This is the fourth in a series of articles from FreedomFest 2021, an annual libertarian-oriented conference hosted by Dr. Mark Skousen, an economist and Presidential Fellow at Chapman University in California. This year’s venue is Rapid City, SD (God’s country), a short distance from Mount Rushmore. This article covers a panel discussion about freedom (or lack thereof) in Communist China with a panel consisting of Director of External Relations—Asia Pacific for the Acton Institute Li Zhao Schoolland, technology futurist and co-founder of the Discovery Institute George Gilder, and author and moderator Joshua Philipp of Epoch Times.
Philipp: is China engaging in the free market? Is the Chinese market actually free?
Gilder: it is as free as the American market but is moving in the wrong direction. Three times as many IPOs as the US over the past year. Until recently, they were part of the US global technological imperium (standards, packet economy, infrastructure, etc.). Alibaba was the flagship enterprise. Nothing of this had to do with the CCP. I visited China with Milton Friedman in 1988. His counsel for the ChiCom government was “get control of the money supply,” and mine was to “let a billion flowers bloom” – which I believe is what happened. I predicted that when the mainland Chinese started imitating the overseas Chinese, Hong Kong would start taking over the mainland. Despite the CCP overreach, the disgrace of Jack Ma, etc., China is an absolutely essential part of the world economy. If we try to decouple from China, we will destroy ourselves.
[Cvrk: Gilder is quite obviously a “China hand” and long-time acolyte of the Henry Kissinger school of “opening China” at the direct expense of the West. His response was quite emotional in that regard.]
Schoolland: China’s market is not free at all. State capitalism owns all the natural resources, banks, etc. All businesses – big or small – must include a CCP bureaucratic entity that is nonproductive and whose sole responsibility is to monitor the “ideological purity” of the given business. [She gave an anecdote about how a business owner was granted permission to crowd-source fund projects, but a CCP bureaucrat changed the policy, and the owner was executed for “exceeding his authority.”] The second largest crypto-exchange platform in Shanghai was shut down because it operates outside the ChiCom central banking system. They are good at using the marketplace to exploit others for personal growth.
Philipp: Lenin invented the phrase “state capitalism.” One issue with state capitalism is that Chinese businesses do not have to show a profit, and thus can underbid other companies to win business. Also, Chinese companies have a domestic advantage due to favorable regulations compared to foreign companies.
Gilder: Communism doesn’t work. The proposition you are conveying is stealing, subsidies, and something comparable to the industrial revolution in the US. In my view, the CCP knew nothing about growing business. All the growth came from the private companies like Alibaba, Tencent, and others. It is crazy to believe that this could be viewed that somehow “communism worked in China.” The fastest growing country in the world (China) has been accomplished in spite of CCP-dominated state-run companies. The CCP these days only moves in after companies are successful. Beginning with Deng Xiaoping (“to be rich is glorious”), the CCP has gotten out of the way of private companies, and the result has been exploding growth. You can’t participate in politics in China unless you are a CCP bureaucrat. If you have no democracy, people aren’t preoccupied with politics. The Chinese are trying to produce capitalism without democracy while the US is trying to produce democracy without capitalism. China has accomplished a capitalist economic miracle by leveraging US standards, tools, operating systems, etc. We are now forcing them to stop it.
[Cvrk: The notion that the “Chinese economic miracle” just magically happened is absurd. It was people like him who facilitated giving away the store to Beijing in the mistaken belief that bringing Communist China into the international system would somehow “democratize.”]
Philipp: Is the CCP linked with the business community in China?
Gilder: The US government is deeply interlinked with US businesses [attempting to claim a moral equivalence].
Philipp: How does intellectual property play into Chinese businesses?
Schoolland: All countries who follow the US become rich; all countries who followed the Soviet Union became poor. This was a lesson the CCP learned before 1972. The CCP made a choice to follow the US methods but refused to give up any measure of CCP control. The CCP will sacrifice anything to control places like Hong Kong, including Hong Kong’s vibrant economy. They know the power of the market, so they want to benefit from it (the Party, but not the people). Intellectual property is leveraged and stolen whenever possible to provide business advantages. Small businesses are not encouraged like they are in the West. Entrepreneurs are squelched in China. Everything is about maintaining CCP control in China.
Philipp: one of the reasons for decoupling with China is due to ChiCom oppression and persecutions and a ChiCom retrenchment away from Deng’s economic policies. How do we deal with decoupling?
Gilder: I oppose slave labor. China is steadily replacing slave labor with capitalist labor. Taiwan is the epicenter of the global technology economy. Taiwan and the mainland are one large economic entity, as considerable Taiwanese investment is made on the mainland. If we try to interfere, it’s like the ChiComs interfering in our Native American reservations policies.
Schoolland: Their violation of human rights, slave labor, religious persecution, etc., is the foundation of their society. We have to look beyond the so-called success of the Chinese economy to see that on which it has been built.
[Cvrk: Gilder’s remarks were an insult. He is of the school that opening China would magically “democratize” the CCP over the decades, and while noting that that strategy failed, he wrings his hands and claims that “economic destruction” will result if we decouple from China now. Has he ever visited the ghost towns that were once manufacturing and production centers in the Upper Midwest that he effectively helped make happen? Despicable.]