sachs333_Dursun AydemirAnadolu Agency via Getty Images_china eu agreement

Europe and China’s Year-End Breakthrough

Dec 31, 2020 Jeffrey D. Sachs

With the completion of a major investment treaty between the European Union and China, the new year will begin on a promising footing. Now is the time for the world's leading powers to stop casting stones from glass houses, and start coming together to end the pandemic and set the stage for a green, digital global recovery.

NEW YORK – Kudos to the European Commission for finalizing a new investment agreement with China. Europe’s active diplomacy also played a role in China’s recent commitment to achieve carbon neutrality by 2060 – a decision that was quickly followed by Japan’s pledge to decarbonize by 2050. Now it has yielded yet another major success.

The new EU-China investment agreement will benefit Europe, China, the world, and even the United States, despite the latter’s warnings against it. In general terms, the agreement signifies the intention of the EU and China to continue to deepen economic relations, by granting each party more assured access for investments in the other’s economy. European industry will gain better access to China’s enormous domestic market just as China embarks on a decade of green and digital economic restructuring, and at a time when Europe is striving to stay at the technological forefront in these areas.

The agreement comes in the face of deeply misguided – indeed, dangerous – attempts by US President Donald Trump’s administration not only to cut economic ties with China in high-tech industries, but also to contain China’s growth by forging a US-led alliance that Trump hoped would be backed by the EU and Asia-Pacific countries, including Australia, India, Japan, and South Korea. It appears that the incoming Biden administration may well lean in the same direction, though certainly with more finesse and less bombast than Trump.

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Jeffrey D. Sachs

Writing for PS since 1995
329 Commentaries

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network. He has served as Special Adviser to three UN Secretaries-General. His books include The End of Poverty, Common Wealth, The Age of Sustainable Development, Building the New American Economy, and most recently, A New Foreign Policy: Beyond American Exceptionalism.

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0 Comments on this paragraph, 25 in all 25 Comments on this article

Yoshimichi Moriyama Jan 9, 2021

I read a report today from a Japanese who has lived in Germany for a long time with her German husband. According to her report, what the European leaders discussed has not yet made open and the contents of the agreement are not known to the public; main German mass media have generally not been critical of Chancellor Merkel but this time is different; the European Parliament is in no position to veto the agreement; it seems that EU has not any specific sanctions guaranteed to impose on China in case of the latter's breaches and infringements.

The Japanese said each EU leader can have the seat of chairperson for half a year, which means a German chancellor can take the seat after fourteen years later and Chancellor Merkel is stepping down soon, so she wanted any agreement before it.

Jonh Lee, a resident fellow at the Hudson Institute, wrote a commentary, " Australia can't afford to bite its tongue on China " December 11, 2020, at Onlineopinion com. Australia. I am not good at the Internet but perhaps you can go there at

https://www.onlineopinion.com.au/view.asp?article=21233.

I, Michi, sent 36 comments on it. A half of them are on Japan's war and peace and the other half on the historical and political character of China. I said like "Chiang Kaishek and Mao Zedong were brothers. Chiang did genocide in Taiwan and Mao did it in Tibet and Inner Mongolia," or "The Good Earth was a deceptive story."
I will appreciate very much if you read them. It will not be a waste of time whether you agree or not agree with me.
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Robert Oser Jan 7, 2021

Academic naivité. PRC does not adhere to its international commitments if it deems it not to be in its strategic interests.
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Nord Sovik Jan 7, 2021

China (the CCP) only adheres to agreements if they restrain the other party and create opportunities for its economic and military expansion. The South China Sea, HK, Indian border conflicts in the geopolitical sphere are examples. The economic attacks on Australia, Japan and South Korea when they didn't toe the Beijing line are examples of China's use of its economic clout to pursue political ends. Merkel is trying to protect the Germany auto industry in China. What will Germany do when China floods Germany's markets with cheap electric cars, withholds the cobalt German companies need to make batteries? Power is what it is all about for the CCP, and agreements are tactics, disposable documents, that are steps on the way to dominance.
Also, does Jeff Sachs really believe that China's systematic repressive and murderous actions, surveillance policies and "re-education" are equivalent to the US's inept, cynical and unwise, stupid and randomly violent policies in the Middle East?
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Rajiv Chopra Jan 4, 2021

