Latest / Trumponomics / What the World Doesn’t Understand About China’s Ambitions

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What the World Doesn’t Understand About China’s Ambitions · Trumponomics

0:04
Speaker 1: Hello, Steponomics here, and this week a special insight on
0:08
Speaker 1: China from someone who has a quite different perspective on
0:12
Speaker 1: the country than many of the economists and policymakers we've
0:15
Speaker 1: had pontificating about it on this show. K Eu Jin,
0:19
Speaker 1: a professor at the London School of Economics who's lived
0:21
Speaker 1: some time in London but grew up in China and
0:24
Speaker 1: still spend part of the year there. That she's in
0:27
Speaker 1: Beijing now, but she's kindly joined me for a conversation
0:30
Speaker 1: about her new book, The New China Playbook. K Eujin,
0:34
Speaker 1: thank you so much for being with us. As I said,
0:39
Speaker 1: it's sort of relatively rare to have someone with both
0:42
Speaker 1: feet so firmly planted in both China and the West.
0:47
Speaker 1: And I think the other sort of particular thing about
0:50
Speaker 1: you is that you have personally experienced, you and your
0:54
Speaker 1: family the extraordinary transformation of China's society and economy over
1:01
Speaker 1: the past thirty or forty years. And you start and
1:04
Speaker 1: you end the book with that. So I think, before
1:07
Speaker 1: we talk about some of the themes in your book,
1:09
Speaker 1: tell us a little bit about your personal story of
1:12
Speaker 1: your family and how different things might have been for
1:15
Speaker 1: them if you hadn't had the kind of changes in
1:19
Speaker 1: China that we've seen.
1:20
Speaker 2: Well, first of all, great to be with you, Stephanie. Thanks,
1:23
Speaker 2: thanks for this opportunity. Yes, I think me my family,
1:28
Speaker 2: but it's only really one of so many Chinese families
1:32
Speaker 2: who have gone through this incredible economic transformation in China.
1:38
Speaker 2: My parents worked in the fields during the Cultural Revolution.
1:44
Speaker 2: They were able to move to Beijing and create this
1:48
Speaker 2: life for me because of the amazing meritocracy and the
1:54
Speaker 2: Donzhelping's reform and opening up since the late nineteen seventies
1:59
Speaker 2: that afford us so many Chinese really an economic opportunity,
2:03
Speaker 2: and so my parents would be the first, again among
2:06
Speaker 2: many in their generation, to have really seen their future
2:11
Speaker 2: and their fate go from you know, just from the
2:15
Speaker 2: farms to the city and even to the West. I
2:21
Speaker 2: grew up in China, but I was an exchange student
2:25
Speaker 2: in high school in the US. And when I went
2:28
Speaker 2: to the US, it was very interesting because everyone knew
2:31
Speaker 2: I was from China in high school and they could
2:34
Speaker 2: only talk about or ask me about I want that
2:38
Speaker 2: human rights. But by the time I got to college
2:41
Speaker 2: a few years later, people were learning Mandarin and a
2:44
Speaker 2: few years later when we were graduating, people moved to
2:46
Speaker 2: China even to look for jobs. So that was a
2:50
Speaker 2: personal experience, but again so typical among so many Chinese.
2:54
Speaker 1: You start the book to sort of talking about the
2:56
Speaker 1: house that you were first born into, and also you
2:59
Speaker 1: mentioned I think it and that it was really sort
3:02
Speaker 1: of luck or and I guess the good performance of
3:06
Speaker 1: your father in his exams that meant that you left
3:10
Speaker 1: the countryside at all.
3:11
Speaker 2: Yes, I was born in an eleven square a meter apartment,
3:16
Speaker 2: which at that time was really a luxury, and we
3:19
Speaker 2: had communal kitchens. And my father had absolutely no family background.
3:24
Speaker 2: He was the son of factory workers, you know, in
3:28
Speaker 2: down in South and he had he was among the
3:31
Speaker 2: first generation to take the Graduate examine examination National Graduate Examination,
3:37
Speaker 2: which Denselping reinstalled and got himself into Beijing. And then
3:43
Speaker 2: you know, the rest is history.
3:44
Speaker 1: And we're all used to our own sort of parents
3:46
Speaker 1: or grandparents saying I remember when. But it's the drama
3:50
Speaker 1: that when you're talking about the pace of change in China,
3:54
Speaker 1: is it something that that you talk about around the
3:57
Speaker 1: dinner table or is it just passed without comment this point?
