So, China wants to change growth drivers, but at the same time is concerned about what it calls ecological civilization. You know, in other words, establishing a harmonious relationship with the natural world. It's concerned about the enrichment of the spiritual quality of life, and this is very interesting because it relates to a kind of criticism, of what has been observed, looking at some of Western societies and the way they've become extremely individualistic and very highly fragmented.

And also, the way in which, a whole series of developments in education and so on are associated with, how can I put it? You know, in a sense, they want to improve the quality of everyone's cultural life and increase the sort of spirituality of human existence.

And then it's also, of course, closely linked with the idea that they need to improve their own systems of democratic accountability and governance. And it's also linked to the idea that development is only really possible in a peaceful world.

So China has a different view about the path to modernization, and that goes hand in hand with this attempt to implement structural change in the economy by directing resources towards productivity, increasing investment, and also, taking up this issue of internal circulation that you have written about and discussed, Radhika.

Article XIII - Promoting domestic-international dual circulation

Based on domestic great circulation, we will coordinate and promote the construction of a strong domestic market and the construction of a trade powerhouse (贸易强国, form a powerful gravitational field to attract global resources and factors of production, promote the coordinated development of domestic and foreign demand, imports and exports, and the introduction of foreign capital and foreign investment, and accelerate the cultivation of new advantages to be used in international cooperation and competition.

-from China’s 14th Five Year Plan

RADHIKA DESAI: This is from the 14th five-year plan, so that would have been five years, no, five years ago, more than that, maybe 10 years. 2014. 14, that's right. It was 10 years ago now.

So, essentially, like I was saying, in order to deal with the shock of 2008, they had first a massive investment drive. And then, within a few years, they were already pointing out that a large part of the stimulus for China's growth must not just come from outside, but also from the domestic economy.

So, Article 13 of this policy refers to promoting domestic international dual circulation. And it says, based on domestic great circulation, we will coordinate and promote the construction of a strong domestic market and the construction of a trade powerhouse. So, both domestic market and foreign market are important to form a powerful gravitational field to attract global resources and factors of production, promote the coordinated development of domestic and foreign demand, imports and exports, and the introduction of foreign capital and foreign investment, and accelerate the cultivation of new advantages to be used in international cooperation and competition.

So, the expansion of the domestic market was made into an explicit goal. And that, I think, can only be a good thing, because at the end of the day, what is development about but increasing the material standards of living of ordinary people, increasing their consumption of meaningful things, obviously, not just superfluous and, in fact, sometimes even harmful goods that we often end up counting as part of consumption in Western countries.

But there's an associated theme here that I also wanted to bring up, because I promised earlier that I would clarify what I mean by the Chinese meaning of globalization. You see, in the West, we think of globalization as essentially an ideology, and as Western governments promote it, it is an ideology of free markets and free trade. The idea is that the government should step back from any role in the economy and should not try to manage trade flows, capital flows, investment flows, etc., etc.

This is the meaning of the term globalization in the West, and the purpose of this meaning is actually not, the West continues to practice all sorts of protectionism and regulation and what have you, but the purpose of it is to open up the rest of the world's economies to Western corporations, Western capital, Western commodities, and, of course, open them up in order that they may supply Western needs for resources, cheap commodities, cheap labor, cheap manufactured goods, etc., etc.

So, this is the Western meaning of the term globalization, and as most people will recognize, the essence of it is to subordinate most of the economies of the world to Western economies. It is an imperial subordination project.

In China, it means something completely different. In China, the Chinese kind of recognize the simple elemental economic adage that the more you have a division of labor, as Adam Smith pointed out, the more we can all benefit. So, we can all benefit from specialization, we can all benefit from increasing scale of production, and so on and so forth, but this should not be done in a zero-sum game. This can be done and should be done for mutual benefit.

And in order to ensure that there is increasing economic interconnection within the economies of the world, all economies have to continue to benefit. One of the results of globalization has been today de-globalization because it has harmed economies to the extent that it has. If you manage the process for mutual benefit, then it actually becomes a more sustainable process.

So, the Chinese look at increasing international interconnection as a managed affair in which states do regulate trade flows, investment flows, etc., etc., in order to achieve mutual benefit of the economic partners, whoever they may be. And I think this type of globalization China will continue to promote and is continuing to promote in these attempts, as I referred to earlier, of trying to reshape the international environment to something that is conducive both to its own growth and that of the rest of the world.

And in fact, that's something that Western imperial powers have not allowed because they say that you want to have a growth both of domestic and foreign markets, and China's investments in the rest of the world are doing exactly that.

MICHAEL HUDSON: What you're saying, Radhika, is that China's concept of growth is very different from the concept of growth in the United States or in neoliberal economics.

