Latest / Zero Shot Podcast DEMO / Navigating China's Dual Economic Landscape

Transcript

Navigating China's Dual Economic Landscape · Zero Shot Podcast DEMO

• 0:00
  speakers: In this conversation, the rapid development of modern China is driven by a unique blend of communist and capitalist systems, shaped by historical leadership and local governance incentives. That opening sets the stakes we'll follow.
• 0:19
  Interviewee: Okay.
• 0:20
  speakers: The task of assembling the Chinese flag is introduced without context or explanation of its relevance.
• 0:29
  Interviewer: Hey, I got your package.
• 0:32
  And I'm not sure what I'm doing here or looking at or what I'm supposed to do next.
• 0:36
  So your task is to use some of these shapes, not all of them, to, from memory, assemble the Chinese
• 0:44
  flag.
• 0:45
  Okay.
• 0:46
  speakers: Moving from doing here to began some, what changed?
• 0:51
  Interviewee: Okay.
• 0:52
  Wait, why am I doing this?
• 0:53
  This all began with some videos.
• 0:55
  China is next level.
• 0:57
  This might be the biggest building I've ever seen.
• 0:59
  They tried to build something like this in America.
• 1:01
  It would take at least two decades.
• 1:03
  This is insane.
• 1:05
  This city does not look real, bro.
• 1:07
  It looks 4K.
• 1:08
  Videos that started appearing on my feed a couple years ago.
• 1:11
  Every time I come to China, I just realize how far behind my country is.
• 1:15
  China doing some things.
• 1:16
  I don't understand how the architects were able to build a city like this.
• 1:20
  Brain stations in China are absolutely insane.
• 1:25
  Videos of people, most of them from the United States, experiencing something that felt genuinely brand new and exciting.
• 1:32
  Next to is one of the most impressive modern marvels of engineering.
• 1:36
  Modern China.
• 1:37
  Look at the twinkles.
• 1:38
  Look at the twinkles.
• 1:39
  They've gone on them.
• 1:39
  Oh!
• 1:40
  Interviewer: It's all weird, man.
• 1:41
  China is decades ahead.
• 1:43
  I read an article about these videos.
• 1:46
  Spoke to the guy who wrote it.
• 1:48
  They're just surprised by like technical innovation, essentially.
• 1:51
  I'm trying to go into a building.
• 1:54
  speakers: The interviewee reflects on the awe-inspiring nature of the videos showcasing China's infrastructure.
• 2:03
  Interviewee: What the?
• 2:04
  These videos are fun and they're awe -inspiring, but they also made me start to wonder.
• 2:10
  What am I actually looking at here?
• 2:12
  What is this?
• 2:13
  How did China build all of this stuff?
• 2:15
  And what does it say?
• 2:17
  No.
• 2:17
  What?
• 2:18
  You cannot make this video.
• 2:19
  No, but I just need to look into this.
• 2:22
  You are in the middle of producing a documentary series that releases in a few weeks.
• 2:27
  It's true.
• 2:28
  In a few weeks' time, you will see The Human Element.
• 2:34
  speakers: The interviewee expresses awe at China's infrastructure, questioning how such rapid development is possible.
• 2:42
  Interviewee: I can't wait to share with you.
• 2:44
  It's coming soon.
• 2:50
  speakers: They do not have a communist, Soviet -style, centrally -planned, state -run economy.
• 2:57
  Wait, Max is in this video?
• 2:58
  Oh, you mean our colleague Max Fisher, host of the new press channel, The Bigger Picture, a former New York Times correspondent who has spent a lot of time reporting on China?
• 3:04
  A zillion conversations with people who are from China, China experts, China economists, China political scientists.
• 3:10
  Okay, so China is communist and capitalist then, right?
• 3:15
  It has features of both.
• 3:16
  But for an ordinary Chinese citizen, a lot of their life would basically look completely familiar to you.
• 3:21
  You earn a salary, you have money in a bank account, you shop at privately owned businesses, you order food from restaurants that are competing with each other, you could buy a car, you could buy an apartment,
• 3:29
  you could invest your money.
• 3:31
  If we're asking if China is communist, if we look at only their economy, it's going to give us a really strange answer.
• 3:38
  That's what this graphic, that system of thinking about communist versus capitalist that I've always had, this is looking at the economy.