I am not fully sure of this article. I lived in China between 2002 and 2006(both years included). China was not technologically advanced in 2002. They have risen since then. They used to look at me, an Indian, as being an expert on IT (even though I know nothing about IT). Since then, India has remained where it was and China has surged ahead. Part of the reason - China's focus (India is not focussed at all!) and investment. Also, they are very good at ensuring technology transfer
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Sing Koo Jan 4, 2021

The author is effusive towards China's illusive faith as a trade partner, while ignoring the longanimity of conducting business with a totalitarian regime. EU's agreement with China is apparently a ploy, setting the stage for Bidden Administration with a paucity of quandary ahead of his inauguration.
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Steven Hillyard Jan 4, 2021

Excellent! America needs more essays like this to encourage our elected policy makers to question our foreign policy establishment’s group think on China. President Obama called this group “the blob” because they are unmovable and envelop all debate in an avalanche of of the same words and positions. It’s a big echo chamber that just overwhelms. Biden saw how they overran Obama on Libya; maybe he will stand up to them—but it doesn’t look promising.
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Bevin Beaudet Jan 3, 2021

EU, where will you be competitively when China steals all your intellectual property? I’m surprised this is not even mentioned in this China-apologetic commentary.
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Joe Ryan Jan 3, 2021

Thank you, Prof. Sachs, for highlighting the EU-China investment agreement. Those of us in the U.S. hear so much about Pres. Trump's antics that it would be easy to forget that the world is moving on.

The essay might also have spared a word for last month's initialing of the "Regional Comprehensive Economic Partnership" (RCEP), which when ratified will apparently be the first RTA to include all three of East Asia's biggest economies — Japan, South Korea, and China — along with all of ASEAN, plus Australia and New Zealand.

The attitude of USG foreign-policy specialists that your essay aptly calls "hunger for dominance" isn't going to keep this train in the station.
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Susan Robinson Jan 3, 2021

Since 1978, China has a series of far-reaching market-economy reforms, China no longer follows communist command economic system and the bulk of China’s astonishing growth has come through the
liberalization of its private sector.

The 3 sources of long-term economic growth are physical capital, human capital, and technological progress, so encouraging and facilitating these 3 sources are a high priority.

China’s economy has grown faster for longer than any other country on record (averaging almost 10 percent a year since 1978). China’s growth rate has slowed down since its peak some years ago but China has continued making an outsize contribution to powering global economic expansion and has reduced poverty in this process. China has generated almost one-third of total global growth since the 2008-2009 financial crisis.

China is learning/ emulating other countries (like Singapore, South Korea) to embark on economic developments, build infrastructure, develop human capital, create jobs... not communist command economic system anymore...

Given China's enormous size and complexities, China is doing many things right that have brought peace and prosperity to hundreds and hundreds of millions of people.

US per capita GDP = 65000 USD, China per capita GDP = 10000 USD, so you can see the very large gap that China is lagging behind....

With hundreds and hundreds of millions of people living in poverty for so many decades, China desperately wants to learn/ emulate other countries (like Singapore, South Korea) to embark on sustainable economic developments, build infrastructure, develop human capital, create jobs, continuously to increase productivity to lift these hundreds and hundreds of millions of people out of poverty....so, you can see the scale and appreciate the full enormity of these efforts which have enabled China's GDP growth to average almost 10 percent a year since 1978, and more than 850 million people have been lifted out of poverty, an admirable record of poverty reduction. China has continued to make a disproportionately large contribution to the pace of global growth.

But China's per capita GDP is still very low (compared to rich countries), so China still has a lot of room and potential for further GDP growth.

