Editor’s note: Prominent American scholar Peter Walker recently visited the Chongyang Institute for Financial Studies at Renmin University of China. At Forum for Area Studies - U.S. Series No 18, he delivered a public lecture titled “Reflections on China-U.S. Relations”. Using the fundamental differences between Eastern and Western cultures and modes of thought as his starting point, he probed the future directions of the development models pursued by both China and the United States. Below is part of the excerpt of his speech:
There’s one basic point I would like to make: the Chinese model is very stable, and has been over long periods of time. But there’s very little understanding in the U.S.
When China started to get visibly successful by relieving so many people out of poverty and by developing the world-class infrastructure and the best manufacturing capabilities by a multiple in the world, especially in advanced technologies, the U.S. has to recognize that China is actually accomplishing a lot.
If you look at the Chinese model, you first start out with the idea that it has a strong central government. The country realized that the only way you could protect yourself is to get everybody working together.
So one of the challenges in the U.S., again, goes back to duality. The U.S. has, by nature, an adversarial system. It has Democrats and Republicans and they agree on almost nothing. So the net effect is that the Democrats get elected and move left, then the Republicans get elected and they undo what was done by the Democrats. But China moves not in a straight line, modified based on changes in the outside world, not because they’re fighting within themselves.
And then the core thing is, if that is the model, how do you ensure quality?
Three key strengths that make the “Chinese model” superior to the U.S.
First, China does very systematic reviews of people’s performance and potential over time and select the people who have accomplished the most for promotions.
And China’s disciplined Five-Year Plans demonstrate the execution ability. The central government set goals, then each industry and each province make plans to achieve those goals. And then, everybody signs on to what the Five-Year Plans call for.
The most important strategic advantage that China has is industrial policies. When China has the direction (of areas including EVs and AI) being set at the top, the best talents are gathered from universities, state-owned enterprises, private sector, and ministries, and the 10-year plan with subsidies from the government can be pulled together, forming into effective and executable plans.
Look at performance since the Reform and Opening-up over the last 47 years, and one will know the model is very stable and really unmatched anywhere in the world. It gets the most talented people. It gets everybody on the same side as opposed to being adversarial. It is strategic with industrial policies. It gets operational and disciplined with Five-Year Plans. It holds people accountable for getting results. It’s a very simple combination, and that’s one of the great strengths of China.
Second, Confucian values. It is the most important and least understood point. To me, Confucian values are everybody has a personal responsibility for self-improvement. Through hard work and education, not for their benefit, but for the benefit of their family and society. China is a collectivist society. That means people don’t think about themselves. They think about how to contribute to the family and the society as a whole. So such thinking stems from Confucian values.
The U.S., compared to China, is the melting pot. So China has enormous strength in having people who grow up with the same values, Confucian values, and with the same ethnic background. It means that when people are rallied to do something for the benefit of the country as a whole, they basically have the same view of the world, which means they’re much more likely to get aligned. So that is the next very important strength for China.
The other one, and this is counter-intuitive for a lot of people. Most people don’t really understand what is The Art of War is all about. But when you think about it strategically, it’s extremely important. It basically says to win military conflicts ideally with no violence, which is very different than the Western view.
The military model in the West has always been those who are the most proficient militarily with the largest troop count, and the best leaders are going to beat the other side. The net is that wars create losers and losers. Yet the cost financially and of lives was enormous.
Looking back to those strengths, it’s not surprising that China has a very strong foundation for performance over time in a way that gets things done and in a way that is supportive to the people. I think China is expected to account for 40% of all global manufacturing over the next couple of years.
U.S. containment policy toward China doomed to fail
Switch over now to the U.S.-China relationship. In the beginning, the U.S. regarded China as a backward Communist country, so there was nothing to worry about. Then China went through what I would call the Wake Up period. It occurred when China gets pretty good at infrastructure. And look at Huawei, the global leader in 5G. People wonder, how did Huawei get its technology? Huawei didn’t get it. It actually created it. And it was state-of-the-art.
