 Chinese-made products. Well, it's manufactured by China, but designed by the Americans, so maybe I can blame the Americans for the malfunctioning or the technical difficulties. Well, anyway, I will try to present without the the visual aid. I prepare it because I think the availability of the visual aid would be easier for my friends to understand mobile chat because it involves about some funny character and things like that. But anyway, let me try. Let me try to use it without the visual aid. So thank you Professor Hopper and Guqin for inviting me to speak at PFS. It's a great honor and also represents one of my greatest challenges as it's rare that I can talk to so many sane people all at once. During preparations, I kept asking myself what value I can bring to this audience. In the end, I decided to my belief that I should not attempt to lecture this audience. Rather, I should view this occasion as an opportunity to raise questions long in my mind. I hope this speaking occasion and the interaction that follows can be a process through which many of my doubts will be cleared up. There have been lots of emotional ups and downs during past year. Brexit and the election of President Trump gave me a brief hope that Western civilization was making a comeback. Although I am ethnically Chinese and was raised in a mostly Confucian-value centric environment, I regard the numerous masterpieces produced by Western philosophers during the age of enlightenment to be major contributors to the unprecedented prosperity of our world today. Without the intellectual input from these philosophers, I believe both the Western and Eastern worlds would still have a standard of living akin to that of the Middle Ages. Life expectancy would still be below 40, with global population levels unable to escape the Malthusian trap. And therefore, many of us would never have existed. I also believe that if human civilization is to progress to another new high, breaking through with what Francis Fukuyama called the end of history, it must be based upon the foundation laid in the age of enlightenment, meaning more free speech, more respect of private property, more separation of power, smaller government. It must not be based upon leadership with increased centralized government. Earlier this year in Warsaw, President Trump gave a speech in which he asked if the West has the will to survive. Given all the events we have witnessed since then, I think the answer is a clear no. Instead, the establishment seems to be rejoicing in the likelihood that Western civilization should be destroyed as quick as possible. If the West is to continue on its path of self-destruction, and if it gives up carrying the torch of civilization, where can we go? Is there still a civilization available on Earth? Or will we be forced to migrate to another planet? After the need, the country best place to be this alternative is China. But what really is China? What would it mean to the West if China picks up the torch? Will China do a better or worse job? What factors could stop them from leading the world? Also, should they be stopped from leading the world like Steve Bannon suggests? I remember the very first moment when I first met Professor Hopper in Hong Kong, doing his chancet to Australia for the Mrs. Seminar there. A German, dubbed by many people as a white supremacist or a Nazi, he told me his impression of the Chinese was that they are the most racist. Rather than admitting that we are racist, I would describe us as racial paramedics. Since our first emperor, Emperor Qin, who eliminated the other six rowing states and united China into 21 BC, the assimilation of other racial groups into the Han race culture has never stopped, even up to today. By the way, for those who are not familiar with China, the Han group is the majority ethnic group in China. 92% of Chinese are Han, and the rest of the 8% divided among 55 minority groups in China. It's evidence that by the fact that there are still 55 official minority groups in China, many of them, particularly in the South, have been ruled by China for over 2000 years, but are still yet to be absorbed into the Han culture. The assimilation in the North was bloodier and more complete, but the Chinese paid a heavy price for it. The first bloody price was paid in the Jin dynasty since 100 BC. A nomadic group, the Xiongnu, who are considered by many Chinese to be where the Huns originated from, started moving southward and settled in the Yellow River Loop area. By 300 AD, 400 years after the first wave of migration, the tribal chiefs of the Xiongnu who adopted by enlarge the Chinese way of living and received Chinese education offered by the royal court, invaded the capital city of Luoyang after it was ruined by a civil war between the Han princes. They put the emperor into captivity and brought an end to the dynasty. China disintegrated, received a similar fate to the Western Roman Empire when it was overrun by the barbarians. The country remained fragmented until its unification in 581 AD, almost three centuries after the Xiongnu invasion. After this bloody experience, the take-home message for the Chinese then and now can be summarized in these few words. They must be devious since they are not our race. These words were a warning issued 10 years prior to the invasion of Xiongnu by an advisor to the emperor regarding the immigration. He foresaw that the nomadic immigrants would eventually