• 3:45
  But then where is communism in everyday life then?
• 3:49
  Is it even there at all?
• 3:50
  Okay, so now you can show me your flag.
• 3:57
  Interviewee: So when I started fixating on China and its infrastructure and why it looks like this, I turned to Adam for help.
• 4:03
  I can imagine an explainer section that's like, let's get to the bottom of how China's government and society actually
• 4:11
  works.
• 4:13
  speakers: The interviewee questions whether China's system is truly communist, highlighting the complexity of its governance.
• 4:22
  What are the systems that made China look like this?
• 4:25
  And a central question for me is, is this communism?
• 4:30
  Like China's communist, right?
• 4:32
  And to be totally clear, I know that what we're looking at in these videos is a snapshot of a very specific slice of China.
• 4:37
  That's what a lot of you are thinking right now.
• 4:38
  This isn't all of China.
• 4:40
  This is rich coastal cities that don't represent most of China and Chinese people's experiences.
• 4:44
  China is obviously not a perfect society.
• 4:47
  And yet, they're able to build a lot of things very quickly.
• 4:50
  And my main hypothesis that I think a lot of us share is, well, they're able to do it because they're a dictatorship.
• 4:56
  They've got one leader who calls all the shots.
• 4:59
  When you're a dictatorship, you can just wave your magic wand and stuff gets built.
• 5:03
  If a leader wants a bridge, they build a bridge.
• 5:05
  But that turns out to not quite be it.
• 5:09
  The truth, as we learned more, turned out to be much more interesting and surprising and informative about
• 5:17
  what modern China actually is.
• 5:19
  And so, that's what we are going to talk about today.
• 5:21
  What is the system that produced the China we see today?
• 5:26
  What do we call it?
• 5:31
  The interviewee explains the symbolism of the Chinese flag and its representation of social classes.
• 5:39
  This is what I did.
• 5:41
  Yeah, not quite.
• 5:43
  You came very close.
• 5:44
  China flag.
• 5:45
  Oh, so it's not this.
• 5:47
  It is a big old star.
• 5:50
  Yes.
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  So it's one big star and four small stars, basically.
• 5:54
  You came close.
• 5:54
  My question for you is, do you know what anything on this flag represents?
• 5:59
  No clue.
• 5:59
  Okay.
• 6:00
  So the four small stars on the flag represent what back in the 1940s, they considered to be the four social classes.
• 6:07
  And if you're looking at the actual flag, you'll notice that they are not all upright.
• 6:11
  Those four small stars are kind of like pointed.
• 6:14
  They're turned around a little bit.
• 6:14
  The tops of them are all pointed towards the big star.
• 6:18
  And the big star is the Chinese Communist Party.
• 6:22
  And the reason we are looking at this is that the party is not just in charge of China.
• 6:28
  China is actually built around the party.
• 6:32
  But I have a kind of a dumb question here.
• 6:35
  Interviewer: What is, quote, the party?
• 6:38
  Like we talk about China's Communist Party.
• 6:40
  And I know what political parties here are.
• 6:43
  Like here in the West, we have the Democrats, the Republicans, whatever.
• 6:46
  But this feels different.
• 6:47
  I don't think this is the same.
• 6:50
  The Chinese Communist Party seems like a different thing.
• 6:52
  And I do not understand.
• 6:57
  speakers: The interviewee discusses the complexities of China's governance, emphasizing its capitalist elements.
• 7:04
  Interviewee: Yes.
• 7:05
  Modern China, to me, feels very clearly capitalist and not communist.
• 7:10
  Right?
• 7:11
  So, one of the first things we're going to talk about is why that distinction gets complicated.
• 7:16
  Right?
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  Because we have been taught our whole lives to think of economies in terms of either state -run, like the Soviet Union,
• 7:23
  or market -driven, like the United States.
• 7:26
  So, in the Soviet Union, where the state ran the economy, businesses were owned by the state.
• 7:34
  Land was owned by the state.
• 7:36
  And the decisions behind what the economy was actually producing also decided by the state.
• 7:41
  Whereas, in a market -driven economy like ours, businesses are typically privately owned.
• 7:45
  Most property, typically privately owned.
• 7:47
  And what gets produced?
• 7:49
  It is determined by the market.
• 7:50
  To me, that was the model that I always understood.
