Why China is rising and the West is falling

As the West desperately tries to stem the economic bleeding with punitive US tariffs and a UK/EU military spending spree, neither of which will solve but exacerbate its problems, China continues to rise. Why?

The answer is simple. China has followed the same economic policies that the US and Europe did in the late 19th century. It has kept natural monopolies like energy, transport, health, education, communications and, most importantly, banking and credit, in public, not private, ownership. In other words, it has pursued a model of productive industrial capitalism, which the west abandoned in the late 1970s for extractive and nonproductive financial capitalism.

China didn’t have a wealthy rent-seeking kleptocratic class that demanded the government borrow from it and pay it interest. It created its own fiat currency and used it, as Keynes would have advised, to finance spending into the economy. It prevented economic rents from accumulating in private hands and used them to pay higher wages and maintain industrial profits.

This is classical political economy - taxing excess economic rents in order to finance government spending. The majority aren’t exploited by a wealthy land-owning aristocratic minority. Markets are free of land rent, monopoly rent and bank interest charges. As a result, the costs of production, doing business and living are all minimised.

Unless the West abandons financial capitalism and returns to industrial capitalism, there’s no way it can compete with China. It would need to renationalise natural monopolies and reinstate progressive taxation, not just of income but of wealth.

It would have to recognise that the public sector manages natural monopolies far better than the private sector which accumulates debt, pays all the profits to owners and shareholders and destroys the service in the process. The water privatisation disaster in England is the poster child for what’s wrong with this approach.

It’s unlikely the West will do what’s needed to reverse its decline because all political parties have jumped onto the neoliberal bandwagon.

Just look at English Labour - you can’t get more neoliberal than Keir Starmer or Rachel Reeves.

They, like the rest of the British political class, are products of a completely financialised political system, bought, sold and controlled by the kleptocrats.

Meanwhile, last week was the opening of the 137th annual Canton fair in Guangzhou, China’s largest trade expo, where 60k Chinese manufacturers are selling to customers from all over the world, especially to buyers from the global South. The global centre of trade has shifted from West to East.

So, China’s power and influence will grow while the West, which pours trillions into endless wars and neglects its people, will decline further.

I’ll leave you with this short video, which says it all.