Shoot the enemy with its own weapon

Published 21.12.2018 22:03
Updated 22.12.2018 08:00

The past week marked the 40th anniversary of China's historic decision to adopt its "reform and outreach policy." The policy designed to establish the direction of the country's development was launched on Dec. 18, 1978 by the historic transformation's architect, Deng Xiaoping. China, which produced 32.8 percent of the world's GDP in 1750, was producing 29.7 percent in 1830 and 19.7 percent in 1860, and dropped its share in the world's GDP down to 6.2 percent by 1900 as it could not keep up with the 150-year effect of the first and second Industrial Revolutions. China, struggling with many political and economic crises and undergoing a Japanese invasion, lost its weight in world GDP, down to 1.8 percent in 1978, despite the "communist revolution" during the 1946-1949 period and the "cultural revolution" in the 1960s. The policy of outreach came right at this point.

China decided to hit its enemy in the global economic-political sphere, capitalism, with its own weapon. China, which was determined to beat capitalism with a model of state capitalism, abandoned practices valid in the Soviet Union such as agriculture communes, excessive centralist planning, and foreign trade and price controls.

In the hands of the state, they switched to a strong banking system that financed investments and leapt toward a giant industrialization move. Rather than politics based on military power where people are suppressed, they adopted a new model of development based on the welfare of the Chinese people and where market economy conditions are favored. In 1995, when China's share in the world's manufacturing industry was only 5 percent, Western Europe's share was 30 percent and the U.S.' share was 27 percent. As of 2019, as China's share in the world's production reaches 25 percent, we have Western Europe whose share have fallen to 23 percent, and the U.S., who has fallen to 15 percent.

During yesterday's 40th year ceremony, Chinese President Xi Jinping, who stated that they aim to improve the special socialist system of China and to strengthen the ability of the country with a national governance system, indicated that they are not after a hegemony, are not threatening anyone with the development move, and both the world and China need each other to develop. 2019 will be very tough between the U.S., the symbol of "market capitalism" and China, the symbol of "state capitalism."

5 critical global risks for 2019

The world's reputable think tanks, well-known economics and political experts are focused on five key risks for 2019 that will affect the short and medium-term future of global economy politics. The first risk is the trade war between the U.S. and China that is expected to escalate. Particularly, they state that the "crack" that will be caused by the escalation of this war is the messenger of a new "economic-political order" in global trade. The tension between the U.S. and China, on one side, leads to the interpretation that the world is shifting toward a multipolar structure, while on other side, is seen as a depolarization or demagnetization. It is a very critical finding that the U.S.' "Chinese policy" will become permanent, and countries should now accept that global trade will be shaped by the tension between these two power centers.

The second key global risk is the future and confidentiality of personal data. For domestic and global trade that is being reshaped and digitalized through data mining and big data, a serious conflict is expected between China's extreme data control, the EU's extreme data confidentiality and U.S.' extreme data privacy. This conflict will further highlight cyberattacks and cybersecurity issues in 2019. The third key global risk is the blockage caused by President Donald Trump in U.S. politics. The rising tension between the Republicans and the Democrats in U.S. Congress will not only delay the decisions and reforms needed by the U.S. economy, but also the trauma caused by Trump will further exacerbate the uncertainty and confusion in global economy politics.

The fourth key global risk is defined as the huge loss of human life and the economic destruction caused by extraordinary natural disasters beyond the global threat of terrorism. With massive forest fires, floods, storms and drought, experts are worried about their damage to the global economy in 2019, especially on production, trade, transportation and logistics. The fifth and last key global risk is that countries such as the United States and France will be seriously increasing the pressure on their supra-national companies for protectionism and repatriation. This is why, it is mentioned that such companies will experience a syndrome of statelessness. Considering all these global risks, Turkey has to manage export-based growth in 2019.

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