For the Chinese, the key to those outcomes is respect for an appropriate hierarchy, itself a means of control. This suggests that something distinctive to mainland China influences this behavior: long-term unpredictability thats sufficiently recent to have been experienced by or passed on to those now buying stocks. Now CEO of the Hong Kongbased $40 billion private-equity firm PAG, Shan spoke with HBR Editor in Chief Adi Ignatius about the economic prospects for China and the United States. China's political system encourages parties, organizations, and representatives from various circles of Chinese society to discuss basic policy as well as important political, economic, cultural and social issues. In context, the United States should be more pluralistic as it prides itself to be a melting pot, but it can be considered more of an elitist democracy. The highest court in China is the Supreme Peoples Court, which includes the Chief Justice and over 340 other judges, including 13 that are considered grand justices. Pundits tend to be alarmed by a default here and there. We have both sat in meetings where business executives, particularly in the technology and pharmaceutical sectors, expressed surprise at Chinas insistence that they transfer ownership of their IP to a Chinese company. China is a great example of a country undergoing a transition as not many years ago it used to practice socialism but now it has transitioned to a dynamic market making it have a second largest economy in the entire world overtaking many great nations. A country that provides its citizen with education produces better minds that can bring in better business ideas to the economy. : Statist Legacies and Market Reforms, 1980-90: Statist Legacies and Market Reforms, 1980-90. Eighty percent of the Senate and House of Representatives are male, while only 20 percent are either women or people of color. That figure is higher than in all Western countries (for example, only 53% of U.S. individual investors trade this frequently); its also even higher than in neighboring Hong Konganother Han Chinese society with a predilection for gambling and a similar, capital-gains-tax-free regime. This is a natural outcome of the decline in U.S. strength. But this argument overlooks some fundamental differences between China and the United States, Japan, Britain, Germany, and France. The executive branch of the government focuses on enforcing the laws and policies and includes major political figures such as the President and the Cabinet. Eventually he came to the United States, where he earned a masters and a PhD at UC Berkeley, worked for the World Bank and J.P. Morgan, and taught at the Wharton School. The US is a developed country, its national infrastructure has essentially been completed; China is a developing country and is undergoing large-scale infrastructure construction. They dont know how capitalist China is. However, it is important to compare and contrast countries to see which policies are working in the best way and what can be changed. How can outside investors ensure that they dont become collateral damage in a bigger political and economic war? But because this is also a Leninist system, those issues are of critical importance to Chinese leaders, who wont change their minds about them, however effective or helpful their foreign partners are economically. Accelerate your career with Harvard ManageMentor. When Nixon first visited China, in 1972, the differences between the two countries were vast, in political and economic systems and of course in ideology. A. When we first traveled to China, in the early 1990s, it was very different from what we see today. First, the similarities among both countries institutions would be the hierarchical construction of their judicial system; the separation of three branches of . Routledge. In fact, the Chinese word for the resolution of a conflict (jiejue) can imply a result in which one side overcomes the other, rather than one in which both sides are content. Even in Beijing many people wore Mao suits and cycled everywhere; only senior Chinese Communist Party (CCP) officials used cars. HBR: Chinas economy seems to be the healthiest in the world at the moment. China and the global economy. That means not that these people are unconcerned with long-term outcomes but, rather, that their risk aversion increases significantly as the time frame lengthens. Some of these challenges are brought about by differences in legal, political and economic systems of different countries. Lobbying groups have more of an influence on the government of the United States than the citizens themselves, which creates the question if the US is more pluralist or elitist, and the matter of the fact is that the US is not really a representative republic but rather a pluralist oligarchy. The United States takes in with high respect the principles of democracy and individualism. China on the other hand practice totalitarianism and collectivism which is the opposite of democracy. Therefore, a country's political system can be assessed effectively by using aspects such as collectivism or individualism and totalitarianism or democracy. If you are the original author of this essay and no longer wish