Editor's Note: Recently, Cheng Li, professor of political science at the University of Hong Kong and former director of the John L. Thornton China Center at the Brookings Institution, delivered a 10-minute speech titled "From Hong Kong to Asia: Decoding the Growth Code of High-View Investment over 30 Years" at a book sharing event hosted by CITIC Publishing Group. Departing from four decades, four years, and four months, he shared his observations on the evolution of Sino-American relations and even the international order. Observer Network has compiled this article for your reference.

[Speech by Cheng Li, Compiled by Observer Network - Li Ling]

I am particularly honored to have the opportunity to comment on Mr. Roland H. Lawrence Jr.'s new book, Forged in Asia: Four Decades of Private Equity Investing. This morning, I just returned from Barcelona and on my way back to the hotel, I was pondering how to express my thoughts within 10 minutes. Then, I thought of three time periods: 40 years, 4 years, and 4 months, hoping to convey my respect and admiration for you, this legendary figure, who has made remarkable contributions. After all, you have witnessed the transformation of an entire era.

SPEAKER'S PHOTO AT THE EVENT

In 1985, Mr. Lawrence came to Hong Kong from New York, while I left Shanghai that same year to pursue a master’s degree at the University of California, Berkeley. In fact, we both witnessed the tremendous historical changes and observed the historic rise of China and Asia.

In July 1985, when my plane landed at San Francisco International Airport, as soon as I stepped out of the airport, I was awestruck by the highway. Later, I learned that Ms. Chen Chong, a Chinese film director known for her role in the movie Little Flower, mentioned similar feelings in an interview. She said that upon arriving in the U.S., she saw red tail lights and yellow headlights on cars at night, which were scenes she had never seen before in China. My awe came from the highways because at that time, China did not have highways, whereas today, China accounts for 60% of the world's total highway mileage. This is undoubtedly a dramatic change.

When I studied at Berkeley, there was an ice cream shop at the intersection of Telegraph Street near the school entrance that left a deep impression on me. The store had 40 different flavors of ice cream, while in Shanghai at that time, there was only one flavor of ice cream—actually more like ice than real “ice cream.”

Another thing also deeply moved me. In 1985, I graduated with a bachelor's degree in English from East China Normal University. At that time, we had a very good Chinese teacher who invited us to her home for dinner after our studies ended. This professor from East China Normal University had been a visiting scholar in California. When she mentioned to her friends in California that she had two cats, they sent her a box of cat food. That noon, the professor opened the can of cat food and served it to us, saying it was "nutritious"—young people today may find it hard to imagine that this was used to entertain classmates. I didn't eat it, but some of my classmates tried it and said, "It's good, tastes great."

This was China 40 years ago. Over the past 40 years, we have witnessed China transform from a poor and backward country into a major global economic power, now ranking second in the world, and it is highly likely to rise to first place in the next few years.

In fact, between 1993 and 1995, I received funding from a foundation to return to China for a two-year study. By then, many changes had occurred in Shanghai, and based on these experiences, I wrote my first book about the middle class in Shanghai. However, the publication of this book was fraught with difficulties, rejected again and again, possibly eight or nine times or even more. As a result, later on, I dared not open the envelopes sent by publishers during dinner, fearing that I would see rejection notices that would spoil my mealtime and make it tasteless.

The reason for the rejection was simple: at that time, Western professors believed that China did not have what was called a middle class (middle class). In their view, the middle class was closely linked to concepts such as civil society and Western democracy, which China lacked. Therefore, they deemed it impossible for China to have a middle class. However, a few years later, the concept of China's middle class was gradually accepted by America's financial and business circles. The rise of the middle class not only profoundly changed China but also reshaped the global economic landscape. Notably, this book was later renamed Reimagining China: The Dynamics and Dilemmas of Reform and published as a bestseller.

Looking back over these 40 years, the development of the middle class in Asia has advanced rapidly, while the middle class in the West and the United States has been shrinking. My good friend Kishore Mahbubani once proposed a new concept—the "CIA countries" (CIA Countries), where "C" stands for China (China), "I" represents India (India), and "A" refers to ASEAN countries (ASEAN countries). These "CIA countries" are considered the most dynamic regions in the world. Over the past two or three decades, the middle class in these regions has gone from almost nothing to a significant presence, with the current middle-class population accounting for 40% of the world, undoubtedly one of the most spectacular changes in the geopolitical and economic landscape of the world.

Now, let's focus on the past four years. These past four years have been the most obvious phase in which the West has demonized China.

Previously, events that occurred in Hong Kong were portrayed by Western officials as a "beautiful 'scenic line'." My good friend Stephen Roach even declared that "Hong Kong is finished," prompting a debate between him and me. I pointed out that Hong Kong has regained its vitality, and he clearly misjudged. Roach is a professor at Yale University and worked at Morgan Stanley for many years, so he has some understanding of China, yet he made a wrong judgment.

Roach wrote an article in the Financial Times criticizing Hong Kong

The West has frequently criticized China's economy, claiming that it has reached its peak and will soon decline. The then U.S. Commerce Secretary even absurdly described the Chinese market as "uninvestable," with some politicians blaming China's lack of creativity on history and politics, among other factors, until DeepSeek's emergence changed many people's views.

