How did he do the China to become one of the world's major superpowers and what is the real stake of this new "cold war" with the United States that sees the two giants engaged in an unprecedented technological and industrial challenge?
We publish the full text below newsletter of Ceresio Investors of May 2023 entitled "China aims at the new miracle and raises the stakes in the challenge with the United States." The analysis edited by the economist Luke Paolazzi explains how and why the Chinese economy is aiming for supremacy and technological autonomy in eight strategic sectors with the aim of building a new shared prosperity, essential to avoid future social tensions.
Ceresio Inverstors Newsletter on China
Il chinese new year it started a few months ago. It is the 4720th on the calendar since the Yellow Emperor took office. It is not the oldest existing calendar (Hebrew has 5783 years and the Byzantine 7531), but it is of the same political unit over time. The Chinese, in fact, is the only surviving empire, despite changing the form of state and borders, among those that arose in antiquity.
This observation, however questionable it may appear in terms of constitutional law, invites us to adopt a long-term perspective in the analysis of China's economic and political events. It is revealing of one unparalleled institutional resilience in the rest of the world. Finally, the millenary cultural unity nourishes the sense of belonging and national pride in the Chinese and the latter translates into a feeling of amused superiority towards other peoples.
In addition to being long, the gaze must widen, to embrace the second characteristic of China: the tonnage. By area, it is the fourth in the world, with 9,6 million sq km, distant from Russia (17,1) but close to Canada (10,0) and the USA (9,8) and double the size of the European Union. By inhabitants, in 2023 it becomes second, with 1.426 million people, just surpassed by India (1.429); the USA is third and distant (336 million); as a reminder, Italy is one twenty-fourth and the EU less than a third (448 million) of the Chinese measure.
By GDP the assessment of China's greatness is not as immediate. In fact, economic science, for a change, confronts us with two possible measures, both correct, albeit very distant. In one, China produces goods worth 19.240 billion dollars, an amount second only to that of the USA, with 26.190 billion, but well above the EU (17.010) and the euro area (14.220). And it is ten times the Italian economy (1.990). This is the valuation at current prices and exchange rates and refers to 2023.
In the other measure the Chinese production value leaps to 32.530 billion and becomes by far the first in the world, with the USA remaining at the estimate already indicated (the dollar is always worth a dollar, the Eurozone at 20.715. Italy is still equal to a tenth of the Asian giant (with $3.120 trillion.) In this case the values are still at current prices but converted using differences in price levels, so they equalize (technically called purchasing power parity, PPP).
Here it is useful to clarify the meaning and different scope of the two measures. Current exchange rates are affected by currency fluctuations, which obey financial variables and choices and the directions of policies, not just economic ones. GDP expressed in current exchange rates indicates how many resources a country can command in the global system: if its currency is strong, foreign goods and assets are cheaper and more accessible. So that country is more "powerful", and also more attractive as a market in which to sell.
With PPPs, however, the international comparison of GDP seeks to free itself from the exchange raids and to provide a more objective assessment of the mass of goods produced and consumed. And therefore the amount of resources needed to produce them. If a country has a higher PPP GDP, other things being equal (above all the supply structure), it will need more raw materials, labor and capital. Thus, its greater size is indicative of the pressure it exerts on the markets for those resources, and also of its footprint on the environment. In the Chinese case, it is this second measure that must be considered in order to understand its hunger for commodities and, consequently, its geopolitical strategies.
Incidentally, it is worth noting that all GDPs are revalued significantly moving from dollar value at current exchange rates to dollar value in PPP, except for Canada (unchanged) and Switzerland (-7,7%). This underlines the current strength of the US currency.
The differences between the quantities at current exchange rates and in PPP can also be explained by the development gap. In less developed countries, basic necessities weigh more in the composition of the GDP, while services and in general products with a higher innovation content, which are more expensive, weigh less. Thus the average level of prices in these countries is much lower than that of the more advanced economies, and this makes the currencies of those countries appear more undervalued.
China, where its economy started from and where it is going
The long gaze on China prompts us to remember where did its economy start from? and where is it going. An analysis to be made both on a quantitative and on a qualitative level.
In terms of quantities, the high-speed advance of China's GDP is now behind us. It started at the beginning of the 80s of the last century, after the reforms aimed at the market desired in 1978 by the then leader Deng Xiaoping, and has experienced a new acceleration with the entry into the WTO in 2000. In the thirty years culminating with the Great Global Financial Crisis China's total GDP multiplied 18 times and per capita GDP jumped from 2% to 18% of US per capita GDP.