to have it published on the China is among the most open markets in the world: It is the largest trading nation and also the largest recipient of foreign direct investment, surpassing the United States in 2020. This means that business contracts are not usually detailed in China since the civil codes do not cover most laws. It is important to understand the background of the political systems in both China and the United States in order to compare both, especially the theoretical system of governance they follow, whether a pluralist or oligarchical system. China is also Apples biggest market for iPhones: It has about twice as many iPhone users as the United States does. Delivery in 6+ hours! However, the beliefs and positions of political parties change over time, so . The U.S., on the other hand, is a federal constitutional republic with three governmental branches sharing powers. This is a belief alien to many Western business executives, especially if theyve had experience with other authoritarian regimes. Consequently, inequality is greater in China than in the United States, measured by the Gini coefficient. The U.S., on the other hand, is infamous for its self-deluded belief in so-called "American Exceptionalism," to which end it obsessively seeks to force all others to change their ways in order to replicate its own radically. However, both states have a very different political landscape, which is what will be discussed in the paper today. Consequently, running international businesses has become significantly easier than ever before. Political discourse in China remains anchored in Marxist-Leninist ideas of struggle (douzheng) and contradiction (maodun)both seen as attributes that force a necessary and even healthy confrontation that can help achieve a victorious outcome. A Chinese professor who has lived in both the US and China believes there is a core cultural difference leading to the country's diverging paths. The pluralist theory denounces such centralization of power, especially in the hands of the rich or a small percentage reflecting the population, but it does support the idea of groups that control the government such as lobbying groups which are present in the country such as the NRA (OpenStax, 2020). Many people have wrongly assumed that political freedom would follow new economic freedoms in China and that its economic growth would have to be built on the same foundations as in the West. There have been reports of local voters being harassed and pressured into voting for the candidates that are supported by the CCP, and these reports have been identified to be affecting the rising independent candidates in local township elections, where there have been reports of voter rigging as well, and any other party other than the CCP is strongly discouraged which is why the existing parties are all under the control of the CCP (LaFraniere, 2011). The vehicles for much of this investment are still the CCPs Soviet-style five-year plans, which include the development of what Xi has termed an eco-civilization built around solar energy technology, smart cities, and high-density, energy-efficient housing. This shared quest for predictability explains the continuing attractiveness of an authoritarian system in which control is the central tenet. Entry to the CCP and to a university involves compulsory courses in Marxist-Leninist thought, which has also become part of popular culture, as evidenced by the 2018 TV talk show Marx Got It Right. By 2020 she was intent on seeing her seven-year-old grandson and infant granddaughter (a second child had only recently become legal) do well. Half of the representatives in Congress are millionaires with their median net worth reported to be more than a million. The legal system of a country plays a key role in terms of its marketing and investment opportunities. Seventy years on, many Chinese believe that their political system is now actually more legitimate and effective than the Wests. It is important to understand the background of the. Solinger, D. J. ), Copyright 2020 CGTN. The real danger is the Taiwan issue. But its also conspicuously different: The concept of U.S. hegemony goes beyond economics to such fields as politics, the military and society. Westerners failure to appreciate this explains why many still expect China to reduce its role as investor, regulator, and, especially, intellectual property owner when that role is in fact seen as essential by the Chinese government. After observing how other nations are doing well under democracy in the international market, countries with command systems are now doing all they can to change this even if it means giving up some of their traditions. The U.S. also repeatedly provoked China using freedom and democracy as a pretext. Economic and macro-political changes happening globally is something that international business management must consider before doing business since it will influence the decisions that they make regarding their business. I see no systemic risk either in Chinas banking system or in its economy. Beijing ICP prepared NO.16065310-3, China vs. America: Political diversity vs. political conformity. People who do take long-term career risks often do so only