China’s Growing Economy: a Value or a Threat?

China has reportedly overtaken Japan as the world’s second largest economy. Many react to China’s ascendance by warning that America is in “danger” of being “overtaken”. On this view, the fact that some people gain more means that others necessarily have less.

This question was raised in a recent discussion on NPR:

JOFFE-WALT: And I think, economically, our instinct is to think that global economics works like a Monopoly game: More money for you means less money for me.
KESTENBAUM: Okay. Wing Thye Woo says that’s a natural feeling, but it’s wrong. What actually happens is the whole pie gets bigger.
Prof. WOO: No, it’s not a zero-sum game. In fact, we want the Chinese to be rich, educated and prosperous, so that they become innovative like us. Then they can contribute to the global stock of knowledge. That would make us all better off.

We agree – Professor Woo is exactly right. He identifies a form of what Ayn Rand called the “trader principle”, which explains why, when people act productively for their own benefit, there is no conflict of interest:

The symbol of all relationships among [rational] men, the moral symbol of respect for human beings, is the trader. We, who live by values, not by loot, are traders, both in matter and in spirit. […]

Although China still suffers under a misguided and authoritarian government that restricts individual freedom in many ways, the economic freedoms and consequent productivity of the Chinese people are considerable and ever-increasing. The actions taken by individual Chinese to produce goods and services sold on a global scale are undertaken in the same spirit as any American who pursues a better, more comfortable life. That the rest of the world can benefit from the inexpensive and increasingly high quality products the Chinese create is a natural co-product of that process. Therefore, we should cheer the Chinese for their progress and encourage them to achieve even more freedom and prosperity – not only because they’re improving their own lives, but for the self-interested reason that we have much to gain therefrom.

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