The reforms freed him entrepreneurial and commercial spirit of the Chinese populations close to the eastern coasts, however inserted for millennia in the network of local and supranational exchanges precisely because they overlook the motorways of the sea. Spirit seasoned with great capacity for work and savings, deriving from the long last four centuries of lean cows. They have given numerous examples of these qualities wherever they have migrated, as the communities present in the numerous Chinatowns scattered around the globe teach.
Just these large expat communities have been important precisely for China's post-reform take-off: having maintained close ties with the clans of origin (the historical role of the clans is explained below), they have provided the mother country with entrepreneurial capital, direct investments and commercial ties with the rest of the world.
Il slowdown is physiological and predictable. In 1998 Angus Maddison, looking at the period up to 2015, wrote: "For these reasons I expect Chinese growth to fall from 7,5% to 5,5% per year" (Chinese Economic Performance in the Long Run, OECD, 1998) . The reasons then indicated by him are the alignment of the dynamics of the labor force with that of the population, the lower increase in education and the more moderate increase both in capital per employee and in total factor productivity. Reasons that are also found Long-Term Highlights of Ceresio Investors and which lead the authors to believe that the catching-up of the USA will take another quarter of a century.
This forecast of a slowdown was accurate in terms of the reduction in the pace of growth but wrong in terms of timing, because before curbing China accelerated very pace for another twenty years, basically until the pandemic.
China: integration into global value chains and support for domestic demand
The considerable prolongation of the high growth phase is explained by the effects of increasing growth Chinese integration into global value chains, the attraction of foreign direct investments to exploit the development of the Chinese domestic market, with large transfers of technological and non-technological know-how, infrastructure policies and the increase in housing stock.
Furthermore, in no small measure, growth has been supported by domestic demand support policies in the years of the Great Financial Crisis, when China continued to function as a locomotive of the world economy while the USA and Europe struggled; the Chinese authorities at that juncture sought advice on which policy recipes to apply and were quick to implement the support of internal demand and not to resort to devaluation of the exchange rate, which would have generated further waves of instability in the global system.
The outcome of this exceptional gallop and its significance for the world economic system can be seen even better by looking at the manufacturing sector. In fact, until the end of the 70s, China's industrial transformation did not have a large impact on the global total, even if its weight had greatly increased within China.
In the period from the establishment of the People's Republic of China in 1949 to the start of reforms in 1978, when total GDP tripled and that per capita almost doubled, the weight of industry on value added increased from 10% to 35%.
However, until at least 1973, that was a period of economic boom all over the world and China did not keep up with it, due to political infighting and serious mistakes in development vision and management, including the Great Leap Forward which, favoring heavy industry, deprived agriculture of workers and caused a long and very serious famine with tens of millions of deaths (I'll come back to this tragic episode later).
Furthermore, the pursuit of the gigantism of production units, Soviet-style, created huge pockets of inefficiency. To give an idea, at the end of that period, Chinese industrial companies had an average size, measured in terms of employees, equal to eleven times that of Japanese companies, which, even though they were not small on the international scene.
Yet, the closure of trade with foreign countries, in the name of the autarchy typical of any despotic system, removed the Chinese economy from competitive pressure. There were, therefore, charged springs which, released by the reforms, gave rise to the subsequent strong industrial upsurge.
China, the disruptive effects of industrial take-off
It was a real one industrial takeoff, similar to that experienced by the UK at the end of the eighteenth century and by Italy a century later. But much more concentrated over time and therefore much more intense, with disruptive effects on global competition, on the demand for raw materials, on atmospheric pollution, on the enlargement of the internal market and on future prospects.
In fact, after a quarter of a century of frantic race to raise the industrial apparatus to the highest technological and qualitative levels of the leading countries, a race necessarily centered on exports (the yuan depreciated five times in the twenty years following 1978), investments and manufacturing, for about ten years now China has been focusing on consumption and services, to spread well-being.
A passage that draws a parable in the weight of industry, so much so that someone speaks of early deindustrialization. But this last word is misleading, because China is not losing pieces of its industry, which continues to upgrade its quality and undermines the high range of Western productions.
How powerful it was the acceleration of manufacturing that China's share of global industrial value added has jumped from 4,1% in the early 90s to over 30% in 2020. With an inevitable strong share erosion of advanced economies, especially Japan and Europe, but also the USA.
