Sep 14, 2018 01:11 PM

Opinion: Trade War Reflects Deep Contest of Worldviews

Those who believe in technology assume that if we use big data and artificial intelligence (AI), we have an advantage over everyone else. But those who fly by black boxes die by black boxes, especially if the data is garbage (fake news or corrupted), and the AI algorithms used have blind spots and bad assumptions.

Even relying on expert opinion is likely to be wrong, since the pollsters all failed to predict Brexit, the Trump victory and quite a few recent elections. This is because many experts have failed to recognize that their paradigms (or model of thinking) and methodological tools are wrong in the chaotic shift from an old order to a new order.

Henry Kissinger made the best comparison between the two different worldviews when he said that Americans think that every foreign policy problem has a single optimal solution, whereas the Chinese consider that every solution brings multiple new problems. Historian Wang Gungwu succinctly put it as the West thinks in terms of ideology, whereas Chinese think in terms of systems. The West is linear, logical and elegant, whereas Asian thinking is interconnected, complex and dialectic. That binary thinking simply means that information and life will become increasingly more complex than simple theory can handle.

The trade disputes are therefore a reflection of a deeper contest of paradigm or worldview. There is no doubt that the Americans now believe that China is a serious competitor and that everything should be done to disrupt the rise of China as a competitor in technology and knowledge, which is the foundation of all development, including defense.

Indeed, the contrast in paradigms is between a theory-oriented West and a practical and experience-bound East. The British historian Stephen Toulmin (1922-2009) defined Western modernity as believing that everything can be reduced to simple theories of natural behavior that are timeless, universal in application and intellectually perfectionist. Ideally, everything can be reduced to a mathematical formula, which accounts for why economics has used a “rational man” to assume away idiosyncratic human behavior. It was this theoretical rigor for certainty and precision that flowered into the Western science and technology that powered the Industrial Revolution. That developed into the hard power of gunboats, navigation and eventually nuclear bombs that created Western colonial and then imperial power.

In the 18th century, the continental-based powers in the East, both in China and India, were preoccupied with domestic politics and human issues, with mindsets that were not open to changing and adapting to the rise of the West. Finding it impossible to compete with Western maritime powers, Japan started the industrialization path of East Asia by copying the hardware without totally absorbing the Western software. China could follow only after its revolution and after the opening-up period to the Four Modernizations. It was easier to adopt the softer option of being the global supply chain (manufacturer of hard goods) to the advanced powers, rather than to develop one’s own software. After the Asian financial crisis, Japan essentially adopted a stance of cheap yen to sustain its hard manufacturing power, rather than develop its own high-valued services software. China simply followed in the path of the flying geese, became the center of the Asian global supply chain, but at the same time began to develop its own software capabilities.

With the global supply chain provided to supply its hardware needs, the U.S. basically ceded manufacturing, and concentrated on software services, of which finance and media were key tools for sustaining the old multilateral global model. That was actually a global system of many countries with one unipolar power. With the arrival of the internet, the U.S. hoped that its dominance in cyberspace would not be challenged. It is no coincidence that the rise of the global tech giants occurred only in the U.S. and China, and not in Europe, Japan or India, each large enough to have skills and scale. India, for example, was the leading software services provider in the developing countries, but only as subcontractors for the major markets, rather than for its own in-house use. The Japanese software market was too tied to Japanese language capability, thus limiting its scale. The European market was technically a “common market” that was still fragmented into national enclaves. The European Commission is a bureaucracy that is rule-bound, forgetting that too many rules are barriers to innovation and diverse choices, thus creating the conditions for Brexit.

The Industrial Revolution is now the Information Revolution, and he who masters information and knowledge wins.

The hard choice before the world is that there is a global competition for innovation and technology as tools of development, within a transition from a unipolar to a multipolar order. There are no soft options.

The U.S. finally woke up to the fact that it is simplistic to assume that any country can be the unipolar power by services and knowledge alone. You cannot power AI without supercomputers that are still hardware-driven. Hence, the competition in the Knowledge Economy is both physical and virtual, which means that the West needs to regain hardware manufacturing skills, whereas the East needs to upgrade software skills and improve on its own hardware.

The history of the global competition for knowledge is that open and diverse systems win, whereas closed systems without internal and external competition become marginalized. Social progress is not about absolute change, but relative change, with trade-offs between values and objectives. There will be no gain without pain, no success without mistakes. Short-term tactical wins can mean that the war is lost, whereas tactical losses could pave the way for long-term advantage.

Thus, it is the dialectical or binary thinking that has proved to be more resilient and adaptable to change than perfectionist theory. In this sense, winning is not everything, because to survive, as Darwin found out, is also a victory. But hard choices have to be made soon.

Andrew Sheng is a distinguished fellow at the Asia Global Institute, University of Hong Kong.

If you want to submit an opinion piece to Caixin Global, please send an email to

Share this article
Open WeChat and scan the QR code