4:00
Speaker 2: What we do talk about often that my parents like
4:03
Speaker 2: to remind me is how grateful I should be and
4:06
Speaker 2: we should all be to Don't helping's policies and economic
4:10
Speaker 2: and opening up, and how difficult it was for the Chinese,
4:14
Speaker 2: and really how grateful they should be to the country
4:17
Speaker 2: and to the great leaders that have given everybody an opportunity.
4:21
Speaker 2: And I think that is a very you know, kind
4:24
Speaker 2: of a common feature in the discussion of all Chinese families.
4:30
Speaker 1: And it's interesting even in the way you say that,
4:33
Speaker 1: you have pointed up one of the great things that
4:37
Speaker 1: people outside China find so hard to understand. That sort
4:41
Speaker 1: of deep sense of deference and gratitude that is so
4:44
Speaker 1: widely shared by people across China is kind of one
4:47
Speaker 1: of those you know, we don't spend on We don't
4:50
Speaker 1: spend very much of our time giving thanks for our
4:53
Speaker 1: leaders and their great decision. And just in terms of
4:56
Speaker 1: the numbers, you had a great stat it was just
4:59
Speaker 1: a good way of summer rising. You mentioned that over
5:01
Speaker 1: the years of the Industrial Revolution were considered to be
5:04
Speaker 1: amazing because they improved the standard of living by seventy
5:08
Speaker 1: five percent within a single lifetime. But the growth rates
5:11
Speaker 1: in China, as you point out, mean that many Chinese
5:13
Speaker 1: will see living standards rise seventy five fold, so seven
5:17
Speaker 1: five hundred percent. I thought that just really kind of
5:20
Speaker 1: put it into perspective. Okay, So your book, you mentioned
5:24
Speaker 1: the phrase several times reading China in the original that
5:28
Speaker 1: what do we miss by not doing that, by not
5:32
Speaker 1: seeing China through Chinese eyes?
5:35
Speaker 2: You know, you know, culturally, historically, China comes from a
5:38
Speaker 2: very different place, and we keep on judging China for
5:42
Speaker 2: what it is through the Western lens, will get China wrong,
5:46
Speaker 2: will predict China wrong, as we have many times, We
5:49
Speaker 2: will not see their view of the Chinese people. And so,
5:54
Speaker 2: whether you're a policy maker or a student learning about
5:58
Speaker 2: China or business is wanting to engage or disengage with China,
6:03
Speaker 2: just having that bit of a cultural and historical nuance
6:06
Speaker 2: and understanding how that really vastly different economic model political
6:10
Speaker 2: economy model works would be just so important.
6:15
Speaker 1: So what's an example of a misunderstanding of China that
6:22
Speaker 1: is potentially dangerous at the current time.
6:25
Speaker 2: Well, I think it starts from the misunderstanding of China's
6:29
Speaker 2: ambitions and goals in the world. There is a view
6:33
Speaker 2: that China is trying to displace the US, for example,
6:38
Speaker 2: but it is actually trying to overcome a middle income trap.
6:42
Speaker 2: We're talking about its economic goal in the next fifteen
6:46
Speaker 2: years or so to be reaching twenty three thousand dollars
6:49
Speaker 2: of per capita income. We're talking about six hundred million
6:53
Speaker 2: people who's living under three hundred dollars of monthly income,
6:57
Speaker 2: still needing to reach international standards middle income. And I
7:03
Speaker 2: think for the Chinese, they believe, well, first of all,
7:05
Speaker 2: if the Chinese people have a right to prosperity, have
7:08
Speaker 2: a right to attain the technolog technological prowess that all
7:13
Speaker 2: developing countries and emerging countries, emerging markets want to have
7:17
Speaker 2: some day. I don't think it's stupid enough to want
7:20
Speaker 2: to displace the US for some reason, because it's not
7:25
Speaker 2: really currently feasible. But also, you know, I'm less dangerous,
7:31
Speaker 2: but just so important and interesting. And every time I
7:34
Speaker 2: mentioned this, I think people are just so surprised, even
7:37
Speaker 2: extremely cosmopolitan while educated people. Is how the political economy
7:42
Speaker 2: works in China. People think about China as a centralized
7:47
Speaker 2: state with you know, with almighty control, but actually the
7:53
Speaker 2: economic model is a very decentralized model. I call this
7:56
Speaker 2: the Mayor economy in my book, and it just goes
8:02
Speaker 2: to show that all the economic transformation reforms we talked about,
8:06
Speaker 2: the innovation, controlling pollution and really just building these amazing unicorns,
8:12
Speaker 2: so many unicorns, hundreds of unicorns a year in China
8:15
Speaker 2: are scattered all throughout China rather than just focused on
8:19
Speaker 2: Beijing and Shanjin and Shagha all because of the mayors,
8:23
Speaker 2: so to speak, that economic decentralization is so far none
8:28
Speaker 2: of you know, my friends have have understood.