In part this is the result of the expansion of world production led by China itself, which has enormously increased domestic demand, satisfying it mainly with domestic activities. In part, however, it is the effect of the Asian giant's cost competition (often with dumping practices), which has put the productions of many companies out of the market in what was once called G-7. Suffice it to say that 35 years ago China sold silk garments to Europe at the same price at which European silk entrepreneurs bought the raw material.
The process of Chinese industrial development and the displacement of the productions of the advanced countries has been facilitated by the choices of foreign companies who have invested in China or conveyed increasingly sophisticated orders to Chinese suppliers, making the latter market leaders difficult to replace, because they possess technological skills that cannot be found elsewhere.
As in the case of smartphones, which have become faithful companions in our lives. And of the microchips that are its heart and also an inexhaustible source of big data, i.e. the raw material for the digitization of economic systems.
China pushes the US to rediscover industrial policy
That's why, under the guise of fighting inflation caused by disruptions in global value chains, United States has launched the policy of large incentives and subsidies to free itself from Chinese domination in this crucial productive sector.
Furthermore, China was further proof of the importance of a large domestic market in order to be successful in global competition. Similar cases were the USA and Japan. Huge domestic market means outsized companies for competitors, i.e. big in China to be big in the world. Three examples: Hikvision (surveillance cameras), Fuyao (windshields and car windows), Gree Electric (air conditioning).
The latter was born in 1992, is led by a woman, has a turnover of almost 30 billion dollars and employs 70 people. The first invoice is 12 billion dollars, and the second, also born in 1992, has revenues of 4 billion and has become famous for the 2019 docu-film American Factory, which narrates its acquisition and restructuring of a factory in Ohio closed by General Motors.
What is true in aggregate for the entire manufacturing sector is even more true for individual sectors. The case of steel is exemplary: in 2000, when it entered the WTO, China had a capacity of 223 million tons per year, ten times that of France, less than a fifth of the world total. Twenty years later he had multiplied it 5,2 times, to 1,2 billion. Its share has reached just over 50%, a sign that world capacity has grown significantly elsewhere as well: in India by almost three times, in South Korea by 50%. Of course, there was a significant contraction in some countries (France -20%), but overall, the Chinese take-off has added an engine to world growth, including in steel.
You can calculate the contribution of China's economic development to global growth. This contribution rose from one-twentieth in 1980 to over one-fifth at the start of the past decade and over one-quarter just before the pandemic. In some years, Chinese growth was the net that held up global GDP, avoiding a more disastrous fall.
China, the 5 effects of its enormous physical and demographic size
Moving on to the broader view, the physical and demographic dimensions have some important consequences which must be taken into account in order to try to understand the logic and effects of Chinese developments.
On the political level, the consequences are at least five. First of all, the government of territories as vast as they are diverse and over such a large population requires a capillary system of administration and controlswhatever the political regime in place; a system that was created a few centuries ago (it already existed in the year XNUMX) and which, in order to last, must be credible and efficient.
The class of Chinese bureaucrats was selected in a rigorously meritocratic way and the uniformity of rules and methods was widespread thanks to printing (invented there a few centuries earlier than in Europe). This does not mean that it was or is perfect or free from distortion. In ancient times, it was the oiled mechanism for extracting added value (which prevented the birth of the merchant-entrepreneurial class, as happened in Europe). In contemporary times, systematic errors or opportunism have caused disasters with bloody consequences.
The striking example was the great famine of 1959-61, alluded to above, which was brought about by decisions based on ideological views and backed by complacent statistics. It caused tens of millions of deaths; estimates vary greatly, but those in the upper part of the range appear more reliable, i.e. around 50 million, or 7,5% of the population at the time. As if in Italy today 4,5 million more people died in three years than the usual mortality; to have a term of comparison, let's consider that the Italian deaths from Covid have so far been less than 190 thousand.
China, the importance of the meritocratic elite but also of the clans
Alongside the bureaucracy formed by a meritocratically chosen elite, another institution has played a crucial role in Chinese social organization: the clans, based on family ties with a great cult of ancestors as an identity value (the lares Familiares of Roman memory). Initially they served to form the wider social fabric with respect to the nucleus of the family, providing public goods to members (religious services, education, aid to widows and orphans, protection from bandits and pirates), and then they extended their role. Fundamental in the birth and functioning of the clans, within them and in relation to other clans and to society in general, is the Confucian philosophical inspiration, which will be discussed at the end. And they reverberate, the clans and Confucianism, still today.