We need to appreciate these determined efforts to end poverty and hunger to ensure that people can fulfil their potential through sustainable consumption and production, managing the natural resources sustainably so that we can support the needs of the present and future generations, ensuring that people can enjoy prosperous and fulfilling lives and that economic, social and technological progress occurs to bring shared prosperity.

Even at the best of times, economic developments, infrastructure building, human capital developments can be very difficult let alone in countries inflicted with violence/chaos or being undermined by others constantly.

No one will invest in a business if rioting mobs are destroying it. So we do need peace and stability to create certainty and confidence that will encourage investments, human capital developments, jobs creation to help to eradicate poverty and hunger, expanding the richness of human life in shared prosperity.

We also cannot ignore inequality between countries, within countries and between women and men if we truly want to eradicate poverty and hunger.

Why global trade?
The key is opportunity cost, specialization and trade that will make larger quantities of goods and services available to consumers, so we’ve more of more (and most) goods/services available which, on balance, will deliver more advantages than costs—lifting hundreds of millions out of poverty and benefiting consumers in countries rich and poor.

Global trade allows different countries to take advantage of their respective comparative advantage (a country's ability to produce a particular good or service at a lower opportunity cost than its trading partners bearing in mind that opportunity cost is the true cost of doing something) and then, by trading these goods/services among themselves, every trading partner is better off.

Indeed, knowing that there are gains from trade with increase of consumer surplus and producer surplus (the pie grows bigger and bigger) that make the trade-participating countries better off, all countries need to work cooperatively to achieve win-win outcomes, but there are some people (far too many) adopting antagonistic approach to scuttle these efforts to achieve win-win outcomes.

In the last few years, President Trump’s unilateralism and destructive behaviors have deliberately weakened the rules-based, multilateral trading system, making the WTO’s Appellate Body dysfunctional (refusal to approve new judges to fill vacancies), imposing illegal sanctions, etc.

Hence US (new President) and leaders of other countries must begin to address the systemic and underlying trade issues as soon as possible—for the good of the world as well as for individual affected countries rich and poor – through negotiations.

With market-economy reforms fuelling China economic growth, there will be more and more opportunities being created making China an economic engine complementing the US economic engine and this is a good thing as we’ve 2 big economic engines powering the global economy, enhancing global economic stability, creating opportunities for countries around the world to take advantage of these opportunities to trade among themselves based on individual country’s comparative advantage that will make every trade-participating country better off…

Given the large size of US economy (GDP 21 trillions USD) and China economy (GDP 14 trillions USD, this GDP is even bigger in purchasing power parity term), the US economic cycle is likely not the same as economic cycle in China, this is important as the complementarity of these 2 large economies will smooth out the overall global economy, avoiding extreme economic ups/downs (like global recessions).

If the Eurozone is able to overcome their difficulty and achieve good growth, the Eurozone will be the 3rd big economic engine powering the global economy which is even better as we’ll have 3 big economic engines driving the global economy (Ideally, Eurozone should have fiscal union but the rich Eurozone countries resent subsidizing poorer Eurozone members with high unemployment and government-debts. Without fiscal union, the Eurozone continues to face inherent risk and difficulty)…

India (population 1.4 billion, per capita GDP = 2000 USD), Indonesia (population 273 million, per capita GDP = 3900 USD), Nigeria (population 214 million, per capita GDP = 2000 USD), Brazil (population 212 million, per capita GDP = 8900 USD) also have large populations with very low per capita GDP, they also have a lot of room and potential for further GDP growth. If these countries can carry out the necessary reforms, embark on sustainable economic developments, build infrastructure, develop human capital, create jobs to lift hundreds of millions of people out of poverty (with help of global trade), these countries will be the additional engines driving the global economy further complementing the 3 engines (US, EU and China) to smooth out the overall global economy

We need all countries to work cooperatively to accomplish win-win outcome, unilateralism and bullying will not work.

All countries should have good relationship with one another to create peace and stability to allow all countries to develop, to eradicate poverty and hunger, create wealth (growing the pie bigger) and to bring shared prosperity to the people.

