The Great Wall of Fear
I'm going to ask you a very straightforward question. How worried are you about China? What is this great wall of fear that we're all talking about? And why are we fearing China? Why is the media constantly talking about national security and privacy and data risk from China, as well as Xi Jinping that wants to influence our thoughts and maybe our way of living? What is it that we fear? And is this new? Well, if we go back 200 years ago, Napoleon Bonaparte already said that China is like a sleeping giant. So let it sleep, because once it wakes up, it's going to shake the world. And it has specifically these past ten years. Now, the dragon clearly has woken up, and this year is the year of the dragon. And from a Chinese symbol point of view, I mean, this is a symbol for prosperity.
It's a symbol for goodness, a symbol for helping people, a symbol that really shows strength and promise. This is the best year of all. But we're worried about that dragon. Why are we so worried? Why do we fear that dragon in China? Well, maybe it has something to do with the fact that we look at dragons spitting fire, having big wings, and killing villages and villagers, and basically we have to slay them to survive. So maybe the answer of why we are fearing China is as simple that we're looking at the wrong dragon, and the Chinese don't understand why we want to slay the dragon that is so good. Now that would be too easy as an explanation. So what is it that really creates that fear amongst so many? Well, one of the things if we go back in history is that before the 19th century, China was the biggest economy in the world.
Together with India, two thirds of the GDP in the world was created by those two countries, and China had more than 35% just before the Opium War in 1840. So China was doing great, but we didn't fear China, despite the fact that they were so great because they were isolated. Now that's a very different story. What happened then, in the 19th century is, of course, the Industrial revolution, where the UK or England and many other countries in the West were suddenly increasing their production and increasing their military spending, but also the military might that became much bigger, meaning that they could actually overturn any country and compete with anyone, both industrial and military. And that changed everything.
Because then, in 1840, with the Opium War and afterwards in China, I mean, the Western powers, actually, they just went into China and they took as much as they could all the concessions that they had. This is what China is calling this 100 years of shame. And until Mao Zedong liberated China in 1949, Chinese felt they were actually at the demand of the West and weren't able to develop themselves. We didn't allow them the industrial progress that we had ourselves. At least that is the view that most Chinese have today. And that, of course changed.
But what changed is that after 1949, when the People's Republic of China was established, China still was very poor, very weak, very vulnerable, and still very isolated. So we didn't really fear China because it was weak. A weak country, why would we care? So the fear wasn't there, despite the fact that China had all the promises of growing big. We didn't believe in the system. We didn't believe in the people.
Now, what happened after that is that Deng Xiaoping in 1978, he started opening China and doing business with the world. And in 1992, and when he went to Shenzhen, created many more of these economic zones. And that's really in the early 90s when China started to be part of the international community. And that is the big change that China underwent only 35 years ago. And that is the change that we're now worried about, because what is it that we saw back in the 90s? Well, what we saw, I mean, people were wearing very often still ordinary clothes, even Mao suits in the 80s. But even in the 90s, there were all on bicycles, the skies were blue.
And this was the beginning of an opportunity for us. We had the industrial transformation of China that we helped to fuel. We helped China to develop. That was back in the 90s. And what we wanted from China back then was also very simple. We saw 1.3 billion people that had
two hands, so 2.6 billion hands that could all build the products that we love so much in the West. We also saw 1.3 billion people that potentially, if they all buy something from us, we're all billionaires.
But what we also wanted was to make sure they played according to our rules. This is where we had many international organizations like the United Nations, like WTO and so on. And we had China joined one after the other because we wanted them to play according to our international rules. Actually, it was more US-Western rules because China or India or all these non-Western powers were never involved in the discussion to create the rules. But that doesn't matter too much.
We want to them to join what we think is the best for the world. And what we definitely were convinced of back in the 90s and early this century is that when 1.3 billion Chinese will have a taste and a feeling of what it means to actually be part of a democracy, a liberal democracy, to have freedom of speech and thought and not have any limitations; that would suddenly wake them up, and they would make sure that Beijing and the Communist Party would not continue to exist. This is why we wanted them to be part of our club. We didn't believe that China would actually, or the Communist Party would survive.