8:31
Speaker 1: Of course, what people look at and what they think
8:34
Speaker 1: of when they're sort of focused on the control of
8:36
Speaker 1: the power of the state is the control over political
8:43
Speaker 1: activity and to some extent, the power control of individual thought.
8:48
Speaker 1: When you think of all the surveillance the Great Fire
8:51
Speaker 1: will preventing people in China from from seeing everything on
8:54
Speaker 1: the on the internet from outside China, I mean, it's
8:59
Speaker 1: it's hard to argue that it isn't a strong central.
9:01
Speaker 2: State politically, it's a very strong central state. But I
9:07
Speaker 2: think the question that you've raised here there's also a
9:09
Speaker 2: bit of misunderstanding. There's actually a very very dynamic, more
9:13
Speaker 2: than we believe dynamic, civic debate on social media in China,
9:18
Speaker 2: and apart from a few Tiboo issues. There are things
9:25
Speaker 2: ranging from organizing protests around China. You know, as an example,
9:31
Speaker 2: there was something like more than eleven thousand protests just
9:33
Speaker 2: over land use rights, not to mention so many other protests,
9:37
Speaker 2: and they allow that there is criticism. One of the
9:41
Speaker 2: top key hot issues is criticisms of local officials calling
9:46
Speaker 2: them out in corruption or if they had a mistress
9:49
Speaker 2: that was found somewhere, that was spotted somewhere, or expensive watches.
9:54
Speaker 2: There's a huge amount of pushback. Again, these stories don't
9:58
Speaker 2: get reported. But for instance, in the city of Hungo
10:02
Speaker 2: down south, you know, people complained about the data collection
10:08
Speaker 2: and data privacy issues from a public park and then
10:12
Speaker 2: they canceled the whole thing. They canceled the facial recognition
10:16
Speaker 2: ticket system. So you're actually able to push the local
10:19
Speaker 2: officials to change and relatively rapidly if there's wide discontent. Now,
10:24
Speaker 2: of course there's some things that you don't hear, and
10:27
Speaker 2: there is a censorship on the social media platform the
10:30
Speaker 2: highly highly sensitive political issues which not every single Chinese
10:35
Speaker 2: citizen talks about. But again there are also loopholes. You know,
10:38
Speaker 2: some of them would post during the midnight and then
10:42
Speaker 2: by the time the officials in charge will wake up.
10:45
Speaker 2: It was already you know, everywhere on the internet, so
10:48
Speaker 2: it's not that easy to implement. But I agree with you, Stephanie.
10:53
Speaker 2: There has been tighter control and more surveillance in the years,
10:58
Speaker 2: that's for sure true. But to see the complete picture,
11:02
Speaker 2: we have to recognize that it's not a bunch of
11:04
Speaker 2: just one point four billion people having no voice at all.
11:13
Speaker 1: We've had a situation where over thirty or forty years,
11:16
Speaker 1: China has made itself, as we discovered recently, indispensable to
11:21
Speaker 1: global manufacturing production. Even people who don't think they're dependent
11:28
Speaker 1: on China have found, you know, actually there's you know,
11:30
Speaker 1: some number of parts that come through China or are
11:34
Speaker 1: made in China, and that's obviously animated President Biden's push
11:38
Speaker 1: to diversify production globally and to some extent decouple. I'm
11:44
Speaker 1: sort of fascinating when China obviously would be proud of
11:48
Speaker 1: what it's achieved, is it does it think that the
11:53
Speaker 1: rest of the world was a bit foolish to allow
11:56
Speaker 1: themselves so easily to become hooked on Chinese production? Does
12:01
Speaker 1: it inculcate a sort of lack of respect? It sort
12:05
Speaker 1: of sometimes feels we sort of wonder whether China's kind
12:08
Speaker 1: of laughing at us behind our backs, but having got
12:10
Speaker 1: ourselves in this situation.