• 7:52
  You know, capitalism versus communism.
• 7:54
  And China completely upends that, right?
• 7:56
  So, in China, you have multiple entire industries that are state -owned, like oil, like airlines, like telecommunications.
• 8:04
  They also, though, have an enormous private sector.
• 8:06
  Think about Huawei.
• 8:07
  Think about Alibaba.
• 8:08
  Land in China is always publicly or collectively owned.
• 8:11
  So, it's either owned by the state or owned by collectives of citizens.
• 8:14
  But individuals and developers can lease land.
• 8:18
  And factories and houses and apartments can be owned.
• 8:20
  So, you can own your house in China, but you don't own the land that it's on.
• 8:24
  China's government has poured tons of money into sectors of the economy, like electric vehicles, batteries, solar, semiconductors, AI.
• 8:31
  But also, there are huge parts of their economy that are market -dictated.
• 8:36
  Like, they didn't make WeChat.
• 8:37
  There are tons of industries and very successful companies in China that did not get help from the government in the same way at all.
• 8:50
  speakers: The interviewee explains the structure of China's government and the role of the Communist Party.
• 8:58
  Interviewee: So, let's talk about China's government.
• 9:00
  Like most governments, it exists at a lot of different levels.
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  At the top, you've got like president, prime minister.
• 9:07
  And as you go down, you have things like state council, provincial government, municipal or city governments, county governments, township governments.
• 9:15
  Fine.
• 9:15
  That's easy to understand.
• 9:16
  That's basically every government.
• 9:17
  But at the same time, what makes it unique is that right alongside that government, there is this thing called the Communist Party.
• 9:24
  It's like a parallel structure.
• 9:26
  For every town government, there is a corresponding town party committee.
• 9:31
  And this continues all the way up the ladder.
• 9:33
  Party offices that mirror the government office.
• 9:38
  And the most important thing to understand about this mirror structure is that all of the power is here with
• 9:46
  the party.
• 9:47
  At any level, the party leader, the party organization is in charge.
• 9:53
  So, if you have a city mayor and a city party leader, on this diagram, it looks like they're kind of on equal footing.
• 9:58
  Like they hold positions at roughly the same level.
• 10:01
  But that's actually not true.
• 10:02
  The party leader is actually the one in charge.
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  They're the ones who decide what happens.
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  They make the big decisions.
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  And the mayor mostly just makes them happen.
• 10:11
  They're the administrator.
• 10:12
  What's really important to understand is that there is the party, which is the backbone of the entire government.
• 10:18
  And then there's the government, which does a lot of the policy implementation.
• 10:22
  Okay, but people in the government, like that mayor we were talking about, he's actually a party official too.
• 10:27
  Basically, anyone with any power in the government is a part of the Chinese Communist Party.
• 10:33
  The party is both in charge of and woven into the government itself.
• 10:39
  Which means if we follow the party structure all the way to the top, this is where real power lies in the country.
• 10:46
  It's like here, this pyramid.
• 10:49
  Interviewer: This is a diagram that you'll see if you search Chinese Communist Party hierarchy or whatever, but we're going to make our own.
• 10:55
  You've got this group of around 200 decision makers.
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  This is the central committee.
• 11:01
  And within that, 24 of these people are members of even the more elite decision making group called the Politburo.
• 11:09
  Within that, currently, there are seven people that belong to the Politburo's standing committee.
• 11:17
  These are effectively the people running China.
• 11:19
  There are seven of them.
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  And there is one guy who holds the title of general secretary of the Chinese Communist Party.
• 11:25
  Today, that is this guy, Xi Jinping.
• 11:28
  He is also the president.
• 11:29
  But remember what we said, the governmental role president is actually less powerful than the same role in the party.
• 11:36
  The general secretary of the Chinese Communist Party is the way more important role.
• 11:40
  That's where Xi Jinping gets his power.
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  If you're struggling with this, I don't blame you.
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  Just think of these two systems, the party and the government, as two parallel entities, but they're wrapped around each other,
• 11:52
  but with one indisputably in charge and more powerful.
• 11:56
  There's a name for this system.
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  It's called a party state system.
• 12:00
  And this is the reason why China is communist.
• 12:04
  It's not just because they call themselves a communist party, but this party state system is a Leninist concept like Vladimir
• 12:12
  Lenin.