devastate the empire. Not only does this bloody lesson shape the Huns' mentality on racial primatism, but it may also explain the foreign policy of subsequent dynasties. It is not that China does not wish to uptake talents from other races, but these other races must be indoctrinated and follow strictly the hierarchical confusion system in every aspect. In fact, after the empire was overrun by Xiongnu and subsequently by various tribes, including the Mongols and the Mantruans, no Chinese can be sure that they carry 100% Han DNA, the same as 2000 years ago. However, DNA is not the primary factor to being Chinese. Chinese-ness is also a concept. Many Chinese people living under the Mantruans had no shame being ruled by the barbarians, so long as the ruling class adopted significantly through the Chinese Confucian tradition. Confucianism functioned similarly to Christianity in Europe or the Islamic world, meaning that an individual's religion or belief system counts more than just his true ethnicity. Like the Pope in Middle Ages, Europe, or later the kings being seen as representatives of God when ruling their subjects. The Confucian religion also considers the ruler of the Middle Kingdom to hold ultimate accountability for the welfare of the subjects. The Confucian doctrine uses a boat and a river to describe the relationship between the ruler and his subjects. The water carries the boat is the same as that overturns it. To warn any ruler that his legitimacy comes from the people and that they are entitled to overthrow their ruler if they are mistreated. However, the bar to overthrow the ruler is high according to the doctrine and according to another major philosopher Lao Zi, the performance of the ruler can be rated as follow. The best rulers are people barely know, so it sounds like the president of Switzerland who can name his name, probably not. So the best rulers are people barely know, the next best they love and praise, the next they fear, and the next they hate. Most Chinese would agree the Chinese Communist Party, CCP scores between two and three. So you know Chinese people kind of praise the CCP as well as they fear them. The ruling party under which the economy grows by 7% a year and millions and millions of people being lifted out of absolute poverty doesn't seem to deserve to be overthrown. That doesn't mean Chinese people are not aware that the Chinese Communist Party is far from perfect. They know the Communists are ruthless, they know they have no human rights, no property rights unless those rights are granted by the party. Normally, like in the West, Chinese citizens are the ultimate owners of the country. But in reality, Chinese people know they are subjects of the party as we give the CCP a nickname, the grandpa, meaning even people consider themselves merely grandchildren of the government. Originally, I wanted to show some article sold in the Chinese market where with Chairman Mao's face on it, they usually put it in front of their car and they believe Mao can drive away demons. So this is how they treat Mao, how they kind of praise the Communist Party as well as fear the Communist Party. The People's Republic of China was created by Chairman Mao and is acceptable to many Chinese that the country is owned and controlled by Mao's successors. In fact, the current Chinese President Xi Jinping, whose father was a senior founding member of the People's Republic of China, the return of the Prince Ling to fill the top positions in the government can be seen as an indication that the party and the country are owned by the descendants of the founding members. The CCP gained their ruling legitimacy not only through the winning of the civil war but also by strengthening the control of Tibet and Xinjiang, areas which once almost gained their independence during the 1940s. In the first 30 years of the CCP's reign, there were a series of economic disasters caused by the implementation of Soviet style plan economic policy. But the CCP was still able to hold the country together by playing the nationalist card. After all, they are the only government since the old PM war who successfully drove away the imperialists. They are therefore the only government to have lifted the Chinese from the humiliation of foreign powers and hence can be considered national heroes. As the Chinese economy was at the brink of total collapse in 1978, the CCP knew they could not keep hold of power just by playing the nationalist card. They realized they would actually have to improve the lives of their subjects. They knew they had been wrong in following the Soviet style central planning. How they made a rapid U-turn embracing capitalism while remaining normally a communist country reveals the degree of primatism the CCP can be. By the way, if you are aware of there was a military confrontation standoff between China and India a month ago and the Indians actually made a big news and some people speculate Modi would really want to start a war against China. But the leadership from China was very clear that they would not want to start any war with any major countries because the Chinese think that just by growing the economy seven percent a year is just a matter of time they could get you know the things they want they don't need a war to gain what they look for. So at the end of the day both countries retreated their troops. Of course the elephant in the room is who conceded first who won in the