So, indeed, there are many global problems (climate change, etc.) that need all countries accepting and respecting each other's system of government, and focus on cooperation and areas of global agreement that can be reached.

People must be objective, understanding and assessing things/issues based on facts.

Poverty is a serious problem in many countries (including US having problem of inequality, racism and poverty, among others).

After 42 years of economic developments, building infrastructure and developing human capital, China has a lot of experience/ knowledge to share and help other countries fighting poverty and this should be welcomed as there are more than 700 millions people in the world still live in poverty, so we cannot be complacent to fight and eliminate poverty around the world.

BRI is part of the initiatives to help to fight poverty in many countries in Asia and elsewhere (remember there are more than 700 millions people in the world still live in poverty and I hope everyone agrees that these 700+ millions people have every right to lift themselves out of poverty, so we cannot be complacent.)

With international cooperation and global efforts to combat poverty worldwide, we can look forward to the day when poverty is eliminated sooner rather than later.

There are many races, many cultures and many languages in the world, so it is important for all these peoples to co-exist peacefully (we do not want wars let alone nuke war) whilst not imposing one's own values/systems on others and not interfering internal affairs of other countries.

This is a multilateral world governed by UN Charter, so all countries (and their systems of governments) should co-exist mutually and peacefully and all countries are protected by UN Charter.

Any countries that attack/invade illegally (like US/NATO attacking Iraq, Libya, etc. which are war crimes) must be brought to justice to uphold the rule of law.

We need all countries to work cooperatively to accomplish peace and prosperity, unilateralism and bullying will not work.

All countries (and their systems of governments) can co-exist mutually without interfering internal affairs of another countries and they can work cooperatively to resolve their differences to accomplish peace and prosperity.

Given the global challenges that all countries are facing (combating terrorism, avoiding wars (including nuclear war); ending poverty, reducing economic inequality, cooperating to stave off the catastrophic consequences of climate change, etc. —all countries must cooperate and work together to create a better world in these respects. The ideal way to work together is not to increase tensions with one another but to increase global cooperation to find common interests with realism and idealism to achieve common goals that will lead to a better and healthier world.

For CO2 emissions, here are CO2 emissions (in tons per capita) for some countries:
Australia = 16.8, US = 16.1, Canada =16.1, South Korea = 13.6, Russia =12.1, Japan = 9.4, China = 8.0

For RE (Renewable Energy), here are some data:
United States: Total electricity = 4,322,038 GWh, Total RE = 637,076 GWh, RE % of total = 14.7%
Japan: Total electricity = 1,057,976 GWh, Total RE = 158,822 GWh, RE % of total = 15.0%
China: Total electricity = 7,142,200 GWh, Total RE = 1,739,400 GWh, RE % of total = 24.35%
Germany: Total electricity = 514,860 GWh, Total RE = 237,610 GWh, RE % of total = 46.2%
India: Total electricity = 1,550,564 GWh, Total RE = 261,790 GWh, RE % of total = 16.88%
Australia: Total electricity = 256,563 GWh, Total RE = 37,205 GWh, RE % of total = 14.5%
Canada: Total electricity = 667,438 GWh, Total RE = 433,597 GWh, RE % of total = 65.0%
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Eric Protzer Jan 3, 2021

The Chinese Communist Party has performed the largest mass detention of a minority group since World War II, unilaterally terminated Hong Konger's freedoms in violation of their human and treaty rights, and outright invaded the South China Sea. It jails, tortures, and murders political dissidents on the largest scale in the world. Sachs is astoundingly, breathtakingly wrong to compare the CCP's human rights record to those from Western nations.
- Leto Atreides Jan 3, 2021
  
  Why not just count the number of Uighurs, dissidents etc that have died at the hands of the Chinese govt during the last two decades, and compare that with the number of casualties from wars waged by the US in the middle east? Or just compare with the number of Kashmiris that have died at the hands of Indian soldiers. The loss of political freedom in Hongkong is nowhere comparable to the loss of numerous lives from US launched or sponsored wars.
  - jef ford Jan 3, 2021
    