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  Lenin's contribution to communism was the role of having a vanguard party, both in the revolution to lead the revolution.
• 12:21
  But once that party is now in power, it actually runs the state in ways that are different from other
• 12:29
  types of states.
• 12:30
  All these positions of leadership are controlled by the party to make sure that its priorities, its policies are
• 12:37
  being followed.
• 12:38
  A state controlled by a communist party, a vanguard party is what he called it, which is what Lenin says is the
• 12:46
  vehicle necessary to reach communism, where a society has no classes, where the things that produce wealth are
• 12:53
  collectively owned by everyone.
• 12:56
  This is something that the Chinese Communist Party states as its goal still.
• 13:00
  So they aren't just communists because they call themselves the Communist Party.
• 13:02
  They actually have real governmental machinery that comes from the communist tradition.
• 13:07
  This is a Marxist Leninist idea.
• 13:13
  And what turns out to be really interesting is this question, right?
• 13:16
  If this thing is the system that created the China that we see today, how did they do that?
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  How did it happen?
• 13:23
  How did it make that happen?
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  Because there is a reason that we are making this video about China and not like North Korea or another communist country, right?
• 13:30
  Why are we so interested in how China works specifically?
• 13:32
  And the answer is kind of in this chart.
• 13:34
  Over the last 40 years, extreme poverty around the world has fallen by a ton, right?
• 13:38
  And that drop has been driven by several countries that have had a very dramatic drop in extreme poverty.
• 13:43
  So there's India.
• 13:44
  Interviewee: This is Vietnam.
• 13:46
  This is Bangladesh.
• 13:47
  Interviewer: And then you have China.
• 13:49
  speakers: The answer refers to China without a clear question to set up the context.
• 13:55
  Wow.
• 13:56
  Jeez.
• 14:00
  The response is a reaction without a preceding question to clarify its significance.
• 14:06
  The real question is, what was it about this structure that made this miracle
• 14:14
  look specifically like this?
• 14:26
  The Chinese Communist Party operates as a parallel structure to the government, influencing all levels of governance.
• 14:35
  Interviewee: There's one man at the top.
• 14:36
  He can do whatever he wants.
• 14:38
  And that includes lifting hundreds of millions of people out of poverty if that's what he wants.
• 14:41
  But it's not quite that easy.
• 14:44
  speakers: The answer simplifies China's governance as a dictatorship without a preceding question to clarify the complexity.
• 14:53
  Interviewer: Economically, it's in chaos.
• 14:55
  Politically, it's in chaos.
• 14:57
  The country is not remotely in a state of order.
• 15:00
  And that's here on this chart.
• 15:03
  Mao dies in the 70s.
• 15:04
  And there's a power struggle on who's going to be the next leader.
• 15:07
  And the one who emerges is this guy, Deng Xiaoping.
• 15:11
  speakers: The answer describes the chaos in China without a preceding question to provide context.
• 15:18
  Interviewer: For this part of the story, we're going to actually start at the end of an era.
• 15:24
  The end of Mao Zedong, the founder of communist China.
• 15:28
  He was the leader of China for about 30 years.
• 15:31
  Now, we're not going to get too deeply into Mao in this video.
• 15:34
  We're not going to litigate his legacy, partly because by the time
• 15:39
  Interviewee: he died in 1976, China almost could not have possibly looked more different than it did today.
• 15:45
  Like, I can't emphasize this enough.
• 15:48
  China was poor.
• 15:51
  speakers: The interviewee discusses Deng Xiaoping's pragmatic approach to governance and its impact on China's future.
• 16:00
  Interviewee: He's going to have an enormous impact on China's future, but in a very different way than Mao did.
• 16:05
  Mao was kind of this crazy romantic.
• 16:08
  He was a warlord.
• 16:09
  He was a poet.
• 16:11
  What exactly is the opposite of a poet?
• 16:13
  Deng coming into power is, he's a pragmatist.
• 16:17
  He's not a hardliner.
• 16:18
  I mean, there's really no way to tell the story of how China got the way it did without talking about Deng Xiaoping.
• 16:24
  He was a party guy, but he was also a pragmatist.
• 16:27
  He saw that China had a big problem, that China's poverty was actually a threat to the Communist Party.
• 16:34
  It is not clear that the Chinese experiment is going to work at this point when Mao dies.
