 18th CPC National Congress, with Xi designated as the core of its leadership, was in dealing with this new situation. Annual Western economic growth in 2012-16 was only 1.7 percent but China's annual average growth was 7.2 percent - China grew more than four times as fast as Western economies.
Thanks to the socialist character of its economy and focus on supply-side reform, China's economy remains on track to achieve moderate prosperity by 2020. In contrast, quantitative easing and similar policies pursued by Western economies proved largely ineffectual.
But economic success after the 18th CPC National Congress required foreign policy development. Given Western economic failures, China itself had to put forward policies aiding global economic growth. This was done through Xi's concept of a "community of common destiny" coupled with practical initiatives such as the Belt and Road initiative. In this framework, Xi's speech to the Davos World Economic Forum received wide international support, as did the Belt and Road and BRICS summits.
Therefore the 18th CPC National Congress was of unusual significance. The CPC, as with Mao Zedong in 1949 and Deng Xiaoping in 1978, faced a new situation - in this case how to successfully make the transition to moderate prosperity faced with very slow Western growth. This, as may be seen from developments since 2012, is being successfully achieved - laying the basis for the 19th CPC National Congress.
* * *
This article originally appeared in Global Times on 18 September 2017.
Cubans live almost a year longer than Americans. So it must come as news to them that Trump says socialism in Cuba has produced 'anguish and devastation and failure'.
And as for China its citizens under socialism live 2.7 years longer than would be expected from its level of per capita GDP, whereas in the US people live 4.0 years less than would be expected from its per capita GDP.
Perhaps Americans dying younger than necessary would like some of the same failure?
Note - according to the latest World Bank data life expectancy in Cuba is 79.5 years and in the US 78.7 years.
A radio interview with me on why Jim O'Neill is correct that BRICS will overtake the G7 in economic size - and why BRICS already accounts for more of world growth than the G7. To listen to the interview please click here.
This is a short video published in China, spoken in English, in which I analyse the importance of the BRICS summit. It has been posted for less than 24 hours but has already been viewed over 1 million times. To see the video please click here or on the picture below.