From the beginning of the second millennium after Christ, during the Song Dynasty, they promoted the social status of its members (on the basis of merit, because the failure of one member was a dishonor for the whole clan), organized markets and exchanges, cooperated with the public administration (to which they supplied the ruling class), resolved commercial disputes and acted as pressure groups (for the analysis of this peculiar institution and also of the historical, cultural and geographical roots of the Chinese political system: Social Organizations and Political Institutions : Why China and Europe Diverged, by Joel Mokyr and Guido Tabellini).
But the main function of the clans was the maintenance of social peace, which in the Chinese scale of values comes much before the rights of the individual. These rights, on the other hand, have permeated the birth and development of all civil, administrative and public law in Western Europe, descending from the Christian religion. While social harmony is a cornerstone of Confucianism. As well as moral conduct which must be all the more irreproachable the higher the social position to which one has ascended.
For the social role of clans based on family ties and rules of moral conduct, the Chinese legal corpus is reduced to the bone and has its pillar in the Tang Code of 653 after Christ.
The second political consequence of large tonnage is that in order to govern such a large people in an autocratic and one-party regime we cannot afford excessive inequalities nor concentration of economic power without generating social disintegration and delegitimization.
La income distribution it changed a lot from 1978 onwards: until then the most affluent 10% had 27,8% of the income and the poorest 50% 25,2%, shares substantially unchanged since 1950; in 2011 the former reached 43,2% and the latter dropped to 14,1%. However, in the following decade they remained almost constant, precisely due to the policy aimed at not exacerbating the gaps. Moreover, these shares are not very different from those in the USA, only that the gap has continued to widen here in recent years (up to 45,6% vs 13,8% in 2021).
It should be emphasized that diversity is also linked to the level of development of the different geographical areas. In fact, the per capita GDP of Beijing and Shanghai is four times higher than that of the poorest province (Gansu). In Italy, which among European countries has the greatest regional differences, the ratio is 2,3 (Lombardy compared to Calabria). In the USA the gap is 2,2 times (New York state at the top, Mississippi at the bottom). Therefore, net of the difference in the degree of development, the distributive inequality in China is much lower than what the usual metrics say.
Thirdly, to be successful decisions must have one anyway some basis for consensus, not only within the political leadership but also in society. A classic example was the rapid about-face in the zero-Covid policy after popular protests at the end of November 2022, triggered by the tragedy of the fire in an apartment building, with people stuck at home by the strict lockdown and relief efforts hampered precisely by anti-Covid blocks; social media acted as a megaphone and coagulant of the protest.
Again, the choices are necessarily oriented by long-term goals, both on the domestic and foreign policy fronts. Finally, China is fully aware of being an elephant in a glassware shop and when it moves in international relations its first objective is not to cause damage, because this would be enormous and would quickly reverberate against it.
In relations with the rest of the world, its goal is to guarantee itself procurement of raw materials and fluid trade, both achievable only in a peaceful context. This helps explain why Beijing is trying to bring peace to Russia's war on Ukraine and still trying to opportunistically exploit that conflict in its international alliances. The only diplomatic taboo is Taiwan, which for Beijing is an integral part of its territory, and not an independent state.
On the other hand, every growth process involves a widening of distribution gaps, according to the path and logic that Angus Deaton has called "The Great Escape". An escape that brings out wealthy social classes, whose formation in China was already visible and predictable in 1990 and whose ranks have constantly increased, reaching the 266 million individuals in 2020, with an expected increase of another 80 million individuals by 2025. In India, for comparison, they are 64 million and estimated to increase by another 39 million by 2025, but here the concentration of wealth is much more accentuated - 57,1% the share of the top 10% vs 13,1% of the bottom 50% – and this implies an overestimation of the affluent class. Individuals whose per capita income exceeds $40 in PPPs per year are considered wealthy.
On an economic level, the dimensions reached by China mean that its contribution to global growth remains high despite the percentage increase in its GDP having more than halved since the roaring years. With what follows in terms of absorption of new resources and consequent pressure on their prices. This is all the more true when it sets certain sectoral objectives. For example, focus on the electric car.
Furthermore, it is the major global hub in the international trade network. It inevitably is, since it is the first exporting country, with a share of over 10%, followed by the USA (7,5%) and Germany (4,6%). Italy is eighth (with 2,7%), ahead of France (2,6%), and Switzerland is eleventh (2,2%).
