China’s Love Affair: Let’s Move Toward an Internet Economy
[Publisher’s Note: With coronavirus fears mounting over the past week, stocks have fallen at a faster pace than any time in history. Yesterday’s decline was the largest one-day drop since the 1987 crash. Whether it’s due to overblown media hype or not doesn’t matter. The market hates uncertainty. That’s why I called each of our expert editors this week – to provide some much-needed clarity. Click here to listen in. Next week, we’ll hear from 10x trading champion Chuck Hughes. Plus, we’re getting former CIA agent Jason Hanson on the line, who can offer helpful tips for keeping you and your family safe if a potential crisis scenario emerges.]
With coronavirus panic and oil price shocks making headlines and rocking the market, I thought today would be a good opportunity to revisit an old prophecy.
Keep scrolling to read how to keep our head as investors in any market climate.
There must be many ways to frame the Chinese Miracle of the past three decades to describe the sudden transformation of one of the world’s most gloomy, desperately poor, and too often tyrannized nations, into this shiny wonderland of innovation. To comprehend lifting hundreds of millions out of poverty and progressing toward freedom, not over centuries like our own ancestors, but in decades.
I’m currently in China on a week-long marathon during which I will deliver keynote speeches at two major tech conferences, do two national TV talk shows, promote 4 books in three different cities, and witness the launch of a new “free-flow zone” on Hainan Island (no visas, no tariffs, full global internet).
So, naturally, from 12,000 miles away, when I think about how to explain China, I think of… home.
For of all the ways to understand the Chinese Miracle, the most poignant and potent for me is to think of it as the fruits of China’s love affair with the United States, today sadly unrequited.
“Be More like America”
American CEOs see the largely imagined theft of US technology, ignoring the truth that in many contested areas Chinese companies are now the leaders from which we should be learning.
American politicians spout ludicrous conspiracy theories about Huawei telecom components — though installed in the US, by US companies, on US networks — somehow being secretly coordinated into a vast network of spy stations.
(Could the Chinese, supposedly such insidious geniuses, really not just figure out a way to bug US-made equipment. Wouldn’t that be easier?)
By contrast, everywhere in China, I encounter tremendous enthusiasm for America and especially American capitalism. As well as no enthusiasm at all for the communist ideology that doomed 100 million Chinese to death by famine within living memory.
For more than 30 years, every step forward the Chinese people have taken could be summed up in one imperative: be more like America.
Isn’t this what we always wanted?
It is true, as with Japan in the last century, that when a nation wants to imitate us, they become, in some sense, competitors. We want to be world leaders in technology, economic productivity, and science. We want great American companies to be the great companies of the world. China also wants all these things for itself. They want what we want.
Greatest Competitors = Greatest Contributors
Fortunately for both nations, and the rest of the world, in none of these arenas is the notion of durable national dominance even meaningful. Our biggest competitors are always our biggest contributors.
Dominance may be elusive but trying to enforce it politically — already futile and destructive as mercantilism in Adam Smith’s day — is far more dangerous today.
The essential truth of the information economy is that the great source of wealth — the human mind itself — cannot be monopolized.
If the US could somehow monopolize the newest technologies we follow in The George Gilder Report and George Gilder’s Moonshots — 5G, real artificial intelligence (AI), edge computing, nanotechnology and the great new companies and radical new business models they are driving — and grasp these for our own and let no one else play, the one sure result would be a huge setback for years or decades.
The great payoff of excluding Chinese minds from the economy of mind would be to impoverish our own, not only by losing the Chinese contribution but by dampening our own competitive fires.
Fortunately, it cannot be done. So please, let’s not die trying.
Far better for the US and US investors would be for every nation on the globe to do its part to drive forward these innovations and finally build a true internet economy. Finding and shifting capital to the companies that will do that, whether from China, Israel, India, old or new Europe, Africa, Australia or Latin America is the great imperative and promise of our time.
That is our job as investors. In these prophecies, I will be detailing how we as investors can embrace this great undertaking and reap tremendous profits along the way.
Editor, Gilder’s Daily Prophecy