Wolff Responds: 'China's Challenges' dated May 13, 2026.

Added: 2026-05-14

[00:00:00]Welcome friends to another Wolf Responds.

[00:00:04]I'm going to call this one China's challenges because I think the visit of Mr. Trump to Beijing is a moment when it is necessary and the historical timing is right to see what are the challenges that China poses to the United States and therefore of course to the world as a whole.

[00:00:33]And I'm going to approach this as I do many topics historically because I think that illuminates a great deal. And I also think that the discussions in the media are mostly focused on what you might call great power conflicts, US versus China and all of that. That's not what I'm going to do. I'm going to try to go behind all of that and ask and answer this question.

[00:01:04]How did it come to be that in the year 2026 great economic powers of the world are the United States which has been in that position for the last 75 years at least and China which has newly arrived in that situation in terms of the last few centuries. ies of history because I think if we can answer that question, we can account for how and why China has arrived at the position of economic, political and indeed also military power. Then we will understand where things are likely to go and not be fooled or deflected by details that are very current and that don't reflect how these two countries are changing as they bump into each other.

[00:02:15]All right, let's begin with this.

[00:02:19]75 years ago at the end of World War II, China ranked among the poorest countries on the face of this earth.

[00:02:33]Let that please sink in. The United States was at that moment, end of World War II, precisely the richest country on the face of the earth. So there we have it. a very very poor country, a very very rich country.

[00:02:57]It went through a civil war, China did, from 1945 until 1949, which meant that on top of all of the destruction of World War II, on top of all of the destruction of the Japanese invasion of China starting early in the 1930s.

[00:03:23]On top of those destructive wreckages, we had a civil war for four or five years.

[00:03:35]So the poorest country on earth or one of the poorest was also one of the most destroyed by all that happened between 1931 and 1949.

[00:03:53]Last point, the civil war in China was won by the Communist Party of China and the eighth root army developed by Mao and his associates in the provinces in the interior in the decades before that.

[00:04:17]very very poor country wrecked by multiple invasions and wars and then a civil war won by a communist party which meant that China entered the world not only one of the poorest countries visav the United States as one of the richest but the United States was the sworn enemy of the communist party that won the civil war in China.

[00:04:52]Which meant that in the following years, the 1950s and the 1960s, the United States worked together with the defeated civil war forces in China, trying to slow, to reverse, to undo what had been achieved in China.

[00:05:15]The whole development of the position of Taiwan comes out of that story.

[00:05:24]No help was given to China to rebuild from World War II. Help was given to Europe. Remember the Marshall Plan? Help was provided to our ally in Japan. but no help to the Chinese because of the role of control operated by the Chinese Communist Party.

[00:05:50]I stress that because when I was a young man learning economics, I study economic development was all the rage in the 1960s and 70s.

[00:06:05]Western capitalism led by the United States was going to develop Asia, Africa, and Latin America. Teach them how to do what they wanted most to do, which is stop being the poorest parts of the human race. They wanted to develop quickly to catch up to the living standards of Western Europe, North America, and Japan.

[00:06:33]And we were the students who are going to bring to them the learning of how to do that accomplished in North America, Western Europe, and Japan that we would convey to them.

[00:06:47]And here in lies the first challenge that comes from China.

[00:06:54]They didn't get help from the United States. They didn't get money. They didn't get supports the way the Europeans and the Japanese did.

[00:07:06]And they didn't get young people's economics, people like me. We were never taught anything about China nor invited to it.

[00:07:17]Nor would we have gone had we been invited.

[00:07:21]China was a pariah. China was not recognized in the 50s and 60s as a country. The United States refused to recognize China to exchange ambassadors and all of that.

[00:07:37]The American position then can best be described as hostile with hopes that China would just go away somehow.

[00:07:47]But it didn't. And the big challenge of China today is the following undisputable fact.

[00:07:58]One of the poorest countries in the world has caught up to what was the richest country in the world 75 years ago. And it did so without any financial help, without any material help.

[00:08:20]In fact, with nothing other than hostility and enmity.

[00:08:26]Wow.

[00:08:28]What did the Chinese have that could begin to explain this? Why is the most successful story of economic development of the last half century the story of China?

[00:08:48]No other country in Asia, Africa, Latin America can display what the Chinese have achieved.

[00:09:00]Well, here comes the second challenge.

[00:09:03]What's unique about China is how it organized its economy and how it organized in particular the relationship between the government and the Communist Party. on one side and its economy on the other.

[00:09:24]Because if you want to know what makes China the powerhouse it is today, it is above all else the economy.

[00:09:35]They have grown their economy unlike anyone else.

[00:09:42]In three to four decades, they achieved what Western Europe took three or four centuries to do.