after fulfilling their primary need for short-term security. This suggests some obvious hypocrisy on the part of the Biden administration and perhaps even a lack of sincerity with respect to the domestic causes that it supports. The nominations of all the candidates are not done through their own accord or will but need to be nominated by the CCP, and this is done through the election committee that then consults a group of voters through what is called the three ups and three downs. Our firm, PAG, invests throughout Asia and occasionally beyond. If a business is successful, its usually open to taking outside capital so that it can quickly expand nationwide. There are several major differences: China's system is based on the governance of one political party only (China has 8 other parties that serve in a consultative role). In that period there has been ruins of buildings as well as joy of victories, rapid advance in success as well as pride, tortuous ordeals and lesions from mistakes done . At 22,000 miles, it is twice as long as the rest of the worlds combined. When the United States formed its constitution, it specifically dictated the unalienable rights of every person. That Canada has elected communists to office, I suggest is just about as important a disparity as the American gun insanity. China is bordered by several countries and lies on the coastline of the Pacific Ocean. The resulting victory, which for decades the CCP spun as its solo vanquishing of an external enemy, was reinforced by defeat of an internal one (Chiang Kai-shek in 1949), establishing the legitimacy of the party and its authoritarian system. Navigating your companys future in China, Americans Dont Know How Capitalist China Is, Economics and Democracy Are Two Sides of the Same Coin, Authoritarian Political Systems Cant Be Legitimate, The Chinese Live, Work, and Invest Like Westerners, A version of this article appeared in the. Investors have always been enticed by Chinas vast market. But it wont back off from its territorial claims, all of which predate the Peoples Republic of China. But looking back over her life story, one can see why even many young Chinese today may feel a reduced sense of predictability or trust in what the future holdsor in what their government might do next. Does the U.S. even have the power to hurt China economically? And when Xi announced, in 2017, that the three critical battles for Chinas development would fall in the areas of reducing financial risk, addressing pollution, and alleviating poverty, he also made it clear that the objective of these reforms was to solidify the system rather than to change it. The civil law system only allows the judge to make his or her judgment basing on the law and should not consider other factors surrounding the business. Routledge. But over the next 30 years, thanks to policies aimed at developing the economy and increasing capital investment, China emerged as a global power, with the second-largest economy in the world and a burgeoning middle class eager to spend. The past decade has, if anything, strengthened Chinese leaders view that economic reform is possible without liberalizing politics. Any shift in supply chains will be gradual and partial, because its very costly to move from the most efficient supplier to the second or third best. For international business management of doing business in a country like China, it can sometimes get hard since it is not possible to function liberally as in a democratic nation. That has political implications, of coursefor example, that the public ownership of assets is necessary to ensure an equal distribution of wealthbut the economic outcomes are the focus. Conversely, the US law system basis its law from cases held previously and judges uses this as an example when determining most cases that are similar to the present one. The major focus of government expenditure is domestic infrastructure. Yet as soon as that ideological cover is removed, internal contradictions immediately reveal themselves. Social Structure In China, the social structure is formal and hierarchical. The Chinese political system is dominated by multiparty cooperation as well as political constitution under the direction of the Communist party of China (CPC), but the USA is governed by the western style of multiparty system. In other words, the U.S. position as hegemon doesnt necessarily bring it any economic benefits. China is also often at pains to suggest to foreign governments or investors that it is similar to the West in many aspectsconsumer lifestyles, leisure travel, and a high demand for tertiary education. With its democratic society, the U.S. is unable to prevent financial capitalism from swelling, or to take dramatic action against vested interests to formulate a model under which finance and industry mutually optimize and complement one another. What the Chinese government does oppose is the system of electoral democracy as . (More than 33 million people were jobless and waiting for relief as of late April.) Trumps trade war was an abject failure. In much Western analysis the verb most commonly attached to Chinas reforms is stalled. The truth is that political reform in China hasnt stalled. What are the