Good evening everyone, and thanks for having me here for a lovely dinner.  As we talk about Chinese industrial policy tonight, I very much want to learn your thoughts and perspectives.  But to try to get the discussion going, I thought I’d say a few words up front about how I think the Chinese leadership sees industrial policy from a strategic perspective.   

What I’ll offer tonight will draw upon the last lecture in the four-part series I recently delivered at Oxford with the kind sponsorship of the Pharos Foundation, but it’s worth stressing that all of this represents no more than my personal opinion, which won’t necessarily reflect the views of anybody else.  That said, let me offer my thoughts.

I’ve written and spoken quite a bit over the years trying to draw attention to what I think are the deeply monist, authoritarian, universalist, Sinocentric, and what I call “virtuocratic” instincts of the ancient Chinese worldview, and the ways in which I think it still shapes Chinese strategy and policy even under the rule of the Chinese Communist Party (CCP). 

But tonight, let me focus on the related but slightly different question of how the CCP anticipates actually getting to a world that feels satisfyingly Sinocentric – a strategy in which the country’s state-managed industrial policy plays a critical role.

CCP leaders have been highly focused since the early 1980s on building up what their theorists came to refer to as “Comprehensive National Power” (CNP).  CNP is basically an aggregative concept of power that aims to wrap together every imaginable possible facet of national strength – military power, economic scale, science and technology prowess, diplomatic sophistication, industrial production, cultural attractiveness, and so forth – into a single conceptual metric by which countries can essentially be rated against each other in order to ascertain who is more (or less) powerful than whom, creating in some sense a kind of global league table of relative standing and power-status. 

In CNP theory, moreover, high CNP is expected to have its privileges.  As Chinese CNP theorists see it, a country with the higher CNP rating will tend to have its way vis-à-vis a country with a lower one.  More interestingly, the country with the highest CNP – or at least the highest CNP relative to other players – will emerge as the decisive norm-shaper and central player in the global system. 

Some of this theory, I think, has been influenced by China’s own history.  The country’s experience of encountering European imperial power in the mid-19^th Century has left it with an acute appreciation for the strategic overmatch that can occur when a country – or a civilization, to the extent that those are different things when  talking about China – encounters a different one that has a much, much higher CNP than it does.  In China’s case, at the time Great Britain so easily bested the Qing Dynasty in the opium wars, Britain had acquired superlative CNP through its “first-mover” status in the Industrial Revolution.  This conclusion seems to have led CCP leaders to develop a view of technology-driven, geopolitically transformative strategic change that I term “Industrial Revolution Theory.”  (That’s not their term, however; it’s mine.)

And CCP thinkers are certainly right that technological revolutions are capable of having earth-shaking implications inmany dimensions, including geopolitics.  The Industrial Revolution of the late 18^th and early 19^th Century set the European powers – and Britain foremost among them, as its “first-mover” – on a path of extraordinary growth and power, and indeed military power as well.  The Industrial Revolution, of which Europeans in general enjoyed the fruits long before most other regions of the world, made possible an era of dramatic imperial expansion.  Aided by modern firearms, ironclad steam-powered warships, railways, the telegraph, and other such bits and bobs – as well as by unprecedented wealth and economic productive capacity – Europeans had by the 1920s conquered nearly 85 percent of the planet, with the British Empire alone covering a quarter of the Earth’s surface. 

CCP officials interpret this through the lens of CNP theory, and explain the overawing power of the British Empire in the 19^th Century as the result of the superlative CNP acquired by the British by their first-mover status in the Industrial Revolution.  Technology-driven modernization, then, explains Britain’s top-notch CNP, while CNP explains Britain’s global dominance, and the two together explain China’s “Century of Humiliation,” which it has ever since been the dream of Chinese nationalists to rectify by returning China to the position of power and status it feels it deserves.

According to Xi Jinping and his colleagues, moreover, this theory of geopolitically transformative technology-driven historical development also explains American dominance in the 20^th and early 21^st Centuries.  Specifically, they see the United States as having enjoyed “first mover” status both in a Second Industrial Revolution based around oil, steel, chemistry, and heavy industry, and in a Third Industrial Revolution based around computers and information technology. 

In all three historical cases, therefore, the country that mastered the secrets of cutting-edge modernity corresponding to each step-change leap in technological and economic capability was rewarded by becoming the norm-shaping hegemon of the world system of the day.  Such industrial leaps made the 19^th Century “Britain’s century,” in other words, just as they made the 20^th and early 21^st Centuries into “America’s.”

But here’s my point.  This theory of industrial history propounded by Chinese Communist Party officials gives us a clear window into Chinese geopolitical ambitions.  When you hear Xi Jinping or other CCP leaders speak, as they do, of the need for China to “seize the commanding heights” of a coming Fourth Industrial Revolution – one based upon technologies such as Artificial Intelligence, quantum computing, bioengineering, and other such innovations – it should now be very clear what they’re saying. 



They are not simply saying that China wants to avoid being left behind by some anticipated wave of growth and productivity, though I’m quite sure that’s true.  Specifically, they are saying five very important additional things: 

• First, they believe that there will soon be another geopolitically transformative, technology-driven disruption in the form of a Fourth Industrial Revolution. 

• Second, they believe that someone will inherently be the “first mover” in that coming Industrial Revolution. 

• Third, they think this “first mover” status will give that country – whoever it is – superlative CNP vis-à-vis all other countries, analogous to what the British Empire had in the 19^th Century and America in the 20^th and early 21^st.   