12:12
Speaker 2: Oh no, no, absolutely not. I think globalization was the
12:16
Speaker 2: best thing that happened to China and allowing China to
12:20
Speaker 2: embrace it unless we really kind of believe that somehow
12:23
Speaker 2: we ought to have three quarters of the people in
12:26
Speaker 2: the world living in an abject poverty. I just don't
12:29
Speaker 2: see any rationale against this view of deglobalization and decoupling.
12:36
Speaker 2: And we can't forget about the eighty percent of the
12:38
Speaker 2: people still living and developing world.
12:42
Speaker 1: In today's world thinking about China right now, and obviously
12:48
Speaker 1: people are looking at China's economy being feeling a bit
12:52
Speaker 1: concerned about the slowdown we've seen in the last few months,
12:55
Speaker 1: and some of the very deep seated challenges that the
12:59
Speaker 1: government fail is, for example, that the real estate trying
13:03
Speaker 1: to reduce the amount of investment in real estate without
13:09
Speaker 1: seriously undermining the economy given that the property has been
13:12
Speaker 1: such a big play puts a big part in growth.
13:16
Speaker 1: How do you judge the way Si Jinping and his
13:19
Speaker 1: new administration are sort of handling those challenges facing the economy.
13:24
Speaker 2: Well, First of all the overarching mood is a return
13:29
Speaker 2: of pragmatism. Pragmatism just the basic principle for Chinese people
13:36
Speaker 2: all these years and still not regarten. It's still most important.
13:40
Speaker 2: Despite everything we think about security and nationalism, pragmatism is
13:45
Speaker 2: actually what the Chinese people want the most. So it's
13:50
Speaker 2: kind of ironic that the economy has to suffer that
13:52
Speaker 2: much before the return of pragmaticals. Once again, keep your
13:56
Speaker 2: head down, make GDP great jobs, and that's what the
14:01
Speaker 2: government is focused on.
14:02
Speaker 1: Sorry, just to interrupt when you say the return of practice,
14:05
Speaker 1: and so what was it returning from what have we've seen?
14:09
Speaker 2: Well, we had a lot of yeah, we especially in
14:13
Speaker 2: the last year or so during COVID and during the
14:15
Speaker 2: Party Congress, there was a lot of mention of security.
14:19
Speaker 2: There was a lot of mention of the threats that
14:22
Speaker 2: have encircled China, external, internal pandemic, and how security was
14:29
Speaker 2: really the most important thing for China. And we're going
14:35
Speaker 2: to see security being continued to be important, but it
14:38
Speaker 2: will be a pendulum swing between the economy and security,
14:43
Speaker 2: and sometimes economics wares and as you mentioned, Stephanie could
14:46
Speaker 2: correctly pointed out the real economics difficulty right now is
14:51
Speaker 2: to find something to replace the property sector, which broadly
14:55
Speaker 2: accounted for a third of China's GDP. And even though
14:59
Speaker 2: recent ursus are directed towards now hard tech, now the
15:03
Speaker 2: high tech, now towards you know, things like evs and renewables,
15:08
Speaker 2: that's just not enough in the short term to get
15:11
Speaker 2: the GDP numbers to create the kind of jobs that
15:16
Speaker 2: are required for social stability, but to reduce youth unemployment,
15:21
Speaker 2: which is north of twenty percent currently, So what could
15:25
Speaker 2: that be. They're still finding the way. So the short
15:27
Speaker 2: term we really might see a slow economy. I don't
15:31
Speaker 2: think there's going to be a collapse or at any sort.
15:33
Speaker 2: I think the government will do enough to reach the
15:35
Speaker 2: goal of reaching twothout and twenty three thousand dollars per
15:38
Speaker 2: capita income in twenty thirty five, but I wouldn't my
15:41
Speaker 2: hopes up for really spectacular performance.
15:43
Speaker 1: Well, it's interesting you mentioned that our chief economist Tom
15:48
Speaker 1: Morlig was saying, you know, just a few years ago,
15:50
Speaker 1: it was very difficult to imagine China not rapidly overtaking
15:54
Speaker 1: the US as the world's biggest economy. But we're now
15:56
Speaker 1: seeing as we update our new forecasts and think about
15:59
Speaker 1: downside and upside scenarios, and there's there's lots of scenarios
16:03
Speaker 1: under which that great moment of China overtaking the US
16:09
Speaker 1: is delayed a long time and somewhere it doesn't happen
16:14
Speaker 1: at all.