dangers in Americas continued demonization of China? However, the country does have branches of government that also include the executive, legislative and judicial branches of government. This clear disconnect is attributable to the so-called "culture war" that's spiraled out of control over the past year and has led to profound changes in American society since then. -- The CPC is at the core of the country's leadership and the ruling party, while the non-communist parties are participating parties. Chinas rulers, therefore, see foreign engagement as a source less of opportunity than of threat, uncertainty, and even humiliation. While Bidens policy proposals reflect fading U.S. hegemonistic attitudes, Trump is showing Americans the status quo of U.S. power. - Quora Answer (1 of 17): Americans hold the individual in the highest regard, whereas Chinese hold the community in the highest regard. Bidens proposals have been criticized as new wine in old bottles, and a kind of tinkering; Trump is regarded by Henry Kissinger as marking the end of an old era. The United States has a democratic government system with three branches in the system, legislative, executive, and judicial. He believes Chinese people are fixated on. Looking into the future, the path for China-U.S. cooperation will become more tortuous owing to the nationalist ideological struggle triggered by the coronavirus. And only the U.S. can threaten Americas economic supremacyby underinvesting in its own infrastructure and by limiting trade. Its GDP dropped 6.8% in the first quarter of 2020, but resumed growth from the second quarter onward. China has stolen American jobs, the thinking goes, so we oppose China. Policy makers, in contrast, looking for ways to gain more control and sovereignty over the future, now play a much longer game than the West does. Springer. Borner, S., Brunetti, A., & Weder, B. But the state-owned sector remains too big and inefficient. Only a sudden surge of such events would herald an economic crisis. Hence the public debt as a percentage of GDP is higher for the U.S. relative to China and the. From the U.S. perspective, upholding the banner of freedom and democracy no longer matters. Thats not likely, precisely because in Chinas particular brand of authoritarianism, control is key. For companies that want to venture into international businesses, it is important to investigate the legal system of that country and how it can affect their day to day business in that nation. It is also the duty of the representative republic to inform its citizens of their rights, and the candidacy for the elections needs to be transparent since city council members to local judges to mayors, and state legislators are all appointed through voting in the United States. This kind of an economy is unattractive and completely represent the aspects of totalitarianism and collectivism. Thats why China is the most active private-equity market in Asia. Hire a professional with VAST experience! A Shanghai journalist is paid by her state-controlled magazine to fly around the world for stories on global lifestyle trends. The benefits are both financial (for example, access to mortgage loans) and social (permission to buy a ticket on one of the new high-speed trains). Our response? The branches of the government are not only responsible for the laws of the land but are also responsible for ensuring free and fair elections and that the citizens of the country that they represent are being heard (USG, 2020). The pandemic has added urgency, but American politicians appear not to have found the answers. (2016). Not blaming China means indirectly acknowledging U.S. shortcomings, which could be explosive in U.S. partisan politics. Weijian Shan understands the delicate U.S.-China dynamic as well as anyone. Unfortunately, you cant copy samples. The technology war waged by the Trump administration forced China to develop critical technologies, such as semiconductor chips, for which it has relied on U.S. suppliers. The legislative branch is not only responsible for making laws but is also responsible for the hiring of important figures in central agencies such as the FBI, and it even has the authority to declare war. (2016). 13 Cultural Differences Between the U.S. and China Social Structure Confrontation/Conflict Self Face/Reputation Business Relations Morals Recognition of the Dead Humility Time Sensitivity Respect Multiculturalism Lack of Personal Space Respect for Elders 1. Today the differences are arguably a lot smaller, and there are many areas in which the two can benefit from cooperation. This is the best approach for one to have and ensures that its partnerships remain everlasting. Investors anywhere should invest in a socially responsible way to advance human rights, adhering to a high standard for labor practices, gender equality, investment in human capital, and charitable contributions. How accessible is it these days? The difference in efficiency between the central and local groups is significant. (b) The national average SP of CO2 is 266.8 US dollars per ton, which is much higher than the carbon price in the emission trading system. The differences in political beliefs led to the formation of a two-party system in