[00:09:53]They have figured out how to speed up economic development. At what moment? At a moment when most of the world is poor like China was and wants to get rich like China has become. And that's of course why China represents a challenge because the whole world, Asia, Africa, Latin America in particular, but not just them are looking to China more and more as the model to replicate, as the model to learn from, as the way to do what is their highest priority. party.

[00:10:40]And now let me drive home what the Chinese economy is that helps explain its spectacular growth to the point where it can present these challenges.

[00:10:55]China is a hybrid.

[00:10:57]It's not a private capitalist economy, kind of like the United States and say Britain. And it's not the Soviet Union either. where instead of private enterprises, the government owns and operates most of the industrial enterprises and a good number of the agricultural as well. No, China is neither the one nor the other. China is a hybrid.

[00:11:25]Half of China's economy roughly is state-owned and operated enterprises and the other half is private capitalist enterprises owned and operated by capitalists who are Chinese and by capitalists who are non-Chinese.

[00:11:45]That's already one uniqueness.

[00:11:50]But on top of this hybrid sits a government that has lots of controls on both sides of that hybrid.

[00:12:01]Much more control than we see any state having in the west.

[00:12:08]And then on top of the government sits a communist party.

[00:12:14]A party committed throughout its history to socialism to moving beyond capitalism.

[00:12:25]That's why Marxism is taught in Chinese universities. Marxism is a philosophic position that the Chinese having interpreted in their way. You might say what they practice there is Marxism with Chinese characteristics. And of course, I'm borrowing from how they describe their economy as socialism with Chinese characteristics.

[00:12:54]They have a philosophy, their communist party that governs their government, which in turn regulates their economy.

[00:13:05]And that formula is what explains a good bit of their remarkable achievement.

[00:13:16]And look at the irony should challenge each of you in your own thinking. The irony is that the most successful country in terms of economic development in the global capitalist system of the last 75 years.

[00:13:36]I call it a global capitalist system because capitalism is the dominant economic form throughout the world.

[00:13:45]If you define capitalism as I do as the organization of production into employers and employees, that has become universal.

[00:13:58]But the Chinese have their own particular way of doing this.

[00:14:04]They're perfectly well entitled to call it whatever they want, but they want to link it to the goal of going beyond capitalism. That's why they're interested in Marxism and that's why they call their society socialist. So think with me of the irony.

[00:14:25]The most critical tradition of thought about capitalism is Marxism. He was a critic of capitalism and the lines of thought he developed have embellished that critique. The most successful country in the world capitalist system so far has been led by a party that doesn't want capitalism, that wants to get beyond it.

[00:14:53]What a remarkable story that the greatest critics achieved the most spectacular growth within the capitalist system which therefore meant that yes they could and did call themselves socialist but they were governed in many ways by the larger capitalist con context within which China's growth developed.

[00:15:22]It is a remarkable story.

[00:15:26]It challenges the United States not just because China has a navy in the in the South China Sea and that that's important. Not just that it's a major shaper of the war in Iran thousands of miles away. Not just that it is the great quote adversary of the United States. important as all of those things are, but the deeper challenge is to ask and dare to answer, why is it China? Why are we not having Mr. Trump visit the great country of Malaysia or Egypt or South Africa or Brazil or you fill in the blank.

[00:16:17]China is what's on the agenda and it would be nothing other than crude ideology to imagine that the Communist Party, the Marxist thinking, the governmental controls, the hybrid quality, all of them were not important. They're somehow not to be thought much about. We're just about to deal with China as a big power vis the United States.

[00:16:52]Not only have we explained how China came to be, but we can now take the last step of this argument.

[00:17:02]China is growing in a way that the United States stopped doing years ago.

[00:17:11]It's not just the rates of growth of GDP. 2% now in the United States, over 5% now in China. That relationship, that's what it's been for many decades, and there is no reason to imagine it's going to stop anytime soon.

[00:17:34]China is about to catch up and then to surpass The challenge of China is for the rest of the world to come to terms with the extraordinary achievement this country has made.

[00:17:52]And because I'm speaking in America to Americans among others, I have to add all I'm trying to do is understand the background to the visit of Mr. Trump to China this week. China has its problems, its difficulties, and its struggles.

[00:18:17]Their Marxism teaches that the struggles never stop, nor does the development.

[00:18:24]What China is now is not what it was 50 years ago and is not what it will be 50 years from now. I am not endorsing China any more than I'm endorsing the United States or anybody else. But I am trying to understand the realities and not get distracted by the ideological warfare between what Mr. Trump stands for and what Mr. Xi Jinping stands for in China.

[00:19:02]If interventions like this strike you as useful, if they help you understand what's going on, then please share them.

[00:19:12]Friends, neighbors, co-workers, family, that's why we make them. And of course, if you can help us defay the costs of producing and distributing these videos, we would be enormously appreciative.

[00:19:29]Just go to our website democracyatwork.info and you will find all the ways to do that. Thank you.