16:15
Speaker 2: Well, Stephanie, I think it's true with these scenarios, but
16:17
Speaker 2: China needs to only only needs to grow one point
16:21
Speaker 2: five percentage points faster than the US to overtake it
16:25
Speaker 2: in a little more than ten years. And I think
16:27
Speaker 2: is actually pretty plausible given that it's all about relative performance.
16:32
Speaker 2: But I think it really depends on how how you
16:35
Speaker 2: get there, right, So, just in terms of nominally achieving
16:38
Speaker 2: a size that's larger than the US, I'm actually more
16:41
Speaker 2: optimistic than those projections, but I don't think it necessarily
16:46
Speaker 2: means all that much unless you really raise the standards
16:50
Speaker 2: of living and less China really really is able to
16:56
Speaker 2: come up with its own, you know, high tech independence again,
17:00
Speaker 2: I think is going to be the story of the
17:01
Speaker 2: next decade, and that you know they can't economic growth
17:06
Speaker 2: is actually real rather than just the macro numbers.
17:10
Speaker 1: You talk quite a lot about the crucial importance for
17:13
Speaker 1: the continued support for the government and for the party
17:19
Speaker 1: is that it delivers stability, that it deliver rising prosperity
17:25
Speaker 1: is the government, and as is China ready for a
17:30
Speaker 1: situation in which we don't see the kind of dramatic
17:34
Speaker 1: economic growth we've seen, or indeed we may see, you know,
17:37
Speaker 1: quite meager growth over the next few years.
17:40
Speaker 2: I think one one group to watch is the younger generation.
17:44
Speaker 2: You know. Imagine that you've done everything in your life,
17:47
Speaker 2: and your family has spent every penny of their savings
17:50
Speaker 2: on your education, and you get a bachelor's degree and
17:55
Speaker 2: you're in trentees and you don't even have a first job.
17:59
Speaker 2: I mean, that's seriously concerning, uh, for the Chinese families
18:04
Speaker 2: and therefore for the government. Uh. And so how do
18:10
Speaker 2: you solve that high youth unemployment problem? I think comes
18:14
Speaker 2: before and many other things because remember that Chinese family
18:18
Speaker 2: is Another cultural misunderstanding that I highlight in my book
18:22
Speaker 2: is that it's a dynastic you know family. It's not
18:25
Speaker 2: about maximizing one's individual consumption, as the Western canonical economic
18:31
Speaker 2: model always assumes, but it's about you know, intergenerational altruism,
18:37
Speaker 2: household maximizing household consumption or saving for your children or
18:44
Speaker 2: saving so that you can support your parents in an
18:46
Speaker 2: older age. None of that, very little of that is
18:49
Speaker 2: featured uh in the in the in these basic workhorse
18:54
Speaker 2: frameworks in the in the Western economics. But that is
18:57
Speaker 2: just the basic foundation. So when the Chinese families are
19:01
Speaker 2: unhappy collectively, then I think it's a potential threat to
19:05
Speaker 2: social stability. Now, we saw how rapid things changed at
19:09
Speaker 2: the end of last year during the pandemic, when China
19:13
Speaker 2: opened up so much earlier than expected as of resistance.
19:18
Speaker 2: I mean that just goes to show the people has
19:22
Speaker 2: enormous power, and the sea of the people is really
19:27
Speaker 2: what keeps the float of leadership, keeps that boat of
19:30
Speaker 2: leadership afloat. We're not seeing necessary signs of social instability
19:36
Speaker 2: because of the economy. Yet it really depends on whether
19:39
Speaker 2: that pragmatic attitude will hold in the coming years. There
19:44
Speaker 2: is a gap of twenty five million jobs in manufacturing
19:48
Speaker 2: the next three years needing to be filled. There is
19:51
Speaker 2: a three hundred thousand talent gap just in semiconductor sectors alone.
19:56
Speaker 2: But the real chasm is that there's you know, there's
20:00
Speaker 2: difference between expectations and reality in the Chinese students and
20:04
Speaker 2: getting this bachelors degree, who wants to have a high
20:06
Speaker 2: earning job in finance and real estate, except that they're
20:09
Speaker 2: not that many jobs in finance and real estate.