• Fourth, they expect that country thereafter to be able to organize the international environment around itself, as did the British and then the Americans each did in their day, serving as the dominant power therein and setting the normative structures within which others will have to operate. 

• And fifth, by declaring their objective to be the goal of having China seize for itself the “commanding heights” of that Fourth Industrial Revolution through a state-run industrial policy, CCP leaders are necessarily saying that they intend that system-dominating country to be China.  And they are actually saying it loudly and openly, if you just know how to listen to them.

So CNP theory and “Industrial Revolution theory” thus combine in CCP strategic thinking to provide the explanatory and causal mechanism by which China’s leaders imagine they will be able to implement the dream of once again creating a harmoniously Sinocentric world. 

This is why policies such as the “Made in China 2025” plan, the “Innovation-Driven Development Strategy,” the “Military-Civil Fusion” strategy, the state-managed policy elements of successive Five-Year Plans, and the concept of “dual circulation” – a policy under which Xi Jinping aims somehow, as he expressly admits, to make the world ever more economically dependent upon China, and hence ever more susceptible to coercive pressures, while making China ever more economically independent of the rest of the world and hence proof against such pressures by others – are so critical to Chinese grand strategy.  They represent the means by which China aims to plan its way to “first-mover” status in the Fourth Industrial Revolution, and hence to reordering the world-system once more around itself as the Middle Kingdom serenely at the center of Sinocentric universe. 

That’s why I think tonight’s topic is so strategically important, and why I’m so keen to hear your thoughts and views, including about how we can better cope with this challenge.

Thankfully, simply to describe such plans and ambitions – and draw your attention to them – is not at all the same things as thinking those plans will necessarily succeed. 

China faces considerable headwinds today.  Its economic project is slowing and sputtering, and its young people are increasingly disillusioned and dispirited at their future projects.  As recent OECD research has shown, moreover, Chinese companies’ growth in global market share over the last two decades has been based more upon government subsidies than upon organic competitiveness – with Chinese companies receiving between three and eight times as much government subsidization than occurs in OECD countries, and also much more than companies get in other non-OECD jurisdictions. This suggests the possibility that some or much of China’s supposed economic miracle may be a Potemkin Village-style display based upon government taxation and debt rather than “genuine” economic prowess (whatever that may mean).

China’s population and workforce are also now both shrinking and ageing faster than the country’s economy can bring per capita income up to first-tier standards.  Its governing apparatus is also increasingly focused upon paranoiac visions of “security” rather than upon growth and prosperity, and its leader-for-life Xi Jinping is apparently increasingly surrounded by frightened yes-men of his own appointing who may be unwilling to offer him any candid advice he might not wish to hear.  (After his most recent purges, for instance, the entire Central Military Commission that manages the People’s Liberation Army has been reduced to just two persons – and one of them is named Xi Jinping.)  These are not promising signs for a glorious future for China as the central node of tomorrow’s world system.

Moreover, while China clearly does hope for some kind of geopolitically transformative boost as it surfs the bow wave of a Fourth Industrial Revolution, it’s worth remembering that nobody has ever planned their way to “first mover” status in an Industrial Revolution before.  It’s worth repeating that to emphasize the extraordinary ambition in play here: nobody has ever before planned their way to technology-driven economic supremacy.

The British certainly didn’t.  I have every confidence that no secret cabal of Lords and MPs met over port and punch at White’s Club – around the corner here and down a block or two on St. James – in the early 17^th Century to plan out how to invest in canals, mining, iron smelting, and railroads so that Britain in the 19^th Century could win for itself an empire on which the sun never set. 

By the same token, no gaggle of mid-19^th Century plutocrats and politicians got together in Washington to orchestrate the United States dominating the world in the 20^th Century by building massive heavy industry plants that could out-produce the rest of the world in B-24 bombers as easily as they could in Model-T Fords or Chevrolets.  And to I am quite confident that no such group of Americans in the early 20^th Century plotted to make New York the center of a banking network that would later let the Treasury Department impose financial sanctions on terrorists or rogue regime malefactors, or schemed to make Silicon Valley the center of a technology industry that would win global information dominance for us in the early 21^st Century.

In both the British and American cases, of course, our countries were quite happy to take advantage of their respective “first mover” roles in those successive Industrial Revolutions – and we did so sometimes quite ruthlessly – once this status had fortuitously developed for a range of reasons mostly outside of government control.  But nobody planned all that.  Yet the Chinese Communist Party thinks that it can plan its way to leading the Fourth Industrial Revolution. 

Now I certainly can’t stand here and tell you that such an ambitious project is impossible, and indeed China has had a good degree of success to date – if more, so far, as a “fast follower” than as a true “first mover.”  So they may perhaps succeed.  (After all, as Yogi Berra reminded us, predictions are always difficult, especially about the future.)   Given the quite unprecedented nature of the project, however, I think there remain grounds for skepticism. 

So my point here is thus not to drive you to panic about China’s vast Sinocentric and imperialist ambitions.  But I do want you to understand those ambitions, and their potential implications for all of us in the rest of the world.  If we are better to cope with the challenges presented by what Xi Jinping calls the “China Dream” of “national rejuvenation,” we need to understand of what that dream really consists.  And a state-driven and fundamentally outwardly coercive industrial policy is at the core of the Party’s strategic thinking.

Thank you.

— Christopher Ford