The U.S. has identified China as a competitor with a drastic change in her China policy from friendly engagement to targeting China as a threatening competitor. This shift has resulted in today’s trade war and technology sanctions, neither one of which is guaranteeing a clear benefit to the U.S. The fundamental reason is that the current Administration is defining her China policy based on legacy views which are outdated and lack of scientific in-depth economic analysis. Ironically, old book such as Death by China by Peter Navarro (Director of White House Trade Council) is floating in the White House influencing our China policy. Such a book may fit for a movie script but it can hardly stand the test of a rigorous economic analysis on US-China competition. Only a serious analysis should be the basis for defining a reasonable and beneficial China policy facing the ‘China’ competition.

This author is not an economist, but as a scientist trained with an analytical mind, he can see that there is a terrible misunderstanding of the competition between the U.S. and China. Unfortunately this misunderstanding is driving a wrong China policy hurting both nations with no benefits to the entire world. In this article, we shall point out the obvious and urge our economists to follow up with a serious analysis to understand the real cause of competition between the two countries and to formulate a sound strategy and policy to deal with the Competition.

The U.S. China experts tend to interpret the issues between the two nations being the result of our ideological and political structural differences. I would suggest that the root cause for China’s rise and competition is not due to political forces but due to natural factors, such as human population, geological resources and historical culture. These factors influence China’s development regardless of her political system whether or not embracing communism, capitalism or socialism. It happens that these three basic natural factors are so different between the U.S. and China so the two countries followed different development paths. For anyone to wish the other to change and conform to a same system is illogical and unreasonable.

China has a population of four times that of the U.S., she has always been the biggest nation in the world for thousands of years with a large portion of her population being peasants working on very limited arable land. Hence land and earth resources are valued highly by the Chinese. Historically, all Chinese governing systems must accept this fact that China has more peasants for their arable land and unfortunately most arable land are hills and valleys not like the great plains of the U.S. These natural factors made Chinese a peace loving and home bound people. History has shown that Chinese (other than the Mongolian horsemen) had never waged a war invading others nor occupied any colony even when Ming Emperor made seven successful sea explorations with world’s most advanced maritime fleet in the 15th century. Chinese peasants are hard working people but they operate as small entities, never was industrialized. 

For example, tea is a famous highly-demanded agricultural product of China but the Chinese never monopolized the tea industry worldwide. It was the West eventually had control over the international trade of tea. The communist government in China today, although made a drastic land reform to make the government the only land owner, it still has to accept the fact that China has hundreds of millions of peasants working on small plots to produce crops. Therefore, China is an agricultural importer to provide sufficient food on her citizens’ tables. Her dependence on U.S. soy bean, corn and cattle meats were clear evidence that Chinese people have to work very hard in agricultural and other industrial areas. To put it simply, a large population and limited arable land and resources force them to work hard to compete – this is the source of competition.

The communist government experimented with communism and failed now they are embracing capitalism gingerly to make China as a hard working world factory making small profits (the assembly factory of Apple’s phones makes $10 out of a phone selling for $500 to 1000, a similar situation like Chinese farmers selling teas to East Indies). The Chinese government realized that it could not organize the Chinese farmers to a few farm corporations to compete in production efficiency (compared to U.S. farmers) due to the natural limitations. They cannot even manage food standard with millions of peasants like the USFA can on American food producers. Therefore, the government is focusing on manufacturing and export initially leveraging on inexpensive labor force, then gradually elevating in technology and eventually making industry transformation and stimulating domestic consumption. 

The U.S. is very different from China; she has less population and vast areas of arable land and rich resources. Americans do not have to work as hard as Chinese to have food on the table. These natural factors have made the government and Americans moving away from manufacturing to financial industries, a blue collar to white collar shift (whereas China has a grey collar to blue collar shift poised to shift to white collar). This transformation has been successful as the U.S. has dominated the finance, banking, investment and insurance industries but the transition created an ‘unemployment problem’. While the U.S. can depend on cheap products imported from the world, she cannot offer enough meaningful jobs to the deposed workers. Blaming this problem to China and other importers (claiming dumping or stealing technologies and drumming up national security threat) are all excuses for government not able to have right economic policies.