So when the U.S. basically realized that it was losing its leading position, the response was to contain China. That became the U.S. mantra for probably the last seven to eight years. But when you are competing against a country that has six times as many STEM students as you do, you’re not going be able to contain China.
I think we’re at the inflection point. And a number of senior well-regarded Chinese people in the U.S. said that the U.S. cannot contain China. When Deep Seek came along, everybody said how in the world was China able to do that? And Huawei came out with a phone that was highly competitive with the iPhone and costs a lot less money. So we’re kind of at a point where containment is being seen increasingly, but not going to be successful.
Where will that lead us to? Just think about uncertainty. But there’s no uncertainty for China. China is going to keep working the mode the same way it has done, and it is going to do it in a consistent way, and deliver results that enable people to increase their overall standard of living. But nobody knows where all of the change that’s going on concurrently in the U.S. is going to lead.
I think the most critical telling point in the U.S. is going to be the midterm elections in 2026. Trump has basically made a big bet that inflation is going to come down and that tariffs are going to enable the U.S. to rebuild its manufacturing capability. Most people who are in that business would say it’s not going to happen.
When the U.S. brings plants back into the U.S., such as Apple that basically assembles all phones in the U.S., there are no people in the U.S. who want to work in an Apple assembly line, dealing with little screws.
So there’s a fundamental challenge. Firstly, do you have the sources of talent needed to rebuild manufacturing? Secondly, who’s going to put money into a manufacturing business in the U.S. when you’ve got lower quality and higher costs?
The question of midterm elections is where is the U.S. going to be when the story is told to the electorate of what’s been accomplished in the first 2 years of this administration, and there are two scenarios.
One is the tariffs drive up inflation. Inflation was supposed to come down and therefore that’s going to be a real challenge. The other one is that manufacturing jobs are supposed to come back, but I think it’s highly unlikely. Then you have social pressure, because with the Big Beautiful Bill that was passed, had a funding of tax cuts for the wealthy at the expense of the poorest people in the country who are on Medicaid. So there’s going to be a lot of pushback on that.
I think the administration will get reasonably good marks on immigration because the flow of illegal immigrants has really come to a grinding halt. But the other side of immigration is to meet the numbers from the ICE. It’s basically going after families and hardworking parents who have been in the U.S. for 20 or 30 years, and deporting them and the jobs they do that no one in the U.S. wants to do. They are the people who work in agriculture, they work in hotels, they work in restaurants, they work hard, and they work for less money than most Americans would accept.
The margin of victory of the Republicans, even though they call it a mandate, was 1.5 percentage points, which was one of the lowest margins of victory in recent elections. A swing of maybe 5 points in voters and will switch the Congress from Republicans to Democrats. If the Republicans lose control of Congress, then they will be in a lame duck situation for the final two years because they won’t be able to pass legislation.
The midterms are going to have an enormous impact on how people feel about where they’ve been, the future, and the political direction. And my hope is that the U.S. will conclude that containing China is not practical. The evidence is pretty clear. If you start out with that, there are a lot of global issues where the Chinese interest is very aligned with the American interest. There should be a lot of opportunities on the climate, on global health, vaccines, refugee issues, perennially poor countries.
So there’s a lot that could be done in a very positive way. But that would also require the U.S. to accept the fact that if you go back to The Art of War and the peaceful history of China over a very long period of time, China is not a military threat to the U.S. If you go back to the fact that China is a civilization state, China does not want to bring in a lot of other nationalities into that model and basically compromise the unity that exists today.
So that’s really what I wanted to cover. It’s a kind of a fascinating time that we’re living in, but I’d like to leave you with the idea that 95% of the uncertainty lies in what happens in the U.S. For China, the channel model is clear, and the history of performance is clear. The commitment of Chinese people to the priorities that have been set is pretty clear. So China is going to keep on doing exactly what it’s been doing and getting better every year and producing pretty good results.
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