We saw it in Eastern Europe and we were convinced the same would happen in China. But what we got was something very different, and this was not our plan. Our plan was not for China to become the biggest factory in the world, with 35% of all production output coming from that one country, meaning we are now dependent on China in terms of this factory, with China doing more production than the next ten countries together. That's all developed countries.
We also didn't want China to create these super companies like Huawei and many others, that became better in quality and took our customers and they didn't want to buy, these customers, our customers, didn't want to buy any more from our own suppliers like Ericsson, Nokia or Cisco. We didn't plan for that. We also didn't plan for China to have these crazy dreams, to go to the moon and Mars and go deep sea and make every possible breakthrough in innovation and do the things that is actually something we've always been doing. We were the inventors of things, not the Chinese.
We didn't plan for that either. And what we definitely didn't plan for was somebody like Xi Jinping that was going to say very straightforward into our face that our system is in decline and that the Chinese system is in a rise or Asia is in a rise, and that the Chinese system, the socialist system with Chinese characteristics, works very well. And that's the path they're going to continue on.
We wanted them to become more like us. So now we're worried that we will have to become like them. That is not the plan or wasn't.
So the issue is, what we really fear is that our plan is not, or what happened, is not what we had planned. And what we see now is that these 1.3, now 1.4 billion Chinese are not just using their hands, they're using their brains. And that means they are starting to outsmart us. That is not nice. We want to be the smartest.
The Chinese also are building the highest quality in the world these days with BYD and many companies like Huawei. And so they're also out-innovating us. So now we have a problem. We've sent our factories to China, and now they are actually using that weapon against us themselves. We also don't like the fact that China is becoming military, very strong, the second biggest military in the world, and that they're actually what we see in Hong Kong, put their system on a democratic system, and how Hong Kong basically is now kind of in limbo and doesn't really know how to develop itself anymore. This makes us scared.
We're fearing all the things that we never planned. But from a Chinese perspective, I mean, it's normal that they wanted to go into that evolution. I mean, we in Europe did it, America did it, Japan did it, South Korea did it.
Why not? China? And India is going to be the next, Indonesia after that. They all want to do this. They all want to have the same. Now. Now the reality and the problem in this
sphere is that we are always fearing the top down. We're fearing Beijing and the Communist Party and the control that China is putting on its population, and hopefully not on the world. But that is what we are fearing.
And specifically when we look at the military, we look at Hong Kong. It's very clear this is a top down decision. But we also have to look at the facts.
If you look at the Chinese military, they're spending $250 billion and increasing every year into the military. But this is less than the GDP percentage then most countries in Europe spend on NATO. It's less than 2%, and we should all spend 2% according to NATO, or according to Trump.
That's what he said. So the reality is China is not outspending us in terms of military investment. If we look at Hong Kong, of course, a huge challenge for people who lived there and still do, but compare that to Singapore. That is much stricter national security laws than Hong Kong today. But nobody fears Singapore.
Is as good as it bad, that's a different discussion. But we're not comparing it with things that we don't fear. And I think that is one of the mistakes we're making. So the mistake, in my view, is that we look constantly top down, and 95% of the reporting comes about top down control. But the real fear we should have about China is the bottom up. And this should be 95% of our fear.
But we're only fearing this for a few percentages because we don't see the impact yet. Except now, of course, with electrical vehicles. But this is just the beginning. What we should fear is that the Chinese are so aspirational and can be so competitive, that it makes us irrelevant if we're not going to be as competitive as they are. They're so pragmatic and practical that this is the real worry. And without these 1.4 billion entrepreneurs, or
half of them at least, Beijing would have zero power. So we're fearing the wrong thing. We're also asking the wrong questions. And I think that's the biggest mistake we're making here in Europe. Here in the West.
We're constantly asking the questions on TikTok, for example, that's going to get banned this year, probably, because the US doesn't want it anymore. Actually, they have to sell it to a US company, which is kind of stealing when you think about it. But the whole idea is that TikTok is now a national security risk, because they could steal our data and get into our living rooms and know how we live. Same happened with Huawei. There was also about getting into our infrastructure. And with the electrical vehicles, it's all about unfair competition with subsidies.
And all these stories makes total sense for us, because this is a top down way of looking at it. But we're asking the wrong questions. The real questions that we should ask ourselves is, how did TikTok make more than a billion people addictive in only a third of the time, as Facebook did? It is because they built something really powerful. This is not Beijing making this
algorithm. It is a company. It is people. It is Chinese. Same for Huawei.