China has a far worse problem and a bigger challenge to manage her industrial transformation than the U.S. does. China would like to see the U.S. staying strong in her economy since she depends on the U.S. in agricultural products and advanced luxury goods and as a market for importing Chinese goods. (Note though the Chinese export to the U.S. is only about 4% of her total export to the world) The U.S. has a challenge to manage her economical transformation but in a lesser degree compared to China’s. The competition between the U.S. and China really is: Which country can manage her economy and industrial transformation better.

The current tariff war and technology sanction seemed to hinge on a strategy of slowing down China’s economical and industry transformation, however, no assurance of success for U.S. economical development. First, the trade war has forced China to stop buying U.S. agriculture products hurting the U.S. farmers. China may have to push back more workers to agricultural industry, but the outcome may be more advanced agricultural solutions such as making huge desert and salt water land arable for producing crops than returning workers back to small farms. In contrast, the U.S. may lose the agriculture market permanently further hurting the U.S. economy.

The technology sanction measures are also ill-thought-out plans. This not only disrupts the supply chain that the U.S. needed (such as Apple phone) but it also forces China to accelerate her industry upgrade and transformation to be self sufficient. On the other hand, the U.S. must recreate her own supply chain which may generate some jobs but it is a reverse technological movement nevertheless. This may damage  the U.S. lead in advanced technology. These policies do push each country to move closer to isolationism. Granted the U.S. has less population, more arable land and resources, thus she may survive as an isolationist. However, standing on the trajectory of civilization in 21st century, it is almost certain that the U.S. may be left behind as a weakening giant if the Asian nations continue to thrust on their progressive, collaborative but competitive development.



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A value is a universal value if it is perceived to have value by almost all people on earth. Certain individual human traits such as intelligence (IQ), compassion (kindness), bravery (sacrifice for others) and physical appearance (youthfulness and fitness) may be regarded as universal value without much dispute. But humans living in a human society have difficulties agreeing on any universal value from the society point of view. For example, morality may be considered as a universal value yet human societies have different moral standards making them difficult to be universal. Certain human rights like freedom (liberty), equality and right to make a living may be considered as universal value. But these human rights are defined differently from individual versus human society point of view. Human civilization was evolved from the ‘animal state’ when muscles were used to determine human’s survival rate then gradually elevated to human societies living together, cooperating and sharing productive outcome. The basic individual human rights such as freedom, equality and right to make a living naturally should be defined differently weighing them with society rights and within the confines of freedom and equality affordable by a human society.

Therefore, each individual’s right must be established on the basis that the human society can peacefully exist and develop. Societies are different just like individuals are different; hence, morality or cultural features or social rights often defined and accepted as a universal value by one society may not be so by other human societies as racial, religious, economic and political factors are weighed in. 

Unless a human is living in an isolated jungle, he or she must define and accept universal values based on a human society’s point of view, with consideration of society culture, civilization and rights of all human societies. Of course, one must recognize that, in the human history, many human societies were developed over different time lines with different geopolitical background resulting in different culture, civilization and social rules including society governance and laws.

Culture is cumulated overtime, accepted and treasured by human society unless destroyed by wars or extinguished by natural disasters, whereas civilization is developed and exhibited by human’s collective effort applying human intelligence to learn and advance human living condition (environment) and to change human and social behaviors with self defined rules. To examine the question of what is the universal value of a human society, we must review human history, human culture and human civilization. Culture is the accumulation of human development in customs, habits, knowledge, language, creation, philosophy, etc., over a long time, whereas civilization is dynamically exhibited by human advances in living condition and productivity. Thus a cultured society may not be the most civilized society measured or propelled by technology, whereas a civilized society may not have a rich culture produced by millennia of history. One must avoid equating culture to civilization unless that society has a continuous (non-interrupted) culture and civilization.

