A Tale of Two Strategies

The father of modern China, Deng Xioping, who converted the Chinese economy from a command economy to a market economy stated that China should hide its strength until it would be strong enough to show it. Having observed the Japanese challenge to America in the 1980’s implode as the American market economic system and democratic system of our society turned back the challenge while Japan went into a 25 year stagnation, there were expectations that the same would happen to the Chinese challenge. What happened! To some extent China has gone relatively silent in the world media while America is the talk of the world as each day we dominate the news with how we are moving into an isolationist program where we disengage from the rest of the world via tariffs and reduction of security support for nations trying to develop democratic structures. Meanwhile China is quietly going about working on the myriad of problems that they have from an ageing population, unemployment, declining real estate prices to developing alternative energy sources. However, since their national debt level is in a more manageable level than ours, they are quietly travelling the world making trade deals as we pull back from our trading partners. Two major countries and two different philosophies. It will be interesting to see which one begins to pull ahead. It will be a challenge to Warren Buffett’s principle of investing “Never bet against America”.