Why couldn't we compete with Huawei anymore unless we put barriers in there? And why do other companies, Chinese cell phone manufacturers still can get Android and chips and whatever, but Huawei cannot? Because they became too powerful! But why did they become so powerful in quality, in innovation, in strength? That's the question we should ask ourselves. Same for the electrical vehicles. It's about BYD being the number one battery producer with the best batteries in the world. It's not because they got all this money from Beijing. Of course it helps, but that is not the
question we should ask ourselves. So unless we're going to ask ourselves the question: how can we compete with China? We're only going to continue asking the question: should we fear China? And in my view, that actually is the wrong question to ask. It all started in 2015, really. That is where the transformation went, where Chinese companies went from quantity to quality. And with the 2025 Made in China plan, that is clearly that China wanted to actually become the leader in innovation. Xi Jinping said it very clearly in 2015.
By 2030, which is just in six years from now, China will become the leader in global innovation. And that created all the tensions with the US, technology wars and so on, because no, we are the leader in innovation. China is not.
If they now become the number one, then that means we become the number two. And Europe can maybe still live with that. But America, no way. We're not going to be the number two any time. Specifically, because that would mean our military would also be the number two.
And we're the protector of the world. We can't have this, right? Now, just a little bit over ten years ago, we were convinced that China would take at least 20 years to become innovative and probably never, ever overtake us when it comes to innovation. We are the inventors. We are the brains of the world. The Chinese are not. But then eight years later, suddenly these same magazines are talking about China and the US and the technology supremacy race.
In every industry you can imagine, artificial intelligence being the number one. Where it's not clear anymore who's winning and who's losing. How is it that we got that memo so wrong? Why didn't we see this coming? We always plan for things that aren't happening when it comes to China.
And the question is: is China behind or is China ahead when it comes to innovation? Well, ASPI, the Australian Strategic Policy Institute is one of the biggest think tanks in the world. There are an Australian think tank, advising the government in Australia and the defence organization. And they made a research for many, many years.
Their researched how is China doing in terms of innovation, in terms of critical technologies? And they analyzed the 44 most critical technologies in the world and try to figure out where is China and the US and every country in the world, the number one, number two, number three, number four, number five. And the result they came to was that China in 37 out of 44 areas of critical technologies, is actually leading in terms of innovator. They're ahead of the US ahead, of the rest of the world. And in eight of these technologies,
they're even having established a monopoly. Think about batteries, electrical batteries these days. And there's many others. While the US is only in seven areas still in a leading position. I mean, there's a long list which you don't have to look at, but the reality is that China is leading in pretty much every technology or critical technology in the world. What worries me most? Is that Europe is not on the list.
How is that possible? Well, Europe in this report always comes up. European countries are number 3, 4 or 5. And that means that we've lost this US-China technology war. We're behind. It's not China behind.
It's us behind in Europe. The US can still keep up in certain areas like vaccines and quantum and and of course ChatGPT. But in most areas China is ahead. Now what's interesting is if you read the American press, like the New York Times or The Washington Post; and you read about the things that China still cannot innovate, we're always talking or we're always reading about these seven areas where America, where the US is still ahead of China. They will never say China cannot innovate and then have a long discourse on the fact that it's one of these 37 other industries where America is already behind.
So it's very clear that our narrative about we as a universe creating all the innovation from the West is completely false these days. But everybody still believes it. We're worried they're going to take things from us, the Chinese. But the reality is they're ahead in many areas.
What can you take when you're ahead? That is the question. And so the narrative should more and more be that Asia, not just China, is becoming the center of innovation, but we don't like that narrative. Now, every month now I have a newsletter.
It's called This Month in China where I talk about these innovations coming from China. Why? Because they don't hit the media headlines. Nobody talks about it. So I've started to write them myself, and it's really mind boggling to see how China every month is coming up with breakthrough innovations that are going to change the world. These are innovations, Elon Musk style type. Things that we haven't thought about.