Among all human societies, the oldest one without discontinuity in culture and civilization is the Chinese society. Its culture is cumulated over five thousand years without total disruption. The Chinese civilization has been one of the most advanced in the world over many centuries but becoming stagnant in the 19th century (in contrast to the Western societies and the Japanese society which adopted the Western civilization) and then reviving in late 20th century as exhibited by its fast growing economy, industrial development and technological advances (developing to developed country in economy and civilization sense). It is important to note that the Chinese culture had never ceased to exist; today with her advances in economy, her culture is rejuvenated, having impact all over the world.

The Western societies have become the most advanced civilization largely due to the success of industrial revolution beginning in the 18th century, merely three hundred years. Naturally, the Western societies began to promote their universal values such as freedom, equality and democracy, a governing system the West cherished and believed responsible for their advances in civilization. In the Chinese society, with her long history and rich culture, she has long established her universal values, 自由 （liberty or freedom）， 平等 （equality）and 安居樂業 （peaceful living and happy career) many millennia ago. The first two universal values are the same in words for the West and the Chinese society, but their interpretations are based on different philosophy. The West emphasizes the individual’s freedom and equality whereas the Chinese emphasizes societal freedom and equality which sometimes restrict individual freedom and equality. China has fifty six ethnic groups but they enjoy the same freedom and equality in the country. Thus no one can tell ‘who is what’ ethnic group living in a big Chinese city unless you visit the ethnic group’s home towns where the ethnic culture is richly preserved. On the other hand, American Indians and blacks in the U.S. are still socially separated in most cities and the Indian reservations are arbitrarily carved out with little Indian culture preserved. The blacks have nearly totally lost their cultural heritage.

Having long history of dynasties ruled by emperors, the Chinese society members regard peaceful living and happy career (安居樂業) as their universal value and they measure their governance system with that value. In ancient China, democracy had been viewed as a tool not a system used for decision making. Villages typically had governing systems, managed by elders selected or elevated. Disputes or matters are ruled employing ‘voting’ (limited democracy) but the elders earn their place by reputation, scholarship and seniority. The villages preferred to settle matters in front of the elders than going to the government court. So are their commerce systems, often regulated by their commerce associations managed by senior and successful businessmen rather than governed by the emperor’s court. In some ways the Chinese people prefer to have a governor to be appointed by the Emperor from another region than to elect one from the local, recognizing local interest often breeds corruption. 

Of course, a bad emperor can have a corrupt government, thus the regime change in China was almost invariably triggered by a revolution toppling the bad ruler and the corrupt government. The West failed to understand that this philosophy was the reason that the current Chinese Communist Party was so conscientious of people’s opinion on its performance, not so much concern in ideology, communism, socialism or capitalism. Chinese leader Deng Xiaoping Ping said: “Black cat or White cat, so long it can catch the mouse is a good cat.”, so wisely depicted the value of government and governance.

In Chinese history, all regime changes were made by revolution; people rose against a bad emperor and established a new one. The tenures of dynasties have been typically a few hundred years covering good, mediocre and the bad emperors who would be eventually toppled. The Chinese citizens were patient and tolerant people who understood that the value of political stability was the prerequisite of ‘peaceful living and happy career’. However, the democratic system In the Western societies have made the regime change so easy and the leader’s tenure so short (1,2,4 or 8 years), the people have little chance (and patience) to evaluate a leader’s performance; this is devastating in today’s complex societies and complicated world environment. Unfortunately, many scholars in the Western societies believe democracy as a universal value and eagerly promote it into other societies even though the success rate is low in terms of stability of governance, which is of course the prerequisite of the ultimate true universal values - society freedom, society equality and peaceful living and happy careers for all.