    Ok, mate, here are the numbers of casualties caused by the US/NATO illegal attacks/invasions (which are war crimes):
    
    US leaders (Bush, Cheney, etc) were telling lies, breaking laws attacking/invading illegally (Iraq, etc), these are war crimes antagonizing and radicalizing the Muslim world creating more and more terrorists around the world (Middle East, Asia and elsewhere) and destabilizing the Middle East (and elsewhere) leading to more violent bloodshed and killing fields, wasting trillions of dollars committing these war crimes with these countries wretched and lied in ruins.
    
    Just in the Middle East alone, estimates of 461,000 to 655,000 deaths (Iraq alone), about 500,000 deaths (Syria alone), estimates of 2,500 to 25,000 deaths (Libya alone)...and millions more of innocent children, women, etc. being killed/ injured/ traumatized and/or displaced (12 million displaced for Syria alone), US leaders have a lot of blood on their hands, US leaders must be held accountable for these war crimes and US leaders must be charged and jailed.
    
    Bush, Cheney, Blair etc. were telling lies, breaking laws to attack/invade illegally (committing war crimes), is all this rule-of-law?
    
    Are these people (Iraqis, Arabs, etc.) sub-humans deserving no human rights? deserving no protection at all?
    
    Stop all this toxic hypocrisy which is a serious global threat creating more violence and bloodshed around the world, these US, UK, Australian leaders (and their generals, senior advisors/officers) have a lot of blood on their hands, they must face the music and must be brought to justice for the war crimes they committed, otherwise they will commit more war crimes again, the UN and ICC must take actions to charge/jail these war criminals.
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- jef ford Jan 3, 2021
  
  This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
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zebbrad Jan 3, 2021

Sachs really has gone over to the other side. His comparisons of Human Rights abuses in China versus the rest of the world are laughable. The scale of these in China are astonishing. He and the EU will rue the day they entangled themselves with and promoted this ruthless dictatorship. I wonder when China invades Taiwan if there will be any Mea Culpas? Probably not, they will both provide some sort of excuse why this was a necessary move and makes the world a better place.
- jef ford Jan 3, 2021
  
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Derrick Baragwanath Jan 2, 2021

Judging from this article and others written by Jeffrey Sachs he has clearly become a powerful China advocate. While Sachs recognizes China has some 'human rights' issues, along with many other nations, he ignores their other multiple and scary transgressions. Balanced articles should be applauded, unbalanced articles leaves one wondering what are the underlying motives behind the writing of such pieces.
- jef ford Jan 3, 2021
  
  This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
  - zebbrad Jan 3, 2021
    
    Jef, there is no doubt there have been very bad things done by many countries, but that does not give a country like China the right to systematically crush, imprison, and indoctrinate millions of Muslims and Buddhists in China, much less imprison Chinese critics on the mainland or disregard signed treaties concerning Hong Kong and take away the few rights left those poor people. Again, just wait for the invasion of Taiwan and see how these Chinese supporters in the West will justify that action. They will have been complicit due to their prior support and excusing of the Chinese undemocratic regime.
    - jef ford Jan 3, 2021
      
      This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
      - zebbrad Jan 3, 2021
        
        Jef, I condemn all war crimes as they should be, but other’s criminal behavior should not be used as justification for what is coming from China. Their military build up, size, strength, one party rule, and stifling of any dissent will make all prior criminal regimes look cartoonish in comparison. They are extremely efficient, focused and have a scale unseen in human history.
        
        jef ford Jan 3, 2021
        
        Stop all this toxic hypocrisy which is the root cause of all these war crimes, violence and bloodshed around the world.
        