Things that they have patented. Things that actually are an enormous scale and could transform the world for a better place. Now my favorite application is flying cars. Why is it my favorite application? Well, very simple. Just a little bit over a year ago, the Chinese company Xpeng, they sold their first flying car in Dubai. And when I was a little kid, 10, 12
years old, I was dreaming. And I was really fantasizing that when I would become older, the him now today, that most of us here would actually be flying around with cars. We wouldn't be driving with cars anymore. But I'm very disappointed in technology evolution of those past 50 years, because today we're all still driving our cars and not flying with it. But the Chinese, they only started dreaming of these flying car applications in 2015.
Seven years later, they have their first flying car. So what is the real difference between Chinese innovation and Western innovation? It's just their return on dreams is much shorter. They dream of something and many years later, five, six, seven years later, they see the results. We've been dreaming for things for 60 years and still haven't seen the results.
Now it's going faster with ChatGPT. We got a lucky break, because otherwise we would all be disappointed and disillusioned. But the Chinese are much more dreaming and believing that their dreams will come true faster than our dreams. And in many cases that is also a fact.
But for us, these Chinese dreams are often nightmares. They're nightmares because we don't trust China, we fear China. And if you look at America, today there's 83% of the Americans that actually have a very negative perception of China. They just don't trust China. Now, what happened in 2017 to really create this exponential boom into this negative perception? Simple. Trump took office.
And when Trump took office, it isn't that he was so different in his view, from Obama, but he was much more vocal and direct about it. And that has created the perception that we have very much. 2017, he was talking about and banning Huawei and ZTE because they were spying on us. In 2018, it was all about the trade war, where ultimately they weren't just spying on us, they were stealing our jobs and stealing our intellectual property. That's where the trade war started.
2019, the whole story from America and also Europe was, of course, about Xinjiang, the Uighurs and about Hong Kong and about human rights. This was a totalitarian regime. Then 2020 came, and of course, the China virus. That's what Trump said. Suddenly China was malicious trying to destroy the world with a lab made virus. Now, the interesting thing is that after four years of Trump, most Chinese thought, well, okay, now Biden has won.
Life is going to be easier. But the opposite happened, because Biden didn't make China a threat for America. He made China a threat for the world. Suddenly, what Biden did and Trump did not do was to actually gather all the allies together and say: don't trust China! Be fearful of China.
And so the narrative continued. But now it became bigger and bigger because more and more countries and media were actually saying the same and telling the same story. And then, of course, when Putin invaded Ukraine, I mean, for us, it was very clear that China is the friend of Putin or Xi Jinping is. That means these two autocracies are really going to be the things that we need to be scared of for the rest of the world. And so these stories are stories that we've been hearing every single day in the news.
And much of it is true. The problem is that we haven't heard about the Chinese view on it. So I wrote a book in 2021 called 'Can We Trust China', where I really put a double lens on all these questions. What's the Chinese view on it? Because it's easy to say our view and we know it. We don't have to explain it. But what do the Chinese think themselves of it? And once you look at that, you get a double lens, you get a double lens and feel that nothing is just ones or zeros.
But there's a lot in between. And China is a country in transition. And so that is the story that we're missing.
Is it important? Probably not. But in terms of the Great Wall of Fear that we have towards China, it does change the way that we're looking at China. And last year, 2023 was all about a high tech war. And this is very clear that now it's all about technology. About AI, it's about quantum, it's about chips. These days it's about biotech.
And pretty much we're just protecting our own markets and don't want anything to do with China anymore. So it's become a really tough Cold war these days. Now, the problem is that this fear is building walls. We're constantly building protectionism in every government planning that we have when it relates to China. But it's not just China. We're fearing everything these days.
I mean, Trump has built his wall in Mexico; and we're building more walls in Europe as well, against all the immigration and all the problems that we're having. They're just different walls. But walls is what we're building now, the Berlin Wall, we've forgotten about tearing that down. Now we're building new walls again, and it has everything to do with fear.
And China is also about fear. But what's on the other side? We don't care too much about that. And that's the problem.
Unless we look over the edge and look what's happening on the other side. We're always going to build more walls. So Europe has a huge dilemma to deal with. Do we keep the bones that China is giving us that helps us with our own economy and our climate goals and reaching everything that we want, because it's very practical? Or do we stay and remain the lapdog of America that protects us, safety and security and everything that we love? Well, this is the problem. It's a choice between heart and mind, and our mind is telling us China can give us so much benefit because they're going so fast, and they have all these resources and talent and markets and all these opportunities. But at the other side, there's this system that we don't really trust.