standoff. It's clear to many people China and India agree on the terms that China need to stop building a highway in the border disputed area so the Indians are willing to retreat their troops. Of course you know from the surface you would think this is a concede concession from the Chinese and and it would be a big deal for for the Chinese government to lose face in front of the people but when being asked in the press in the media when the media asked the Chinese official so are you going to rebuild the restart the construction the official answer was well yeah immediately we would resume the construction but we have to wait for the weather the weather the weather was so bad we have to wait so so I think I was quite impressed it's such a diplomacy China is it is kind of smart having this respond so so since 1978 40 years we have witnessed explosive economic development in China that can match the US in the 19th century and post-war Japan and Germany however the path has not always been smooth the Tiananmen massacre in 1989 coincided with the fall of the Berlin Wall and the end of communist rule in the eastern bloc why was communist China able to escape the fate of their counterparts in the eastern bloc why didn't the chinese people follow their comrades in eastern europe and overthrow their government there are many reasons for this but there must be one question that most chinese were thinking at the time if the ccp were overthrown who could guarantee the next government would be better the chinese are sometimes criticized for being too timid and too accepting of the ccp but the chinese actually have a different mindset that the wets fails to grasp that this trust that this trust of the government is so deep that they have become indifferent to who's in power this traditional chinese attitude towards government can be summarized by a well-known saying all quotes are equally dark when it comes to personal well-being the chinese would see that is the individual responsibility to pursue their happiness irrespective of who is in the government actually chinese believe that if the government doesn't stand in the way of the things they do they should feel very grateful the chinese would think to the extent that the government being exploitative is acceptable because is of their nature before a series of brand improving brainwashing initiatives by the hong kong police force in the 1980s it was not uncommon for hong kong people to call our police the licensed mafia given the chinese are well aware of the mafia nature of government and we cannot solve the problem by electing a new mafia to replace the old mafia the persuade of personal happiness must involve how to cope with the mafia in other words if people fail to get around or conude with the government to prosper is not of the fault of the government but rather a personal problem while being more realistic on racial issues and ditching superstition on democracy lets the ccp outsmart the western government that doesn't mean the ccp are immune from picking some of their bad policies to prevent an economic slowdown china has also resorted to korean stimulus and has increased money supply like the west causing a gigantic asset inflation bubble in china housing prices in major cities soared as much as 50 in a year making them comparable to world major cities such as london hong kong san jose even though the gdp per capita in major chinese cities are only a quarter of the us the asset bubble all together with the fixed exchange rate with the usd us dollar created a wealth effect that caused more middle class chinese to think about diversifying their wealth abroad although the foreign reserves look massive standing at 3 trillion us dollar when it's divided by 1.3 billion people each person's share is just 2300 us dollar it's obvious that if china were to maintain its credit expansion and the de facto paid with the us dollar essential bank would eventually have insufficient us dollar to pay the chinese on demand leading to a currency crisis currently the ccp has dealt with the problem by reversing the chinese yuan internationalization and to we introduce tighter capital controls how to manage the over leveraging excess capacity huge non-performing loans and capital flight all at once remains a challenge to the ccp many of you may have heard of the belt and roll initiative initiated by a presidency some chinese officials would call the belt and roll or compare to the initiative with the marshal plan in europe meaning they they consider central europe not central central asia they would put enormous amount of money into the area and develop the area and the reasoning behind the plan is to set up another global trade network that excludes the us and hence challenges the us dollar dominant position in the global trade excess capacity currently in china becomes a handy tool to attract other countries to participate in the belt and roll initiative through which these countries will receive china's direct investment on infrastructure at very attractive terms though this comes without the military presence that the the american empire and former colonial powers imposed in those belt and roll countries i'm interested interested to see how china will respond when trade disputes arise whether china's um 65 billion u.s. dollar loan to venezuela back a few years ago can be repaid is in question and while chinese operated diamond mines in simbar bay