Much of what you're talking about doesn't even appear in GDP because it's largely redistributive. It has to do with the quality of life. It really is: what kind of growth are you going to have? That's what the issue that China's development is posing for the whole world and what we're talking about.

We talked about providing housing, providing better living standards. If you provide education for free, is that growth? If you provide medical care for free and it's not part of the market, is that growth?

In the West, they say, what is part of the market, especially excluding government? And China looks at the whole economy and says, no, we're looking at growth of the whole society as an organism. We're talking about transformation. Transformation and redistribution is much more important than growth. That's not measured by GDP, but you pointed out the qualitative aspect of what the West views simply as quantitative changes.

RADHIKA DESAI: Exactly, yeah. Did you want to add anything, Mick?

MICK DUNFORD: Well, if I just come back in relation to what you said about China's view of globalization. China sometimes describes itself as "socialism with Chinese characteristics". And Chinese characteristics are actually very important in many ways. I mean, Chinese thought is obviously a synthesis of Marxism, but also with earlier Chinese traditions.

If you look at Chinese ideas about international relations, the core concept, the core concept is harmony. I mean, actually, it's one of the core concepts in Chinese thought, the idea of harmony and living in harmonious relationships with others, which means understanding the kind of internal dynamic of others and then working with them to develop their potentialities, rather than imposing.

The Western model is that you sort of imprint, your model on something where instead of looking at their own internal capabilities and helping them move in a positive direction.

So some of the core concepts in Chinese international relations are things like guānxi (关系, or “relationality”; or gòngshēng (共生, which means symbiosis; or tiānxià (天下, or “all under heaven”.

And that leads to these ideas that the way you help yourself is actually by helping others. So by helping others, you actually help yourself. So it leads to a quite different view about the way in which the relations between countries should be organized, the principles governing the relations between countries.

It's obviously very difficult to act in this way if there's a bully in the room, which at present there is. But I mean, even in the face of that bully, you can see that China tries to hold its principles as far as it possibly can.

So I think that is quite important. I mean, that's associated with, if you like, a mutually supportive approach to working with other countries and trying to find complementarities. And that grows out of a different tradition of thought, that is rather different from the Western tradition.

And that's also why, China speaks about a rather distinctive and different path to modernization. And that's why they come up with these initiatives, like this global civilization initiative, or this global indivisible security, although it was Russia, that before the start of the conflict in Ukraine, insisted on this issue of indivisible security in relation to European security. And then this global development initiatives.

So, it's important that we start to look at the existence of other traditions of thought in the world and start to understand the variety and multiplicity, of human civilization and the way in which those civilizations can work together and cooperate in a different kind of global order from the one that's prevailed, for the last 500 years, when the Western world basically seized on Song Dynasty innovations to embark on a process of colonialism and conquest.

RADHIKA DESAI: Quite right. I just wanted to pick up on one, a very deep point actually emerges from what you were saying, because you know you were emphasizing harmony. And I think that, of course, the Chinese value harmony and the West can say, well, we value harmony as well, except that in the West, from the earliest beginnings of capitalism, there has been an extremely odd conception of harmony, which is supposed to spontaneously arise from the workings of the market.

And in that sense, and even though actually spontaneously capitalism, market society, whatever you want to call it, has actually produced a lot of conflict. The ideological commitment to the market has always meant, and therefore to markets, private property, profits, all these things, has always meant that no matter how much evidence piles up that market relations are producing conflict, unregulated market relations are producing conflict, both domestic conflict and international conflict, the West sticks ideologically to this notion that, you are going to have harmony out of markets.

Whereas the Chinese conception realizes that harmony is a value and you have to work to produce harmony. You have to do it through deliberate actions of both households and businesses as well as governments. So, harmony is not spontaneous. It is something that is consciously aimed for and produced. And that is the difference.

I think that increasingly as China plays a leading role and its demonstration effect, how it manages its economy, how it manages its international relations, its demonstration effect will underline the truth that harmony is something that is desirable, but if we are to get it, we must work for it. We must build it through deliberate actions. So, I think this is a very, very important thing. And in this sense, the Chinese are extremely pragmatic. They will do whatever works, whereas I think in this context, the West is appearing more and more ideological in its commitment to this weird ideology that somehow markets produce spontaneous harmony.

So, maybe now that we've talked about China's growth strategy, and this is a very perfect segue into talking about China's foreign policy, particularly the accusations that are made against China of creating debt trap diplomacy. I mean, and by the way, I should say that we are going to talk about a lot of things, but people who are curious about China's foreign economic policy and accusations that China only wants to export its labor, that China only wants to grab the world's resources, etc., and is engaged in debt trap diplomacy. We will be discussing that in particular, but please also go to the Johns Hopkins University's China-Africa Research Initiative website that has exceedingly valuable statistics and reports and blogs about this matter.