While the American system we do trust. I mean, so far we do. And we know that this is what actually keep so safe, because America has kept us safe. It's about values.
It's about democratic systems. So we feel very comfortable to align with the West, much less comfortable to align with China. Now the real issue here is that everything is at a crossroad right now. It's at a crossroad, which means that the future is going to look different than it has looked so far. And China's crossroad is very simple.
They've decided that their future will not be a future where we in the West are the reference point for China. They will define their own reference point from now on. And our question is only do we want to look at what China's reference point is and benefit from it? Or do we want to go into another direction, which is the direction the US is going in these days? It's a totally different direction. And so the biggest challenge these days that we are having is that many fear when we talk about the Great Wall of fear of this new world order that is being created.
A new world order, that is a path that we definitely do not want to take. A new world order that Putin said literally he wants to create, and because of that, invaded Ukraine. Xi Jinping didn't really oppose too much of it. And so we assumed that these two autocracies are actually aligned in the fact that this new world order has to be created. And so this is the interesting thing, because Biden very clearly has put a summit of democracies together, with all the democracies in the world, that he could gather to say: we have to fight for our freedoms, for our future, for our rights, for our way of thinking, against these autocracies that we should fear and that are a threat to our future. And so this has been a story, a narrative constantly about democracies, and safeguard the democracies, against the dangerous autocracies of the world. And more and more, this has become a
new Cold War. Where it's either you stand with us, or you stand against us. This is what we call a bipolar world. You're with us or you're against us.
And if you're a democracy, you're with us. If you're not a democracy, basically you're against us. This is the US narrative, and Europe is starting to take that narrative. The problem is that I think, I believe, that this is a completely false narrative. But everybody talks about it.
And everybody believes it pretty much. In the media, there's nothing else that you hear but this narrative. And why do I think it's a false narrative? Well, I believe it's a false narrative, because if you look at the countries that put sanctions on Russia for the illegal invasion into Ukraine, it's very clear that all these countries are countries in what we call the Western Hemisphere.
These are North America, Europe, Canada. It's also Australia, and maybe Japan can be part of it. But the rest of the world, in the Global South, which are in the color gray, not in the blue color on this chart, is very clearly not putting any economic sanctions on Russia. And the question is why? Because the biggest democracy in the world, India, is in this zone, and they don't put sanctions on Russia. The same for Indonesia. And so why are these countries not putting sanctions on Russia? And if you look at autocracies, I mean, Singapore, you could call an autocracy.
Definitely Vietnam with a Communist party in charge. But also the Gulf countries like Saudi Arabia or the United Arab Emirates or Qatar. I mean, clear autocracies. In some cases, we love to do business with them. As long as they get away from China or it benefits us, or if we can't get the oil from Russia, well, we'll get them from other autocracies. So we like to do business or have no problem to do business with autocracies, as long as they're small enough and we can manage them.
So this is not an autocracy versus democracy narrative, but everybody talks about it. What it really is about. It's about this bipolar world against a multi-polar world. The multipolar world is the world that most countries in the Global South believe should be the future for the international based order.
And that means that great powers like China, like India, like Brazil, also have a voice, a stronger voice. The whole Africa must have a stronger voice. And this is something that is not new at all. Actually, in the 60s, when there was the Cold War, already, the Non-Aligned movement was established and was created to show that most of the countries in the Global South did not want to choose between the West, America and Europe, or the Soviet Union. They wanted to stay neutral.
But after the fact, with the IMF and the World Bank and many other situations, they were forced to choose for the West. But they didn't really like it. Actually, in 1974, they even created a resolution, or they wanted to create a resolution in the United Nations, which is called the New International Economic Order, which said very clearly that this multipolar world is about giving the Global South a bigger voice and more votes and more voices, because they represent 80% of the world's population. But that never passed. Even last year, in 2022, in December, that new international economic order was vetoed. And most countries in the West, actually were against this new international economic order.
You could call it a multi-polar world. And so the interesting thing is that these countries that voted for and these countries that voted against are the exact same countries that put sanctions on Russia or didn't put sanctions on Russia. This map constantly comes by every single time, over and over again. And so it's not an autocracy versus democracy fight. It's a West versus the Rest fight, or world. And that means an old world versus a new world. And that is what is the challenge.