Moreover, the West has exaggerated China's employment issues and deliberately linked them to China's aging population problem. One issue is an excess of working-age population, while the other is a shortage of labor force, but the West never mentions the contradiction between them and never discusses the impact of artificial intelligence on these two issues. The core purpose of the West's hype is to render China's social instability. Mr. Lawrence, your book precisely challenges this narrative, presenting readers with a real and vibrant China and Asia through an explanation of Hong Kong, China, and Asia's development changes.

Let's talk about the situation over the past four months.

Since Trump's second term began, nearly four months have passed. During these four months, the rapid changes in the world situation have exceeded many people's expectations. On the day Trump was elected, a financial magazine conducted a long interview with me, asking me to predict his 2.0 era with one word. I said that word was "chaos." Looking back now, I believe many people would agree with my judgment, as the current situation, both domestically and internationally in the U.S., presents a chaotic state.

Notably, this is Trump's second election. If the first election was when Americans still had little knowledge of him, the second election undoubtedly means they have gained a comprehensive understanding of him. We have discussed Trump extensively, and I myself have expressed numerous opinions. However, there might be a misunderstanding here: perhaps we have overly focused on Trump himself, while in reality, he is merely a product of a certain trend, a phenomenon, not the root of the problem. In other words, even without Trump, many of the problems the U.S. faces in the future will continue to persist.

Trump and his supporters, Photo: AP

Currently, the U.S. faces four thorny problems domestically, and there seems to be no hope of solving them in the short term:

First, the polarization between the two parties has reached a boiling point. Nowadays, the U.S. party struggle has reached a life-or-death level, with both sides even willing to put each other and their family members in mortal danger, which is contrary to traditional U.S. party culture.

Second, the wealth gap is extreme. A report released by the Federal Reserve in 2023 shows that for the first time in American history, the total wealth of the top 1% exceeds the combined wealth of the entire middle class (which accounts for 50% of the population). There are unconfirmed reports that the combined wealth of Elon Musk, Jeff Bezos, and Zuckerberg is equivalent to the total wealth of the bottom 50% of Americans.

Third, racial tensions have intensified. The U.S. once made efforts to reduce conflicts between different races in the immigration country, but ultimately failed. Now, mutual hatred between races runs deep, and Trump's anti-immigration policies have exacerbated this situation.

Fourth, cultural wars continue unabated. Whether it is the issue of women's abortion, gay marriage rights, or gun control, they are intertwined, showing no signs of compromise but becoming increasingly divisive. It can be said that the U.S. has become a fragmented nation.

Although the U.S. still holds leading positions in finance, military, and technology, it is gradually declining, and its credibility has been severely damaged. So-called "credit" and "soft power" no longer exist.

In February, I attended the Munich Security Conference. In my view, this conference marks a turning point in history. At the meeting, Vice President J.D. Vance of the United States made some incredible remarks, claiming that American values are completely different from European values and even hostile to each other; he also stated that Europe's enemies are not Russia or China but Europe itself—this is undoubtedly naked interference in European politics. The reason behind this is simple: Trump believes that the U.S. is unable to bear Europe's security responsibilities. In fact, Obama once made similar statements.

Vance said that Europe should pay more attention to threats from within rather than external factors like Russia. Image source: CCTV News

At that time, my perception of U.S.-European relations could be summarized with four words starting with "D":

First is Damage (harm), the harm caused by this hostility is not easily remedied;

Second is Distrust (mistrust), it is unlikely that trust will be rebuilt between the two sides;

Third is Decoupling (decoupling), previously decoupling mainly referred to the relationship between China and the U.S., but now the decoupling trend between Europe and the U.S. is becoming more severe;

Fourth is De-risking (de-risking), including global countries, suddenly realizing that the U.S. is not a safe investment destination, making investment decisions cautiously, and reigniting optimism towards the Asian market.

This is a moment of major turning point, similar to the turning point I experienced when studying in the U.S. from 1989 to 1992, when the Soviet Union dissolved and Eastern Europe underwent dramatic changes. Now, we are witnessing the U.S.'s predicament and illness, as well as the gradual dissipation of NATO's influence.

Friends, this is a very serious problem. Unlike the Soviet Union, the U.S. is a powerful country. If my analysis earlier is correct, then this problem will have extremely serious impacts on the world. As for Europe, it is currently seeking to strengthen its own armaments, and the nuclear proliferation issue will become a major challenge we face together—not only does Germany desire nuclear weapons, but Japan and South Korea are also becoming restless.

It is evident that we are in a multipolar but disorderly world. Against this backdrop, the importance of Asia becomes increasingly prominent. The Asian culture, including the Doctrine of the Mean and inclusiveness of diversity, showcases unique charm. Moreover, most Asian countries have benefited from globalization, rather than feeling marginalized like some Western countries. Therefore, I believe that Asia will play an increasingly important role in the future.

This article is an exclusive piece by Guancha Network. The content purely reflects the author's personal views, which do not necessarily represent the platform's stance. Unauthorized reproduction is prohibited, and legal action will be taken for violations. Follow Guancha Network on WeChat (guanchacn) for daily interesting articles.

Original article: https://www.toutiao.com/article/7509277697994932786/

Disclaimer: The article solely represents the author's views, and we welcome your feedback by clicking the "Top/Downvote" buttons below.