In the ancient Chinese philosophy, valuing society freedom and equality and peaceful living and happy career over individual rights did exhibit a few phenomena. Individuals tended to give in to society expectations, for example, in selecting personal career, moving away from home or family and even in committing to marriage. Thus there were more traditional family businesses or careers (trades passed on in generations and professionals, like doctors, pharmacists, farmers, traders, etc) contributing to society stability, creating more peaceful living and happy careers than dissenters. By today’s universal values promoted by the Western societies, individual freedom and equality often overrides the society values, causing more broken families, keens separation for decades and more lonely individuals and poor social infrastructure. Peaceful living and happy career for the mass can hardly be achieved in our societies, exhibited by protests demanding better government services. (Social welfare, healthcare, retirement, etc.) 

What is our universal value is an important global citizenship question. We must understand it beyond an individual’s point of view. Let’s seriously think about freedom, equality and peaceful living and happy careers as our universal values truly based on a society (or nation) view, unless we want to destroy our society and live as loners.




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Freedom of Navigation in South China Sea (SCS) is an Issue like citizens of Moscow interfering about how New Yorkers build their subway stations and how NY districts lobby for funds and investments to build new stations. It is none of Russia’s business; certainly no one will prevent any international travelers to ride a NY subway with proper conduct. SCS is a large area of ocean having numerous small uninhabited islands. Historically, these small islands were under China’s sovereignty when most parts of Indo-China were tributary states under China’s dominance. Many coastal countries respected China’s claim of sovereignty over the SCS islands until WW II when Japan’s invasion disrupted the peace in SCS. Post WW II, the SCS was supposed to be restored to pre-war condition according to Potsdam declaration and San Francisco Peace Treaty, but China was devastated by the war and was split into Mainland China and Taiwan resulting in each claiming Sovereignty over SCS islands. Then the SCS coastal countries began to encroach the nearby uninhabited islands, started to build structures on these islands.
 
China naturally was aware of these encroachments and tried to prevent them. In particular, Vietnam was the most aggressive country claiming territorial sovereignty over Paracel and Spratly Islands in the Gulf of Tonkin. During the 1950s, Paracel Islands were controlled by China and South Vietnam, but in 1958, North Vietnam accepted China's claim of the Paracels, relinquishing its own claim. In 1974, a clash between South Vietnam and China resulted in China taking complete control of the Paracels. When the North Vietnam absorbed the South Vietnam in 1975 (ending of US-Vietnam War), North Vietnam took over the South Vietnamese-controlled portions of the Spratly Islands. The united Vietnam then canceled its earlier renunciation of its claim to the Paracels and attempted to dominate the Spratly Islands, partially controlled by China. In 1978, China ceased financial aid to Vietnam as Vietnam signed a friendship treaty with the Soviet Union favoring commercial and military ties with the Soviet over China. In February, 1979, one month after the U.S. recognized China, the Chinese People’s Liberation Army launched a two week military campaign crushing into the northern Vietnam and threatened occupation of the Vietnamese capital, Hanoi, as a punishment to Vietnam’s hostile attitude to China, discrimination to Chinese people living in Vietnam and hegemonic aggression into Cambodia.
 
China strategically stopped the 29 Day invasion on March 5th and engaged a peace talk with Vietnam after causing heavier casualties in Vietnam army than themselves. But the peace negotiation broke down in December, 1979, both sides began buildup of troops as many as 600,000 on Vietnam side and 400,000 on China’s side. Sporadic slirmishess occurred in the 1980’s. China threatened to launch another punitive attack to force Vietnam to move out of Cambodia. China succeeded somewhat in checking Vietnam’s ambition of encroaching into her neighbors, Laos and Cambodia, but the Vietnam-China border conflicts persisted to 1990 when the Soviet Union collapsed. The Spratly Islands in SCS became a dispute among China (Mainland and Taiwan), Malaysia, Philippines and Vietnam following the following events: 1. China lost the Sino-France war ceding control of Indo-China and consequentially part of SCS to France. 2. Briefly, Japan invaded and occupied Indo-China during WW II. 3. Post WW II, the U.S. took over the French interest in Indo-China, engaged a twenty year war in Vietnam (1955-1975), 4. China won a war against the united Vietnam (1979). 5. Development of Asian countries from post Vietnam War to the collapse of the Soviet Union (1979-1990) and then rapid development from 1990 to 2000.
 