And because most of these countries in the global South has felt this containment or entanglement of the US and the Western rules based order into their countries, they feel that they need to get out of that. But they haven't been able to do that. And the first country that really was able to do that was China.
And they did it through building this Belt and Road Initiative or the New Silk Road. Now many say it's about the resources, it's about the markets that they get, and they can sell their products and all these countries. And that's all true.
But what they really wanted was to get more friends in the Global South that could help them to get more votes at the United Nations. Because otherwise they couldn't get enough votes to get a voice against the powerful G7 or the powerful West. And so the Belt and Road Initiative was more an initiative to not get contained by America rather than actually contain something themselves. But the rhetoric and the narrative is, of course, very different. What also came out of this whole new thinking of this multi-polar world and this new order has to do with the BRICS, Brazil, Russia, India, China and South Africa, in 2001 created this alliance to actually help each other economically, primarily. But this really didn't take off very
much because China was just too big compared to the others. But then last year, 2022 and 2023, what you saw in 2023 was an expansion of BRICs and many more countries have applied. And now we're talking about almost 40 countries that want to join BRICs and all of these countries are in the global South, from Mexico to Indonesia, and all want to join this new alliance or this new group.
And last year, six new countries joined, including Saudi Arabia, United Arab Emirates and even Iran. Imagine! That America must not like at all. And so this is all about creating this new multipolar world.
And they are starting to become very, very powerful economically. And that is the new paradigm that we should see. It's a new paradigm where there's a new world order being created or a new world, you could say being created where China is somehow at the center of it because they're the biggest economy in the global South. You can count China as part of the Global South.
Now, the problem in the West, in my view, is that we are getting more and more cracks in our own Western Wall. And China is looking at this and is emphasizing and extrapolating these cracks as well, which is also not a good reaction on itself. But the reality is that we need to deal with our own problems more than we should deal with China at times. And there's four big paradigm shifts that we need to accept, in my view. And this is all about this new world that is being created. And if we're not going to see this new paradigm, we're going to try and stick to the old way of doing business, which is actually, in my view, going to hurt us more than benefit us.
The four paradigm shifts that I think are happening in this world. The first one is about trade, and this is massive. What you see is that everybody is doing more protectionism. Everybody is building more walls,
more walls of fear. But the reality is that in the Global South, you see the opposite. In the Global South you see a south to south trade that is increasing a globalization 2.0, where we in the West are doing more protectionism. And so there's a different direction going into trade increase in the global South and a decrease in the Global North. And if you simply look at the exports that China is doing to the Global South, it is already this year bigger than the exports to the Global North.
And I'm talking about America, about Europe, and about Canada, and even Japan. you can call part of that, or Australia. And so this is the real transition that is happening. And in the first two months of 2024, actually China's export growth towards Indonesia, India and many countries in the Global South was more than 20%, sometimes 40%. While in the rest of the world it decreased. What happens is that the Chinese are now selling to Vietnam to then sell to the US, or selling to Mexico to sell to the US.
China is still selling the same. It's just doing a differen route. And that makes that these economies in the Global South are becoming stronger because they're part of this global trade.
The second thing has everything to do with security. And for many, many years since the Second World War, America has kept the world at peace, or at least the Western world. And NATO has had a huge budget to make sure that we keep safe. And these days we really need NATO
because of what's happening in Ukraine. But the problem is that we're not seeing that outside of the NATO realm, that there's more and more coalitions being formed. And these coalitions is about economy, but also about security. And that means that more and more conflicts will be created. Why?
Because as these other parties, these non-NATO members are aligning more, we are going to want to strengthen our military as well. And the risk of more conflicts is real. Now this is happening, and it's happening specifically in the Shanghai Cooperation Organization, which, again, China is driving. And this is happening where many countries that don't get along at all are now all coming together to actually form more agreements to have peaceful coexistence, at least in the non-Western world. And that is a paradigm shift that will be
very difficult to stop. Now, the third thing has everything to do with finance, and this is where a de-dollarization is on the way. It means that countries since the war in Ukraine have started to doubt the US dollar as the reserve currency and currency of trade.