20:12
Speaker 1: You talk about the new generation and them having different
20:16
Speaker 1: expectations and potentially just very different individual experiences from their family.
20:23
Speaker 1: One of the things, the basic things that the West
20:25
Speaker 1: has been surprised about, rightly or wrongly, is that there
20:29
Speaker 1: hasn't been more of a move towards more democratic, more
20:34
Speaker 1: individualistic society as a market economy has taken hold in China.
20:39
Speaker 1: At the bottom of that is a sort of continued
20:42
Speaker 1: belief that as you move to a more service oriented,
20:45
Speaker 1: so service sector based economy, which structurally they have to do,
20:49
Speaker 1: and as they move to having more of the growth
20:52
Speaker 1: of the economy driven by consumption not investment, which I
20:56
Speaker 1: think the government also recognizes a country, and certainly as
21:00
Speaker 1: you try and develop more and more technological innovation and
21:05
Speaker 1: you are more on the kind of frontier of technology
21:09
Speaker 1: rather than catching up to the rest of the world,
21:12
Speaker 1: that to us spells a need for a more individualistic society,
21:19
Speaker 1: one where people will feel I'm more likely to feel
21:21
Speaker 1: oppressed by a very strong single party government, So do
21:26
Speaker 1: not recognize that as a possibility that some of those
21:29
Speaker 1: cultural traditions will come right up against just the economy
21:33
Speaker 1: as it is today and will be in the next
21:35
Speaker 1: ten twenty years.
21:37
Speaker 2: The relationship with authority is something that is very different
21:41
Speaker 2: from the West, and it's kind of ingrained in the
21:44
Speaker 2: Chinese people since we were young. The relationship with our
21:47
Speaker 2: parents and our Confucian family, the relationship with our teachers,
21:52
Speaker 2: you know, and of course the relationship with authorities, the government.
21:57
Speaker 2: The Chinese people have always had to learn to balance
22:00
Speaker 2: at a desire of exerting one's individual free will and
22:06
Speaker 2: behaving in a community deference in collaboration and cooperation with
22:11
Speaker 2: the government or with your authorities. But I think, Stephanie,
22:16
Speaker 2: at the bottom line, if you're asking, you know, if
22:18
Speaker 2: the question is if the Chinese people want to have
22:21
Speaker 2: a more free and open society, I think the answer
22:25
Speaker 2: is a resounding yes. And I think whether it's the
22:29
Speaker 2: new generation and even much more so the older generation
22:32
Speaker 2: like those in the nineteen sixties, they aspire democratic values.
22:38
Speaker 2: But I also have to say they're not that inspired
22:41
Speaker 2: by its Western incarnation, Western incarnation of democracy, because they
22:47
Speaker 2: would be, you know, observing the fact that there's so
22:50
Speaker 2: much bickering. And for the US, they'd be wondering why
22:53
Speaker 2: a society that champions rights don't give all the women
22:57
Speaker 2: rights to end unwanted pregnancies. And they would be, you know,
23:02
Speaker 2: looking at the gun violence and the potholes on the
23:04
Speaker 2: streets in the US, and they would be they're be wondering. Now,
23:07
Speaker 2: that was not necessarily cased. In the eighties and nineties,
23:11
Speaker 2: when the Chinese people was more mesmerized by the US,
23:15
Speaker 2: people were very deeply impressed. So at that point you
23:18
Speaker 2: saw many Chinese people asparring to that society and that
23:22
Speaker 2: openness and that freedom, et cetera. But I think less
23:26
Speaker 2: and less so, and this is very clear from the surveys,
23:28
Speaker 2: international surveys of the different generations. The new generations has
23:33
Speaker 2: no appetite to have overhauled their own system. And yes,
23:37
Speaker 2: I think things have become difficult in the last few years,
23:41
Speaker 2: the last two years, especially by the end of the pandemic.
23:45
Speaker 2: But over the last decade the Chinese people have been
23:48
Speaker 2: more proud, not less proud, and more sure of their
23:51
Speaker 2: system the power of their system, than compared to many
23:55
Speaker 2: years ago. Again, I'm not saying what is good and wrong,
23:59
Speaker 2: right or wrong. But this is understating the facts of
24:01
Speaker 2: how the Chinese people feel and when they look at
24:04
Speaker 2: democracies for inspiration outside of China.
