US China | Stepping back and taking stock
Powerful Different and Equal is a timely and significant analysis between the US and China by Peter B. Walker, Senior Partner Emeritus at McKinsey & Company.
Stepping back and taking stock
Based on history, concluding that either of these two democratic modesl is not well positioned going forward is difficult to support. Many predicted upheaval or collapse in China and have been proven wrong. While democracy in the US faces a growing list of challenges, it contiues to prove resilient. So, what can we conclude at this point in history?
The US Democracy is Inherently Messier Than China’s Model
A divisive two-party system with full transparency, a balance of power across the three brandches, and predsidential elections every four years guarentees a high level of ongoing disruption. China’s leadership team, by comparison, is more cohesive and experienced, with no decision-making transparency. Further, China’s test and learn model facilitates less risk taking and enables quick adaptation. Tensions arise from differences, but they remian behind closed doors and once decisions are amde they are fully supported. Finally, the dicsipline of the five year planning process ensures a balance between short-term operating issues and long-term investments. The US model makes producing a one-year budget difficult and leads to persisitent underinvestment in the strategic areas of education, healthcare and infrustructure.
The US Government is rarely popular with the people
The Founding Fathers designed the US governance model to make government decision-making difficult so the free eterprise economy could thrive. Citizens, seeing dysfunctional behaviour by government officials through full transparency, are understanably unimpressed. This is reflected in the results of the Edelman Trust Barometer, an annual online survey that calibrates trust in governments, businesses, GOs and the media throughout 27 markets and tapping into 1,150 individuals per market. To the question “Which institution is the most broken?” 59% of US citizens believe the government is the most broken institution. To the question “Which istitutuoin is most likely to lead to a btter future?” 15% of US citizens, the lowest percent, said they believe government is the answer.
The Chinese central government sustains a high level of suppor from the people
The central government is in charge of all important decisions and actions taking place. The government delivered prosperity, stabliity, and national pricde over the 40 years of Reform and Opening Up, and it refledcts the same in the Edelman Trust Barometer. To the question, “Which institution is the most broken institution?” 38% of Chinese citizens believe business is the most broken institution. To the question “Which institution is most likely to lead to a better future?” 68% of Chinese citizens believe the gobernment drives the country forward.
The US government faces more serious challenges today than China’s
The path to reverse the growing US partisanship is unclear. The resulting gridlock led to a sharp growth in the number and importance of executive orders, which shifts the balance of power from the legislative to the executibve and judicial branches. Partisanship also udermines people’s confidence in goverment and discourages talent from running for office. A second challeneg, grounded in a Supreme Court ruling, increases the influence of exceptionally wealthy donors, frequently with etremist views, on election outcomes. Finally the infighting, as well as ongoing deficit spending is undermining the US’s ability to make the long-term investments needed for future growth.
While China faces many serious issues, including an aging population, income ineuqlaity fast exceeding the US in scale, environmental pollution and technology gaps in chip manufacturing and elsewhere, a single-party government with strong leadership and an effectient corproate governance model is well positioned to deal with its challenges.
Despite this, the US and CHina’s success in building the two strongest economies globally is tied to their own unique forms of democracy. Both will be challenged to a great extent going forward as their rivalry intensifies and the technology-driven pace of change accelerates. How well each adapts will determine future successes.
The major challenge
The major challange to understanding the two different forms of democracy is the lack of openness in the West to understanding China’s model and recognizing how the current US model seriously compromises the original objectives of the Founding Fathers/ In the bigger picture, the US is designated as the global standard bearer for democracy and CHina is recognized as the world’s largest country. Beyond this broad perspective, there are many compromises to Jefferson’s vision of one man and one vote for fullyt informesd male citizens. If we look beyond the ‘communist’ lavel and recognize that the goa. is to serve its people well, the ‘responsive’ Chinese model focuses on delivering prosperity and should be consdiered a credible alternative to a traditional electoral democracy.
About the book
From Trumpâ€™s aggressive rhetoric against China, to the escalating trade war with tit for tat responses, and Chinaâ€™s 2025 initiative that threatens the US global leadership in advanced technologies, tensions between the US and China (the two dominant forces of todayâ€™s world) have never been higher.
This book provides a timely analysis of the US-China relationship. Each model is deeply rooted in their respective histories and cultures, with both models highly successful in achieving their main goals and highly resilient over time. It explores the core misconceptions on governance, economic, social and military issues, and the root causes of these misconceptions. If China and US could close the gap by each understanding those differences and their implications, the author argues, they could work together to overcome global issues to the benefit of all.
About the author
Peter B. Walker is a Senior Partner Emeritus at McKinsey & Company, the worldâ€™s leading management consultancy firm. During his 46 years at the firm, he worked with a wide range of financial institutions around the world, with a focus on China.
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