Chris Skinner on how China’s grip on the planet’s culture has risen and fallen, and is now on the rise again.

I grew up with America as the dream. However, in the past two decades, China has become the second world superpower whether the Americans like it or not. This isn’t me having a love thing for China. It’s just a fact.

The Americans don’t like it. Google China as a superpower and most US media write along the lines of, “China lacks the political, economic and civil freedoms to become a world leader”. Hmmm. In fact, I remember presenting at an American banking conference in 2006, saying that all the biggest banks of the world will soon be Chinese. The audience gave me massively negative ratings, yet 10 years later, I’m right. The US markets just don’t want to admit when they’re being beaten.

Read a more neutral discussion, such as the Indian magazine Swarajya, and you get a very different view:

America is still the world’s biggest economic and military superpower by far, but its geographic isolation means this power cannot rise any more. Its power will last if the Chinese still think the American market is important for its own growth – and that could last for another decade or so. Once its new Belt and Road Initiative starts taking off, the economic centre of the world will even more decisively turn towards Asia.

Perhaps the most neutral observation came from The Atlantic, after the recent G20 meetings:

Remarkably – and, unthinkably, as recently as one year ago – today China seems to be the world’s most likeable superpower. Compare Donald Trump’s recent visit to Europe with that of Premier Li Keqiang, China’s second-in-command. Li, who landed in Berlin on Wednesday, hoped to use his three-day trip, with stops in Germany and Belgium, to “voice support for an open economy, free trade and investment [and] global regional peace and stability”, according to China’s state news wire Xinhua. Trump, on the other hand, failed to support Nato, decried Germany as “very bad” for its trade policies, and even seemingly pushed aside Montenegro’s prime minister to barrel his way to the front of a group photo. On Thursday, Li reaffirmed China’s support for the Paris Agreement, stating that there is an “international responsibility” to fight climate change. Later on Thursday, Trump announced the United States would exit the landmark climate-change treaty. In that speech, Trump reaffirmed his commitment to his “America First” policy, while Li, in his meetings and speeches in Europe, successfully painted China as a liberal, responsible, globalist power.

Historical stereotyping

What seems obvious to me is that some of us have a distrust of China, and other nations, due to historical stereotyping. We think Chinese are communists who abuse basic human rights. So some media would have you believe, but I’ve been intrigued (over the past decade specifically) to see the rise of a nation through technology that’s becoming more equitable. Maybe I’m naive, but feel that if current trends continue we will all be viewing China, Chinese culture and Chinese business as the dream in 10-20 years, replacing the American dream with the Chinese one.

Blasphemy, some may say, but you only have to look to history to see how China’s grip on the planet’s culture has risen and fallen, and is now on the rise again. Growing up, for example, I was educated with strong knowledge about Egyptian, Greek and Roman civilisations. I was taught nothing of one of the oldest cultures in the world, where paper, writing, the compass, alcohol, silk, porcelain and more were all invented by the Chinese.

Why? Because of our Western bias. In fact, it’s been interesting to see a variety of discussions over the past months of the Belt and Road (BRI) initiative. If you’re not familiar:

The initiative was officially launched in September 2013 when President Xi used a speech at a university in Kazakhstan to call for the creation of a “Silk Road Economic Belt”. The project was later expanded and rebranded with its current name …

The Belt and Road initiative is an immensely ambitious development campaign through which China wants to boost trade and stimulate economic growth across Asia and beyond. It hopes to do so by building massive amounts of infrastructure connecting it to countries around the globe. By some estimates, China plans to pump $150bn into such projects each year. In a report released at the start of this year, ratings agency Fitch said an extraordinary $900bn in projects were planned or underway.

There are plans for pipelines and a port in Pakistan, bridges in Bangladesh and railways to Russia – all with the aim of creating what China calls a “modern Silk Road” trading route that Beijing believes will kick start “a new era of globalisation”.

Phenomenal.

While America is rejecting globalisation and creating friction with Russia, continuing the enforcement of sanctions much to Putin’s annoyance, and China, who Trump tweets aren’t helping to stop that irritating little country called North Korea from testing bombs that could reach the US … China is going the opposite direction and courting Europe, Africa, Russia and other nations to cooperate in building the next unique future world.

Fully cashless

Meantime, as many of you know, Ant Financial and Alibaba are poster children of Chinese entrepreneurialism and are leading the way in building global partnerships for trade. Between Alipay and WeChat Pay, China will be one of the first and largest nations to be cashless. Estimates are that China’s first-tier cities will be fully cashless by 2022, while the rest of the country will follow within around 10 years. Already, WeChat and Alipay users are transacting trillions of dollars through their mobile wallets – USD $5.5tn in 2016 to be exact – which makes America’s paltry USD $112bn in mobile payments look archaic.

A cashless China will be an amazing achievement for a nation with near 1.4 billion people. It’s also phenomenal, because China was the first nation to use cash (they invented it) and now it’s one of the first nations to get rid of cash. Paper notes as payment have been used in China since the Tang Dynasty in the seventh century A.D. and has been a consistent form of payment ever since. By comparison, the first paper notes as a value store used elsewhere in the world didn’t appear until the 1600s, almost a thousand years after China.

All in all, China’s transformation from a nation that demanded bank tellers take a proficiency test in using an abacus 20 years ago to the cashless nation we see today is a phenomenon, and I firmly believe that the leadership – economically and commercially – will impact all of us in our day-to-day dealings within another decade.

READ NEXT: Imagining a cashless future

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by 尧智 林 on Unsplash.

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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