Beinstein column: Making a real deal with China | PostIndependent.com

Beinstein column: Making a real deal with China

Alex Beinstein
Alex Beinstein
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President Donald Trump has been right to spotlight fundamental imbalances in the trading relationship between the USA and China. And if China does, finally, agree to purchase more of our food that will help on the margins. But the real hope should be in a dramatic paradigm shift in how our own two countries view one another.

If you read accounts of Richard Nixon’s first visits to China, you’ll see China as a very fragile and vulnerable country. According to Nixon, Chairman Mao never felt comfortable talking in terms of GDP growth or demographic trends. Mao usually wanted to speak to the “soul” of China. China, even in the 1970s, still carried the weight of earlier colonialism, of times in which British and American golf courses in Shanghai refused to allow any Asians, regardless of their wealth, to join.

There were times in Hong King in which whites and Asians had to live separately. The movie “Chinese Box”, which centered around Britain’s departure from Hong Kong, depicts Asian women feeling used by white men.

The Chinese, in short, don’t trust the West. That trust can only be gained by showing respect and empathy for China’s wounded feelings. Getting caught up in the micro details of tariff rates or currency manipulation misses the larger point; it’s about inherent mistrust.

If that mistrust can be morphed into something much more positive, then durable change really is possible.

According to many western businessmen who have operated in China, one of China’s greatest flaws is the culture’s emphasis on eschewing failure. In America, it’s so typical for somebody to start a venture, fail, and then try again.

Not so in China, where risk taking is limited to avoid any shame for the family. Warren Buffett is happy to speak to many of his failed investments. Would he have been so successful if he had never been willing to fail? And yet, according to the blog ESI Money, one Chinese-American said even after making a significant annual income, he couldn’t growth his wealth because he was always taught to put everything in a savings account; the stock market and real estate, his parents always said, were too risky.

Eventually, he realized the only way he could grow his wealth was to risk his capital and he did, leading to substantially more wealth for himself. Societies can’t grow if everybody just sits on cash or very conservative bonds; that’s why our tax system rewards investment and capital gains.

China cannot reach its full potential unless its own people are allowed, even encouraged to fail. And relatedly, growth can only come in the freedom to question authority.

Our capitalist system is predicated upon younger generations coming up with ideas to make goods and services better, cheaper, and more efficiently. This cannot happen in a hierarchical society, like China’s, in which young people are prohibited from questioning their parents or government officials or state owned enterprises.

Jeff Bezos of Amazon was laughed at by Harvard Business School for wanting to bring retail online, Bill Gates was dismissed for dropping out of college. Those stories, under the current conditions, are less likely to happen in the context of Chinese culture.

But all of this can change. Sure, from a selfish point of view, the more access we have to Chinese markets, the more our companies would benefit, which would enhance the wealth of all Americans. But much more importantly, the more that China opens up, the more their own beautiful people can blossom.

Coupling the industriousness and work ethic of the Chinese people with a much more open system would unleash miracles hard to fathom. Rather than call China a bunch of cheaters and thieves, we instead should adopt the rhetoric of our sixteenth president, Abraham Lincoln.

The old prairie lawyer once said, “It is an old and true maxim that ‘a drop of honey catches more flies than a gallon of gall.’ So with men, if you would win a man to your cause, first convince him that you are his sincere friend.

“Therein is a drop of honey that catches his heart; which, say what you will, is the great high road to his reason.”

Alex Beinstein is a millennial who grew up in Aspen, lived in Carbondale for a while and now writes from Washington, D.C. His column appears monthly in the Post Independent.


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