24:13
Speaker 1: I mean, you say in your book that understanding Chinese
24:17
Speaker 1: thinking doesn't mean endorsing it in its entirety. I have
24:21
Speaker 1: to admit kind of, as you read it, it sort
24:23
Speaker 1: of feels like you do pretty much endorse it its entirety.
24:27
Speaker 1: I mean you even the mistakes that you identify, all
24:31
Speaker 1: the economic problems that you identify, you know, you then
24:35
Speaker 1: sort of later in the book explain how they have
24:37
Speaker 1: been reversed or remedied by a very agile and flexible
24:43
Speaker 1: response by the state. So I guess I'm just wondering,
24:46
Speaker 1: do you what do you think that the other countries
24:50
Speaker 1: have done better than China? Where do you think China
24:52
Speaker 1: should needs to learn lessons?
24:55
Speaker 2: I think if you felt a sense of endorsement, it
24:57
Speaker 2: was an endorsement. It was certain kind to model in
25:01
Speaker 2: the early stages of developments, not eternally. And if there's
25:07
Speaker 2: one thing I think there, it is important. It is
25:09
Speaker 2: important and proved to be repeatedly crucial for countries to
25:14
Speaker 2: jump out of poverty and slowly tread on the middle
25:17
Speaker 2: income path towards rich to rich income. It's high quality
25:21
Speaker 2: state capacity. And China's model was a form one form
25:26
Speaker 2: of delivering high quality state capacity, not the only and
25:30
Speaker 2: unique form, but I think it does have certain developmental lessons.
25:35
Speaker 2: And just take a solid example. Recently, China became the
25:38
Speaker 2: largest producer and consumer of evs within a decade. How
25:42
Speaker 2: was it able to do that? Well, it wasn't able
25:44
Speaker 2: to It wasn't. It wouldn't have been able to do
25:46
Speaker 2: that without the government installing four million EV charging stations
25:50
Speaker 2: around the country. Compared to China, the US is one
25:53
Speaker 2: hundred and forty thousand. And it wouldn't have been able
25:55
Speaker 2: to do it so quickly if the local government officials
25:57
Speaker 2: were not so avidly working on coordinating supply chains all
26:01
Speaker 2: around China, you know, gathering battery makers, control systems, manufacturers,
26:07
Speaker 2: et cetera all together. That requires high quality state capacity.
26:12
Speaker 1: But can you think of anything that China got wrong
26:14
Speaker 1: that America's got right?
26:15
Speaker 2: Oh? Yes, and you mentioned the other countries done well,
26:20
Speaker 2: you know there there there are many countries that you know,
26:25
Speaker 2: we always talk about getting to Denmark, even in the West.
26:29
Speaker 2: You know, the kind of the the you know, the
26:32
Speaker 2: lower levels of inequality, the social goods and public goods
26:36
Speaker 2: that have been delivered to the people, the general level happiness.
26:41
Speaker 2: I think we should all aspire to get to Denmark.
26:43
Speaker 2: But Denmark is also kind of tiny, if I may
26:47
Speaker 2: say so. So it's obviously more difficult for bigger countries
26:50
Speaker 2: like the US and China. And eventually we're going to
26:53
Speaker 2: see what's going to happen to India, right, And so
26:56
Speaker 2: I think all of these large economies have their their
26:58
Speaker 2: their challenges because the complexity of society. I will say that.
27:03
Speaker 2: But you know, you know, if we observe South Korea
27:06
Speaker 2: or Japan closer as neighbors, you know they are they
27:10
Speaker 2: are good models of relatively good liberal democracies that have worked.
27:17
Speaker 2: But I think that the real issue, it really is
27:20
Speaker 2: China is going to become much more complex social even
27:23
Speaker 2: more than now, and that's going to be the real
27:25
Speaker 2: challenge for the country and for the government. Because in
27:28
Speaker 2: the last forty years, people were centered on one goal,
27:31
Speaker 2: and that was economic growth and senior income grow up
27:35
Speaker 2: up and up, and that was what that was the
27:39
Speaker 2: focal point of the nation. Everybody was rallied around that goal.