China's supremacy increases if the export is measured, rather than with its face value, with the exporting country's added value measure contained in that export. This increase means that Chinese exports originate from productions that are more vertically integrated within Chinese supply chains than are the exports of other countries it competes with in the global arena. To illustrate, a totally opposite model is the German one, of Bazar-economy, where Germany assembles much of what is produced elsewhere, and therefore its ranking worsens when one passes from the value of exports to the German added value incorporated in that export.
La strong Chinese vertical integration lends itself to at least three readings, which are not mutually exclusive. First reading: there is a strong autarkic heritage that comes from the distant and post-revolutionary history of China; isolationism was the offspring of that feeling of superiority mentioned above, justified until the fifteenth century by the undoubted technological and administrative supremacy; and it was functional to central control, through the efficient network of a select elite of bureaucrats.
Second reading: higher value-added content and vertical integration entail higher domestic employment, fundamental for a country that needed to free itself as quickly as possible from poverty and hunger; this, compared to the theoretical Ricardian model of comparative advantages, is at the expense of efficiency, but with such inexpensive work it was not the priority on a competitive level.
Third reading: being integrated means master all stages of processing, and therefore to seize it also by attracting foreign investments; this paves the way for qualitative upgrading and the penetration of more sophisticated, higher quality and higher technology sectors and markets, for a new phase of development.
A different way of looking at the same phenomenon, with a cut that starts from the Chinese role in various product markets, is from the angle of the composition of the import and export of material goods of China, with respect to both the total of China itself and the world total.
It emerges that 40% of Chinese imports are raw materials. Compared to the world markets of these commodities, the Chinese incidence varies greatly: from 11% of food to 31,1% for non-agricultural and non-energy inputs. But the greatest weight is recorded for purchases of electronic components (including microchips), equal to 38,7% of the global total.
In the latter sector, China is a major producer and exporter, given that its sales abroad are equivalent to 21,8% of world exports. However, most of these imports are incorporated in other manufactures: from data processors and office equipment (40,6%), to communications equipment (which includes smartphones, 39,5%) and machinery (in the wake of the growing machine learning, 41,2%).
Interestingly, although China holds a sort of quasi-monopoly in textiles and clothing, since its exports are respectively 41,1% and 32,1% of the global total, however their importance on Chinese exports is very limited (9% overall), signifying the liberation of Made in China from productions considered to have a lower innovative and technological content. Much more relevant are products with digital content (25,3% overall), machinery (14,8% and means of transport (8,5%), in addition to the miscellaneous item of other manufactured goods (where there are furniture, rubber products, 25,4%).
In China, manufacturing upgrading is even less a spontaneous process than it is in Western countries, where industrial objectives are pursued through defense budgets or other types of instruments (for example, in the USA, the Inflation Reduction Act contains clear targeted measures to import substitution). The Chinese authorities have launched industrial policy programs since the early 80s and the latest plan dates back to 2015, is valid for ten years and significantly entitled Made in China 2025.
The goal is to make yourself independent of semi-finished products and capital goods purchased abroad in strategic sectors. This involves acquiring technologies and skills and then being able to develop both independently.
The transition is neither simple nor obvious in its results, and yet it is pursued with great determination and no scruple, using a range of tools to steer the system in the desired direction: direct control of production and financial intermediaries, with state enterprises; subsidies to individuals who are committed to pursuing shared strategic objectives; forced transfer of technology from foreign companies investing in China; acquisitions of companies abroad. And he seems to be succeeding, judging by the primacy achieved in itactive patents (3,6 million in 2021, against 3,3 in the USA and 2 in Japan).
China: the strategic sectors on which it focuses
I strategic sectors where China wants to increase the share of the domestic market served by domestic production are: wide-body aircraft; phone chips; large tractors and harvesters; advanced medical equipment; industrial robots; renewable energy equipment; naval components; green vehicles.
Hence the US action aimed at countering or at least stemming the rise of China as a technological power. After having favored their insertion and integration into international trade because at the time it was considered advantageous for the United States which had emerged victorious from the Cold War and which considered itself, sinning by hubris, the only planetary superpower.