        First things first, Charge and jail these US, UK, Australian leaders (and their generals, senior advisors/officers) without parole - this will send a clear signal to all leaders not to attack and commit war crimes again.
        
        zebbrad Jan 3, 2021
        
        Jef, do you also condemn war crimes or crimes against humanity done any any others than the US, UK, and Australia? Thanks
        
        jef ford Jan 4, 2021
        
        Hi mate,
        
        Stop all this toxic hypocrisy which will stop this very root cause of all these war crimes, violence and bloodshed around the world.
        
        The first priority, Charge and jail these US, UK, Australian leaders (and their generals, senior advisors/officers) without parole - this will send a clear and unambiguous signal to all leaders not to attack and commit war crimes again.
        
        Thanks
        
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alex Finch Jan 1, 2021

What on earth is going on in Europe? The stupidity is mind-boggling. The Problem in the EU is that stupidity, timidness (and corruption) is tolerated, that’s why Nigel Farage was an outsider. Trump is perhaps a thug, but he is no fool. China agreed to address it’s huge overcapacity of steel production at a G20 meeting in 2016. Since then China has steadily INCREASED production by another 30% to new record levels in 2020. The ‚Global Forum on Steel Excess Capacity GFSEC‘ was formed by the EU in 2016 and the EU is currently serving as Chair, however the GFSEC has been utterly useless. The giant German Steel company ThyssenKrupp had around €10-billion net equity in 2009 and in 2020 it’s equity is now zero, nil, and it’s workforce of 155.000 is now facing a „bloodbath”. AND TODAY Mr Sachs writes triumphantly: „Europe’s active diplomacy played a key role in China’s recent commitment to achieve carbon neutrality by 2060“. BY 2060...? China already totally ignored the commitment they made only 4 years ago!! NO WONDER THE UK LEFT THE EU. Already falling way behind, Europe will be absolutely slaughtered by China and America if this sort of stupidity keeps going on. Merkel’s complacency is pushing the EU dangerously toward the radical Right as people slowly realize, ‘chilling’, avoiding stress at all costs, is not the appropriate diplomacy in this world, ....unless of course, you plan to be as dishonest and deceitful as your opponents. Europe is probably destined to end up like Japan, a ‘has been’. That’s OK, but don’t do any more stupid deals, it’s embarrassing.
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Luigi Luis Jan 1, 2021

As a convinced European I find this excellent post hopeful, but also helpful and inspiring. Thanks Prof.Sachs for showing so clearly the way forward, and particularly for not losing hope in our very troubled continent, which in fact it is not only called Europe, or Asia, but rather: Eurasia.
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Mike W Jan 1, 2021

Very insightful and balanced take, thank you Prof. Sachs.
- Shiu Kee CHU Jan 1, 2021
  
  Appropriately defining priorities and major orientations for the world in the year 2021 and beyond.
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Chandrashekar Tamirisa Dec 31, 2020

The bi-partisan collusion to turn America into a tyranny began after the Cold War under Bill Clinton in 1993 with ideological underpinnings in the Mont Pelerin Society formed in 1947 by 36 scholars mostly classical economists, historians and philosophers led by Friedrich Hayek. People became powerless by the rising income inequality and took refuge in conspiracy theories and demagogues like Trump to explain their plight just as Socrates had predicted in antiquity about the degeneration of democracy into tyranny, while the real conspiracy was to transfer power, independent of party preference, to the very wealthy around the world who are politically agnostic and interested only in their aggrandizement. The democracies which America helped build after World War II around the world have been gradually morphed into tyrannies run by the very wealthy under the guise of democracy. Milton Friedman’s thesis in his popular book Capitalism and Freedom that economic freedom begets political freedom has been proven wrong around the world: neoliberalism has not strengthened democracies but weakened them and has not produced democracies in China and Russia but authoritarian capitalist states.

https://ctamirisa.wordpress.com/2010/03/30/supercapitalism-by-robert-reich-a-book-review-for-kindle/

It is doubtful if America and China are any different at the moment. If America is governed by capitalist authoritarianism under the guise of democracy, China is more honest with no guise of democracy.
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