were set to have nationalized by the local government in 2016 will this mean china has to militarize and follow the path of the old colonial powers will china need to stretch its frontier to protect its foreign interest does that mean the military confrontation with the us will come prematurely the transfer of the possibly transfer of global dominance the transfer of global dominance from the british empire to the us seems to be easier for the british to accept because they share many common grounds in terms of language religion custom judiciary system and the like however the return of the middle kingdom china is a much more complicated concept while most western governments are leading their people into cultural self-destruction through socialism multiculturalism and egalitarianism china counters this stupidity with racial permacism skepticism in democracy and a moderately hierarchical society however there are also chinese traditions that my friends in this room wouldn't accept easily many free market proponents argue economic freedom in china will eventually lead to political freedom and a china which embraces western values but recent development indicates a richer china is now so confident that they think the so-called socialism with chinese characteristics trumps the western model the ccp has clearly gone backwards in freedom of speech and is ruthlessly cracking down on those who speak against the government nevertheless the ccp seemed to be more open-minded in terms of free speech in the areas such as race and sexual orientation regarding rule of law the ccp don't believe in equality before the law they like to follow the practice of the old dynasties by deliberately making laws so arbitrary that there is no way for their subjects to avoid breaking the law the rulers can therefore always have reasons to eliminate anyone who threatens them we all know corruption is a problem in china as well as many developing countries because basically the laws are drafted so badly people cannot follow if you follow the the law that means you give up your hope to survive um so so the same situation happened in china but i i don't think the uh the the chinese scarf actually the chinese scarf women are happy to see it because you know 20 years from now when you get rich and you become influential and you start to have individual kind of thinking independent thinking and then they can find a drawer get your file out and say oh 20 years you broke the law so you better shut up so i think china would keep this tradition for a long time in ancient times the emperors also like to have something in their hands so they can back mail the mentoring at that time so there is a little hope the ccp would develop uh judiciary independence uh presidency openly advocated there shouldn't be separation of power but rather the executive branch um the legislature and the court should cooperate with each other they always believe the party should be above the law there may be incentives for the party to improve the judicial system to resolve disputes among citizens but the court must protect the state if the dispute is between the government and the citizens arbitrary law enforcement will continue in china as a tool to crack down on political opponents despite all the above considerations the ccp believe they created and they own the people's republic of china uh we were once uh in um some gathering uh with a party member in china and and talking about privatizing the state-owned enterprises uh whether china should do more privatization the response is like this uh there won't be total privatization happen because they consider that's the assets of the party so uh outright privatization won't happen in china um so they they they consider they really own the country uh and but uh because of the undemocratic nature uh leading to a constant fear of losing uh ruling legitimacy this fear perhaps leads to higher government efficiency and benevolence to the people does this sound like how traditional european monarchies treated their subjects back in the 19th century does this explain why many chinese believe they actually enjoy more freedom than the west i'm stuck with the feeling that uh there is no choice but perhaps to accept this second best option in the civilized world when steve bannon compares china to germany in the 1930s he has a point chinese is nationalistic china is fascist that the government expects individual chinese citizens to sacrifice for the greater good of the country or to help the country to reclaim number one in the world however xijin ping is unlikely to become hitler there are much better ways to achieve win-win with other nations let me wrap up with an example the west has been transferring huge amounts of tax payers money to africa for decades so-called 418 during which time the improvement on african's livelihood has been negligible the chinese have improved the lives of africans with one very simple and cheap method they have sold them corrective eyeglasses at dollar shops countless africans immediately recovered their vision and hence their productivity this is one great example of what i call the chinese solution the chinese solutions are so cheap so simple and so effective that sometimes i scratch my head why the problems had remained unresolved by the west for such a long time i hope by now you have a clear picture of china and i look forward your feedback in the qna session thank you