But Mick, I'm going to show the chart that you wanted to discuss. So, we'll start off the discussion with this chart. So, go ahead.

MICK DUNFORD: Yeah, I mean, I think, the first thing I want to say is, if you look what China does is it basically builds, high-speed rail, ports, power plants, factories, roads, constructs social infrastructure, and it's established certain or cooperated in the establishment of certain financial institutions, that do lend to the developing world.

This chart actually plots Chinese credit, so it's the debt of the rest of the world, the developing world, to China. And the chart on the left simply indicates the way in which debt owed to China has, of course, increased over the course of time as a result of Chinese development assistance and China's lending, especially to parts of the Global South.

What I want to emphasize, however, is what the chart on the right shows. So, the one on the right records the share of gross national income of total debt, I should say, of total debt. And it does it by looking at the World Bank grouping of countries as least developed, low income, lower middle income, low middle income, middle income, macro middle income, and then separates out sub-Saharan Africa.

I mean, one of the very striking things about China is that a large share of its lending is, in fact, to very low income countries. It lends more to the least developed countries in the world than do the multilateral institutions and do the OECD group.

But if you look, if you see the least developed countries, their total debt to the rest of the world is 43% of their gross national income, which is, nearly one half, a very substantial share. But of that debt, the share owed to China is only 5.5%. And Chinese debt amounts to 12.8% of the total. Now, I mean, if you take the famous case of the Sri Lankan port of Hambantota, I mean, that issue blew up because Sri Lanka had to repay, Sri Lanka's debt to China was about 10% of its GDP, 11%, but it had to repay debt to the Paris Club and to multilateral institutions.

So that is fundamental debt problem was debt to these institutions and not debt to China. Although Sri Lanka is not in the least developed case.

If you look at low income countries, China's share is 5% of GNI. China's debt is 5% of GNI. Their total debt is 51.4% of gross national income. And then you can work your way through the list. I mean, if you look at sub-Saharan Africa, 43.1%, their debt is 43.1% of the gross national income. This is data from the IMF for [2021].

So, 43% of GNI debt, which obviously is an excessive level of debt and is a serious impediment to the development of these countries. You know, especially, if this debt is not used to fund infrastructure and other kinds of activities that are going to generate income and enable them in a sense to disindebt themselves.

But China's share of GNI is 4.3%, and its share of the total debt of sub-Saharan Africa is 10%. So these claims about a debt trap are, in a sense, simply do not stand up empirically.

And it's very interesting to go back to where that notion came from, because it came from a book, I think, written in the 1970s. What was it? I can't remember the precise title. Michael will tell us about "Disclosures by an Economic Hitman", who was actually talking about what the United States did. So it's very curious, that that thesis has been applied without any real justification to China, simply in order to discredit China's very significant contributions to the development of the Global South and the very significant contributions of the BRI, which also, receives completely unwarranted criticism.

I mean, obviously, some things do not work as they're meant to work out. But I mean, the degree of criticism of these projects is absurd, in fact.

RADHIKA DESAI: Indeed. Sorry, Michael, please go ahead.

MICHAEL HUDSON: It's very important because it's obvious now that much of the Global South cannot pay its international, its foreign debt, its dollarized debt. And we're back in a situation very near to 1982, when Mexico's default on its Tessobonos led to the Latin American debt bomb.

Now, the United States realizes that there's going to be a debt write-down. The bank lobbyists, people like Bono, say, well, the government should now forgive all of their debts to the Third World so that all the money that the governments have can be paid to private bondholders. So Bono is the lobbyist, basically, for the private bondholders. Instead of the government taking priority, as it does under international contracts, the money would be paid to private holders.

But for the government debt, Mick, you're absolutely right. The reason why the Global South has a right to annul its debt to the World Bank and to the IMF has been that these loans are to finance underdevelopment, not development. They've been to finance economic dependency, not economic self-reliance. They have imposed on the Global South a trade pattern that has led their balance of payments into increasing deficits. And the IMF has only lent money on the condition that they privatize and sell off their basic infrastructure, their raw materials, and other things.

So the United States is trying to say, well, if we write down our debt to the foreign dollarized debt, to foreign governments and the IMF and the World Bank that are basically arms of the U.S. economic strategy, then China has to write down its debt.

Well, the difference, as you point out, Mick, and this is what I think China needs to make very explicit that it has not done so far, is that its debt has been to help countries grow, not to finance their dependency, more or less. And China's idea of mutual gain means, yes, we're going to help you develop your ports so that you can grow, and your growth will provide your ability to have the money to pay for the loans that we've made out of your growth, not using the debt as a means of, oh, you can't pay. Please sell off your ports, your raw materials, your land, your public utilities, and ultimately your government.