27:43
Speaker 2: Now as you reach middle income, as you reach you know,
27:47
Speaker 2: a richer income, country level income. Yeah, people are going
27:51
Speaker 2: to want different things. They're going to want their preferences
27:53
Speaker 2: to be reflected ultimately in political decisions, and so I
27:57
Speaker 2: think that will be a challenge. And how can you
27:59
Speaker 2: manage if going to be much more difficult to manage
28:01
Speaker 2: a complex society with a wide range of needs and
28:06
Speaker 2: desires rather than just the economies. I think that would
28:09
Speaker 2: really be the challenge for China.
28:12
Speaker 1: I'm so sorry to talk to you, but I just
28:14
Speaker 1: find it kind of interesting that you can't I mean,
28:16
Speaker 1: as you say, there's the two big countries, and there's
28:19
Speaker 1: lots of things that are different about them, but I
28:21
Speaker 1: just it seems like you can't think of something that
28:25
Speaker 1: China's got wrong.
28:28
Speaker 2: I've been I've been digressing. No, Look, the Chinese are
28:33
Speaker 2: absolutely mesborized by entrepreneurs like Elon Musk and the technological
28:40
Speaker 2: innovation is like chat, GPT. They are obsessed with them.
28:43
Speaker 2: The new generation are obsessed with them. And how do
28:46
Speaker 2: you have a society that can allow these great things
28:48
Speaker 2: to happen? Is what absolutely I think the US would
28:51
Speaker 2: be ahead of China for a very very long time
28:56
Speaker 2: and if we're talking about basically breakthrough technologies, it's in America,
29:00
Speaker 2: it's not in China. Yet that comes down to so
29:03
Speaker 2: many things, so many factors, and not least civil society
29:08
Speaker 2: and its openness and its relationship between the universities and
29:14
Speaker 2: and and industries, and that free flow of ideas absolutely crucial.
29:19
Speaker 2: And that's that's for sure something that the US has
29:22
Speaker 2: gone right. Thank you.
29:25
Speaker 1: So my final question, do you find the students LC
29:29
Speaker 1: very different from students who teach? It's an obvious question,
29:32
Speaker 1: but I'm just fascinated. I mean, when you talk about
29:34
Speaker 1: this sort of tradition, the way people deal with their
29:36
Speaker 1: teachers and everything else, do you find the British students
29:39
Speaker 1: terribly insubordinate and cheeky?
29:42
Speaker 2: No? No, no, I think no, not at all. I
29:45
Speaker 2: think you yeah, actually, you know, each student is different.
29:49
Speaker 2: But I think the Chinese students come into my office
29:51
Speaker 2: and often start with what their parents think, which is
29:54
Speaker 2: you know, sur writing, especially when it comes to their future.
29:59
Speaker 2: But look, you know, good students are always great students
30:02
Speaker 2: because of their ability to think out of the box.
30:05
Speaker 2: And we see that whether you're Chinese or Grits. And
30:07
Speaker 2: I think the new generation as I mentioned, they're much
30:09
Speaker 2: more so to speak, individualistic and selfish and eyes of
30:15
Speaker 2: the authorities. But that's a good thing. You know. They
30:18
Speaker 2: want to consume more, they want to borrow more, so
30:21
Speaker 2: they're going to change the economy. But I still think
30:24
Speaker 2: their roots are culturally deeply rooted in China, that local,
30:29
Speaker 2: the relationship with the local culture. You know, in the
30:32
Speaker 2: last decade or so, eighty percent of the students who
30:34
Speaker 2: have studied abroad have returned to China. And if really
30:38
Speaker 2: China wasn't a really great place, how could these people
30:42
Speaker 2: who had jobs in Microsoft and Google and Facebook give
30:45
Speaker 2: them up to go back to pursue their future in China.
30:48
Speaker 2: So it can't be as bad as we think. In fact,
30:51
Speaker 2: they had been rather optimistic about their nation's future.
30:54
Speaker 1: Okay, Jan, thank you so much.
30:56
Speaker 2: Thank you, Stephanie.
31:02
Speaker 1: That's it for this episode of Stephenomics. Next week we
31:05
Speaker 1: will have more. In the meantime, you can get a
31:07
Speaker 1: lot more economic insight and news from the Bloomberg Terminal
31:11
Speaker 1: website or app. This episode was produced by Mangnus, Hendrickson,
31:15
Speaker 1: Yang Yang and Samasadi, with special thanks to Professor k
31:19
Speaker 1: Yu Jin, the executive producer of Stephanomics is Molly Smith,
31:23
Speaker 1: and the head of Bloomberg Podcast is Sage Bowmen.