the United States, contrary to George Washington's wishes. The harsh reality of the pandemic has given rise to political competition with characteristics not seen before, sounding the alarm for future bilateral relations. Decisionsby both individuals and the stateabout how to invest all serve one purpose: to provide security and stability in an unpredictable world. The positions in this branch can be for either a five-year long term or even an unlimited amount of time. China and the United States are one of the strongest economies in the world, and both nations are considered superpowers and have contributed significantly to global politics and culture. Most significantly, the British have a democratic parliamentary government, headed by a monarch and prime minister. Until Western companies and politicians understand this and revise their views, they will continue to get China wrong. The study of geography is centered on the regional system of the human-land relationship, and the core of the study of the geographical system of the human-land relationship is land use change. Our own experiences on the ground in China confirm this. 9. The White Houses China-bashing is more about a fight for self-identification than about exonerating the Trump administration. The founding fathers of USA forecasted their nation to be one that respects and follow basic human rights and Biblical ideas as guidance. A nation that practice individualism and democracy is more likely to have an economic system that is market-based and this is more desirable since it allows businesses to produce what their products maximally thereby making desirable profits. If the U.S. abandons the one-China policy and supports Taiwans independence, conflict will be inevitable, with unimaginable consequences for the world market. As a result, economic growth came in tandem with social progress (through, for example, legislation protecting individual choice and minority rights), which made it easy to imagine that they were two sides of a coin. Voter suppression has been reported through disenfranchising people of color, through restrictions placed on mail-in voting that can cause irregularities in the system and strict voter ID laws that can contribute to issues that can cause certain people to not place votes(McKeever, 2020). Even now Chinas private consumption represents only about 39% of its GDPway below the U.S. level of 68% and the world average of 63%. It is unbelievable that the western countries face a serious competition from these nations due to the political stability found in the two countries. Civic engagement ensures that the government is serving the people and not the other way around. This review discusses recent efforts to systematically compare three leading values in China's philosophical traditionsmeritocracy, hierarchy, and harmony . Doing business in emerging markets. So a Marxist-Leninist system is concerned not only with economic outcomes but also with gaining and maintaining control over the system itself. The reality is quite different. Depending on the conditions surrounding a case, the law system allows special consideration to such as a case. The Leninist nature of politics is also evidenced by the language used to discuss it. The authors suggest that those assumptions are rooted in three essentially false beliefs about modern China: (1) Economics and democracy are two sides of the same coin; (2) authoritarian political systems cant be legitimate; and (3) the Chinese live, work, and invest like Westerners. Americans Dont Know How Capitalist China Is, A version of this article appeared in the. Ideological competition between China and the U.S. in recent years comes in three basic models: The nationalist hegemony model that ultimately serves U.S. hegemonistic purposes in the international community. It will take years if not decades for China to catch up in some areas, at great cost. Under this view, whether or not other countries are free and democratic, or whether others deem the U.S. to be so, matters less than the economic benefits the U.S. deserves, including a favorable balance of trade and jobs. But the third assumption can also mislead those seeking to engage with China. The one long-term asset class in which increasing numbers of Chinese are investedthat is, residential property, ownership of which grew from 14% of 25-to-69-year-olds in 1988 to 93% by 2008is driven also by the need for security: Unlike all other assets, property ensures a roof over ones head if things go wrong, in a system with limited social welfare and a history of sudden policy changes. is good morning vietnam based on pat sajak, Appropriate hierarchy, itself a means of control two countries < a ''. Difference in efficiency between the central and local groups is significant in are... With China today the differences are arguably a lot smaller, and there are many areas which. Fading U.S. hegemonistic attitudes, Trump is showing Americans the status quo of U.S. goes... Ideas as guidance the power to hurt China economically their primary need for short-term.... Expenditure is domestic infrastructure the positions in this branch can be assessed effectively using. 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