What we're talking about with the chart is the whole difference between the Eurasian BRICS-plus strategy of international trade and investment and the predatory neoliberal U.S.-NATO strategy of the World Bank, IMF, and the U.S. government.

RADHIKA DESAI: Absolutely. You know, first of all, let me say that, "Confessions of an Economic Hitman" is a relatively more recent book.

But Cheryl Payer, back in the 1970s, already, maybe early 1980s, had already written a book called "The Debt Trap". And the debt trap she was referring to was the one set by the West, not by China.

So these accusations of what China, about what China is doing are really absurd. And in fact, Michael, as you were talking, I was reminded that in a recent essay that I wrote, I cited the following study by one Asad Izmi, who noted in 2004 that Africa's external debt has increased by more than 500 percent since 1980 to $333 billion and transferred $229 billion in debt payments from sub-Saharan Africa to the West since 1980, four times the region's 1980 debt.

In the past decade alone, African countries have paid their debt three times over, yet they are three times as indebted as 10 years ago. So talk about debt trap diplomacy. This is what the West is doing to the poorest countries in the world.

He's talking only about Africa. He's not even talking about debt elsewhere, which has also, I mean, essentially what we have witnessed in the 1980s and 1990s are giant, so-called giant reverse capital flows. And the reason they're called reverse capital flows is, of course, that the neoliberal ideology is that, free capital markets are going to direct capital from where it is in excess in the first world countries to where it is needed. But in fact, money and capital are moving from those parts of the world where they are needed to those parts of the world where they are already in surfeit. So that's one point I wanted to make.

The second point I wanted to make is that, this current phase, it was actually an Indian academic who really is part of India's aggression towards China that started using the term debt trap diplomacy vis-a-vis China. A guy called Brahma Chalani, who is one of the anti-China hawks in India.

And finally, I just want to say that the discourse of the accusations of debt trap diplomacy are actually part of a complex footwork on the part of the West, because as you showed in your chart, in fact, let me just go back to that. The chart that we were discussing, what you can see here is that bulk of the debt in this right hand side chart here, bulk of the debt that you are looking at is actually owed to not to China, but to the rest of the world, of which, of course, the Western countries are the leading creditors. And Western private lenders are also among the leading producers, lenders, because what has happened in the recent past is that Western financial institutions, essentially given the stagnant character of their own economies, have been looking for returns elsewhere. And one of the ways in which they have been getting these returns is by charging exorbitant interest rates to third world countries to lend to them to buy their bonds, essentially, which are issued in dollars or other international currencies.

So third world countries are in debt distress. As Michael pointed out, we are close to a 1982 type position. This is going to require complex negotiations. But these negotiations, unlike back in the 1980s, will now involve an outsider, namely China. China's debt rescheduling practices are actually tremendously liberal. China has gone to the table and given both debt forgiveness and generous reschedulings and so on, without the kind of extortion that we are just looking at. But the West does not want to do that. And what better way of dealing with this issue of having to include China in their negotiations and China's very different lending practices than to accuse China of what they are doing all along. So that is really the real story.

So that is about debt trap diplomacy. And any other, I think we should probably wind down because we are definitely over an hour by now. So any final comments on any aspect of this, but particularly China's foreign economic policy?

MICK DUNFORD: No, I just think that what you just said, Radhika, is extremely powerful. But I think if you combine it with an analysis of the data, then it is quite clear that these claims about debt trap are in a sense trying to distract attention from the real source of the issue and to some extent stand in the way of a solution.

RADHIKA DESAI: Yes, and also because this time around the private sector is very heavily involved. And they are basically trying to, instead of dealing with the fact that the private sector has been lending irresponsibly and in a predatory fashion, they'd rather talk about China. This is basically it.

MICK DUNFORD: Yes, I think, they're trying to put moral pressure on China, because if they can put moral pressure on China to get China to basically deal with the debt problems of these countries in order to reschedule their debt and so on, it enables them to be repaid in full. I mean, this is a classic example, of this kind of win-lose view of the world that predominates in the Western world.

RADHIKA DESAI: On that note, I think we should probably wind this discussion to a close. So please, we have just been talking about, we're just completing the second part of a two-part series on China's future, China's economic future, whether it is going to decline, as the Western world and Western pundits love to say, or whether it is in the process of engineering the next industrial revolution.

So please watch both episodes, please share widely. And thanks again to Mick and to all of you for listening. And I look forward to seeing you again in a fortnight or so. Bye-bye.

MICK DUNFORD: Bye. Thank you, Radhika. Thank you, Michael.