Industrial policy in a big way was rediscovered under the Obama presidency and on the wave of Great financial crisis, making the bitter discovery that the USA could not immediately bring smartphone production back home because they did not have the same skills and technologies as the Chinese ones. The imposition of high tariffs, the banning of some Chinese brands, strong incentives to attract foreign manufacturers (for example, Taiwanese) or retain domestic ones (Intel), and the ban on exporting sophisticated technologies to China are all part of the strategy of containment, if not of contrast, of the rise of Chinese power.
Which, among other things, has launched a long and complex program of exploration of the Moon, which aims to create a manned base at the South Pole of the satellite. The first three phases of the program have been completed successfully (including lunar landings with material sampling) and it has now entered the fourth and final phase. Therefore, even in the space economy, which was dealt with in the XXI Newsletter, China plays the leading role.
As demonstrated by the rover, christened Zhurong (mythological figure of the sun and light) through a popular contest and landed on Mars in 2021; it was capable of transmitting information for nearly a year, despite being designed to last three months. Only the USA had managed to do the same.
To give another example of technological avant-garde positioning, China is rivaling, again with the US, inextreme frontier innovation of quantum computing, i.e. in the use of atoms instead of transistors and of a system no longer binary 0-1 but of the infinity of numbers included in the range 0-1, with calculation and memory capacity and therefore speeds millions of times higher than traditional computers that we currently use. Quantum computers would have the ability to breach any existing computer security system. Not a small problem, so much so that it slows down the race for this innovation until it has been solved by inventing adequate protection systems.
The key point to understand is that China has moved sharply and for about ten years policy priorities: from growth driven by exports, to pay for foreign purchases of goods necessary for development, to growth driven by domestic demand, served by domestic production; from the manufacturing pillar to that of services, to satisfy the richest and most demanding consumers. Services that are enriched by better health care, which are still dual: with greater coverage for the employed urban population (about a third of the total) and basic for the rural and unemployed population.
The ultimate goal is shared prosperity. This term is by no means new in the history of the People's Republic. But it has been variously interpreted, passing from absolute egalitarianism, with collectivization of the means of production, in the Mao era, to the faculty for some (individuals and territories) to grow first, to then help others, in the Deng phase, to rediscover under Xi of leveling (but not of egalitarianism), with the aim of avoiding the widening of inequalities, heralding social divisions, political polarization and populism. Greater state control is the tool to smooth the edges of the highest levels of income and, at the same time, maintain a light welfare that encourages work.
Raising the demography. According to the UN central projection, the Chinese population would increase from the current 1,426 billion to 771 million at the end of the century, albeit with a slight rise in the fertility rate. India's is projected at 1,533 billion.
Technological supremacy, peaceful access to sources of raw materials and control of distribution gaps are the three pillars of the Chinese strategy. No nation, since the advent of rapid economic development with the Industrial Revolution, has ever managed to keep them together, but neither did they set out to do so as cogently. Whether China succeeds in this second, more challenging miracle will have to be verified over time, bearing in mind that economic development brings with it aspirations for freedom that the political system inhibits (primum vivere, deinde philosophari).
Basically, they are the same guidelines of Confucianism, a sort of non-transcendental Christianity born in China a few centuries before the Advent of Christ. And which was rediscovered forty years ago and relaunched in the XNUMXs by the Chinese authorities themselves, in the name of social harmony and a spiritualism that maintains a certain detachment from material riches (for an original reading of Confucianism The Zen Christ: in search of a Jesus never told, Raul Montanari).
Confucius elaborated an ethical conception of man and training for the conduct of an existence that leads to self-realization in a way compatible with the creation of a prosperous and harmonious community. His teachings are contained in the Dialogues, which collect thoughts and aphorisms.
For China, individuals are not all the same
At the basis of his vision of humanity is the conception that human individuals are not all the same (which is instead a pillar of Christianity and Western law) and that people are very different in intelligence, attitudes and morals. Also, elevation arises from education. Individual characteristics and study shape the ruling class, made up of wise people and "good governance" is born from them. All of this is the result of a evolutionary process as long as the history of China itself.
Confucius' teaching and philosophy have not only influenced all Chinese philosophical, artistic and religious thought, but are also the basis of Taoism, Zen and a part of Buddhism. And therefore the Korean, Japanese and Vietnamese cultures. But with different results in terms of social organization.
The meaning of Confucian thought is well encapsulated in this famous sentence by the master: «Are you asking me why I buy rice and flowers? I buy rice to live and flowers to have a reason to live.' Ethics and aesthetics, practical sense and love of beauty hand in hand.