The importance of SCS islands especially the bigger ones like Spratly are threefold: 1. Large oil and gas reserve in the region; 2. Fishing rights; and 3. Strategic position to the commercial sea lane for vast amount of world trade. The dispute over Spratly would have been essentially over today if just dealing with the above issues, but the U.S. raised a new issue, “Freedom of Navigation” for her naval vessels in SCS. Ever since 1992, the ASEAN countries advocated peaceful resolution of any dispute in SCS. In 1995, the ten ASEAN countries signed an agreement with China (PRC) that any military action occurred in SCS would be informed to all other countries. In 2002, ASEAN reached another declaration on Conduct in SCS, “to resolve their territorial and jurisdictional disputes by peaceful means, ..... (consultation, negotiation and not using force)" though it was short of a legal binding code of conduct. In 2002, China announced that she was launching a discussion of code of conduct in SCS, but in 2012, the U.S. Senate passed a resolution denouncing that China's actions amounted to unilaterally asserting control of disputed territories in the SCS.
 
Then the Philippines, under the Administration of President Benigno Aquino, III, initiated a protest against China to the International Tribunal for the Law of Sea for Chinese petroleum boat interfering Philippine’s oil exploration near disputed Spratly. Subsequently, Philippines instituted an arbitration proceedings in “the Permanent Court of Arbitration” (2013-2016) to which China refused to respond denying the court’s jurisdiction. Hence the ruling essentially was useless, nothing more than creating political debate among biased commentators. In 2016, when Rodrigo Duterte, a strong Administrator against crime and drugs, got elected as Philippines’ President, he chose to steer Philippine’s diplomacy away from being dominated by the U.S., pursuing a neutral position towards China as an ASEAN member. Duterte elected not to contest with China over disputes over SCS islands and welcomed China’s collaboration in resource exploration and investment for economic development.
 
In recent few years, the SCS Issue was not bothering the SCS regional countries as much as the U.S. Her naval forces demanded ‘Freedom of Navigation’ by sending battle ships (even organizing naval exercises in Pacific Ocean) into SCS sometimes into the 12 nautical miles territorial water of the claimed islands. China sensed the military threat from the U.S. and her allies’ naval forces; she accelerated her construction and fortification of her controlled SCS islands. China’s progress was amazingly rapid, now she has completed modern seaport and airport on several controlled and enlarged islands providing not only defense capability but also operational support for maritime rescue and sea-lane safety.
 
On June 7th, American TV network, CNN, broadcasted a video of a Russian warship almost colliding into an American warship, each side blaming the other. This incident occurred a few days after a similar brush between their planes in the Mediterranean. The above naval incidence happened during President Xi’s visit in Russia, thus some commentators speculated that it was a message sent by President Putin: Russia being on the China side. However, judging on the intricate development in the past decade in SCS, I would say that the Asian countries and China had taken a peaceful approach to deal with their problems. They all had focused on the possibilities of collaborative economic development. China had always taken a welcome posture to collaboration whereas the American corporations were more worried about the investment risks in SCS. Flexing muscle by the U.S. Navy in SCS does not really reduce the security risk (hence investment risk) in SCS for American corporations. Therefore, it is easy to conclude that China and ASEAN should continue to develop an agreement on the code of conduct in SCS. The outside forces, whether, the U.S., Australia, India, Japan or Russia, should restrain from interfering with their peaceful discussion.



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