Ray Dalio's new book, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail (2021), is an exciting new book to read recently.
As a social science scholar, I would wonder why an American financial tycoon would write such a scholarly book.
But whether you agree with him or not, you will always be fascinated by his concise and clear theoretical framework.
A person is not as good as a thousand days, and a flower is not as red as a hundred days
Before I say it again, the laws of the rise and fall of great powers that are mainly touched on in the book are not uncommon in sociological and political discussions.
The closest approximation is the "World Systems Theory" that emerged in the 1970s, and its representative Immanuel Wallerstein died just over two years ago.
This theory mainly explores how a single "core" country dominated the world in different historical periods, and closely interacts with "half-periphery" and "periphery" countries to collage a big picture of the global political economy.
The theory focuses more on how different countries, from Spain, the Netherlands, the United Kingdom to the United States, take turns to occupy the "core" position.
In contrast, Dalio's new work also aims at the rise and fall of such great powers for more than 500 years, but focuses more on the internal and external cycles that determine national strength, especially the three major issues of long-term currency and debt, internal governance of the country, and external conflict and cooperation. cycle.
As the author clearly pointed out at the beginning, it was the financial tsunami in 2008 that made him notice how the hegemon, as the issuer of the world's major reserve currency in different periods, has continued its influence through its financial monopoly position, but at the same time it has already planted the seeds of decline. .
In addition, Dalio also pays attention to other broad factors affecting national strength.
For example, in the rising stage of a great power, education quality, technological innovation and competitiveness are all very important; at the peak stage, economic output, international trade and military strength are all critical to consolidating its global position; finally, when a great power develops financial The status of the center and reserve currency is beneficial for it to exert its residual heat, but it also means that the most glorious days are coming to an end.
Questions about the Sino-US conflict
Undoubtedly, the most controversial aspect of Dalio's book is its unreserved premonition of the rise of China, which is about to replace the United States as the new global hegemon.
Under his calculation formula, since the 1980s, China's national strength has experienced a blowout-style astonishing explosion.
Since 1949, China's military and educational soft and hard power have increased; after 1978, economic output, trade and technological innovation have all caught up rapidly; after 2000, financial and foreign exchange reserves have also stepped up. superior.
It seems to be a fait accompli that China is vigorously challenging the detached status of the United States; but what will be the consequences of the conflict between the great powers of China and the United States?
Dalio also provides a detailed analysis in the book.
Chapter 13 of the book is titled "Sino-US Relations and Wars", which compares the strengths of China and the United States in detail in terms of trade wars, technological wars, geopolitical wars, capital wars, cultural wars, and military wars.
The main focus is the potential risk of regional or full-scale war between the two countries, while Taiwan and the South China Sea are the focus of attention.
Russia's invasion of Ukraine in 2022 presages the high level of uncertainty brought about by great-power conflict.
Although China and the United States did not directly intervene in the war, they have an unusually close relationship with Russia and Ukraine, and may even play an important role in facilitating the war.
From a good perspective, the war has made China and the US aware of the danger of military adventures, and they will no longer launch a war as rashly as Russia does; but from a bad perspective, the global arms race will accelerate in an all-round way, and geopolitical tensions are inevitable. long lasting.
The main point I think Dalio overlooked is that when one global hegemon is inevitable, it doesn't mean that another power is the inevitable successor.
This can be clearly seen in the history of World War II. It was Germany and Japan who regarded themselves as global hegemons and were eager (or rather forced by the situation) to challenge the core position of Britain and the United States head on. national disaster.
This shows that "the rise of a great power" also needs to be at the right time. Because of the uncontrollable ambition and eagerness to achieve, it may become the prey targeted by the overlord.
The Chinese version of Dalio's new work will be published by CITIC Publishing Group in Beijing in early 2022, and also includes detailed comments from many mainland scholars such as Wen Tiejun.
Wen Tiejun pointed out that the key to the future Sino-US hegemony is that the US has no bottom line to print money and issue bonds, which will definitely impact the US dollar's status as a reserve currency.
The stance of China and the United States on monetary policy may be the key to the final victory that determines the future status of the dollar and even the renminbi.
At the moment of the twenty-fifth anniversary of the handover, it may be time to declare that the "fifty years unchanged" promise of the Basic Law can come to an end.
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Hong Kong in the slits of great power conflict
What are the implications for Hong Kong from the above-mentioned long-term and big-history discussion?
To be sure, since the opening of Hong Kong as a port 180 years ago, it has been caught between the conflicts between the Eastern and Western powers.
In the first 140 years, when the hegemony of the United Kingdom and the United States continued to expand, Hong Kong acted as its comprador agent; in the past 40 years, Hong Kong was increasingly shrouded in the huge shadow of China, and finally adopted the "one country, two systems" model. maintain a temporary equilibrium.
However, in the last 10 years, from the era of Leung Chun-ying and Carrie Lam to the current Li Jiachao era, the situation in Hong Kong has become increasingly tense and out of control. The end result is that "one country, two systems" exists in name only.
From an official point of view, the Hong Kong issue is of course purely China's internal affairs and has nothing to do with Western countries. However, from an objective analysis of history, Hong Kong has always survived in the cracks between the East and the West, and forced mainlandization will inevitably destroy Hong Kong directly.
In any case, as the conflict between the great powers continues to expand, the pressure for Hong Kong to "return to the border" will only increase day by day, and the uniqueness of all aspects of culture, politics, and economy (including the monetary system?) is still being weakened.
At the moment of the twenty-fifth anniversary of the handover, it may be time to declare that the "fifty years unchanged" promise of the Basic Law can come to an end.