Because they feel more and more countries in the Global South that ultimately the US has been using this currency more and more as a weapon rather than as a way for globalization, which it was intended to. This is the reason why people put so much into the US dollar as a reserve currency, is simply because it will always be transferable. It's always exchangeable. Except now for Russia, of course, and that could happen in any other country, is how many countries in the Global South now reason. But it's very clear that if you look at the debt of America today, it's almost 100,000 USD that every American should pay just to pay off the debt that America has towards China, towards Japan, towards Germany, towards Luxembourg and the UK and so on. So this is the real issue.
America is hugely indebted and they need the US dollar to be the main currency of trade and the main currency as a reserve currency. Otherwise they can't pay back their own debt. And so as soon as that trust gets lost, there's a problem. But nobody in America worries about that, or very few, because America is America and there's no second best. That, on the other hand, in the Global South, people are starting to think very different. If you look at Saudi Arabia, for example, they're starting to see, well, we're selling oil to China. China is our biggest customer, so why
wouldn't we trade that oil in renminbi instead of US dollars? And why would we need the renminbi? Well, we need a lot of technology. And China has technology. We can use that Chinese currency to buy the technology that we need. We don't need to go to the US bankers. But US has always protected Saudi Arabia militarily, so they don't feel very happy about this deal. But it's clear that the global South
is feeling more strong about this multi-polar world and making their own decisions. And so this is going to affect the dollar over time. Now, the fourth paradigm shift that I see is very clearly about technology. And this is a story I constantly talk about. There's a real tech war between China and the US. And today China has decided that they can actually play at the same level field of the US.
But what is really the big risk when it comes to high tech is that now, because we've pressured China and put them in a corner and not giving them access to technology, to resources, to talent, to investments for anything related to the highest tech, is that China has decided to create overcapacity in the middle tech. That means everything we need in our washing machines, in our cars, and everything that we love so much and drive and use every single day. China is going to cut the price as low as possible, have overcapacity, and that means it's a race to the bottom. And this is 95% of the tech that we need every single day. And if we can't follow, it means that our factories are not going to be able to produce the same technology as we used to before. This is a race to the bottom, which only China can win, because they know exactly how to race to the bottom. We are always racing to the top.
This is what Tesla does. This is what Apple does. China is now racing to the bottom. And so we are going to get more and more onslaught of Chinese goods, which are high quality, lower price. And simply because we have accepted that we want to fight the war on the highest tech and not anymore on the medium or low tech, which is still technology, but maybe unworthy of our attention.
And this is the difference with the Global South. The Global South, they love this idea to have more technology at better prices. And so this will enable their countries to develop much faster than they used to in the past. So my prediction of a paradigm shift is that actually the Global South will start to develop faster in growth, in terms of technology and in terms of entrepreneurship, than Europe and America. And all because China is supporting it. Now, the real thing here is that there's four big paradigm shifts happening, in my view, and it's all related to this multipolar world that is being created.
And there's a globalization 2.0. There's new coalitions happening into the global development securities outside of NATO, outside of the West. There's a new BRICS+, finance decoupling of the dollar that is happening. And there's also much more high tech trade happening in the Global South. And these new paradigms are very hard to stop unless we have a World War III.
It's really hard to stop. And that is probably the main reason, because the rest of the world, where 80% of the world lives, is going to develop faster than ever. The main reason why we should understand that we shouldn't fear China as much from the top down and more from the bottom up, because that is where the real transformation is going to happen.
So we're living in a twilight zone, a situation between an old world and a new world. An old world that tells us that this is where we're safe. This is what we know. This is what we understand, and we want to stick to that. But there's a new world where the Global
South and most of the countries outside China really want to go towards, and they now feel strengthened with China as a big economy, India coming up, Indonesia, the BRICS, the De-dollarization,...all these paradigm shifts, they feel now is their time in history to start together, creating this new world where the global South has a lot more to say and can define their own future. And so our problem is that we're stuck in the twilight zone between the old world and the new world, and we're creating great walls of fear in our society to make sure that we don't cross from the old to the new world. The problem is, when the rest of the world has crossed over that wall, will we also cross, or will we stay behind our old world and be happy with what we have? But the problem is, as we have more and more cracks in our own world, we might not even keep what we have. And that is why I believe fearing China from the top down is probably not the right way if we consider that the real transformation is happening bottom up.
2024-04-03 04:55