• 16:41
  Deng looks around at China at the end of Mao's reign, and he knows that the future of the Communist Party is tied to the future of China's economy.
• 16:48
  The people need to eat if they're going to continue to let the Chinese Communist Party rule them.
• 16:53
  So, he begins to make changes that are going to completely transform China.
• 16:57
  And one of the most important changes
• 17:00
  Interviewer: What do I mean by that?
• 17:01
  What I mean is like, it makes it look like there's just kind of like one ladder and there's like the same amount of people in each of these rungs.
• 17:07
  But remember, as you go down, you're getting to like the state level, then the city and the town level.
• 17:13
  Each of these have large groups of people who are leaders of each of these gajillion cities around China.
• 17:20
  So, you have tens of thousands, if not hundreds of thousands of local governments, like millions and millions of local
• 17:28
  officials.
• 17:28
  And like any big hierarchical organization, among all of these millions of officials, there are lots of ambitious
• 17:36
  people who are motivated by the very rational thing of wanting to be promoted.
• 17:41
  They want to move up in their job.
• 17:42
  They want more money, more power.
• 17:44
  Totally normal, reasonable impulse.
• 17:46
  But multiply that by several million, huge population.
• 17:49
  And suddenly, you have this big beehive.
• 17:54
  speakers: The answer discusses the misleading nature of the government diagram without a preceding question to clarify its significance.
• 18:03
  Interviewee: Okay, so how do you get a promotion?
• 18:05
  Well, under Mao, the main thing that these worker bees were rewarded for was revolutionary credentials.
• 18:12
  How deeply committed they were to like the ideology of communism, loyalty to the party, your fervor, your might for the
• 18:20
  communist revolution.
• 18:21
  And Mao kind of wanted to all centralize around him.
• 18:24
  There was a cult of personality around him.
• 18:26
  But Deng, the pragmatist, starts to tweak this.
• 18:30
  He decentralizes power away from him and his central government and makes loyalty to a single leader less important.
• 18:37
  He wants younger, better educated, more technically competent officials to come up through the ranks.
• 18:43
  To try to emphasize a little bit more practical knowledge rather than, you know, straightforward occurrence to Mao Zedong thought, Marxist -Leninist
• 18:50
  thought.
• 18:51
  When you think of China technocratic governance, that is a Deng Xiaoping thing.
• 18:56
  Technocratic governance.
• 18:57
  What does that mean?
• 18:59
  Let me just put it this way.
• 19:00
  What Deng does is he changes the way these officials are graded, what they're judged by, how they're able to
• 19:08
  move up in the party.
• 19:10
  He lays out new priorities.
• 19:12
  At the bottom of the system for like county level people or city level leaders, their key task is to make the
• 19:19
  economy grow.
• 19:20
  To make the economy grow.
• 19:22
  Interviewer: Economic development.
• 19:24
  It's a little bit like a computer game that to get out of one round, you need certain skills.
• 19:29
  It's very mind boggling when we think about it from the Western, especially American context.
• 19:34
  Every government official in China is graded, like literally graded with a grade sheet.
• 19:40
  And I've seen these grade sheets and it has like, you know, a hundred items on it.
• 19:43
  But right at the top in big letters is economic development.
• 19:47
  This is now dictating the decisions of millions of powerful officials all across the country who know that if they want to move up in the Chinese Communist Party, make the
• 19:55
  economy grow.
• 19:56
  It's really predictable
• 19:57
  speakers: The answer discusses economic development grading without a preceding question to clarify its importance.
• 20:04
  Interviewee: That's very strong motivation because, you know, you want to move up.
• 20:08
  The people who led those places saying, my route to personal success within the Communist Party is to really
• 20:16
  knock it out of the park economically.
• 20:18
  And I'm going to color outside the lines to do that and that being rewarded.
• 20:22
  So Deng, the pragmatist, has just changed the incentive structure of all of China.
• 20:27
  And this is going to determine basically the next 30 to 40 years of what happens next.
• 20:33
  It'll be a major engine to China's economic miracle.
• 20:36
  He also creates special economic zones, basically a sandbox where people who have been indoctrinated in communist economics
• 20:44
  can start to play around with capitalism.
• 20:47
  Essentially, that's where this side of the ledger begins.
• 20:50
  Private companies that are taking investment and trying to make money in a free market, but only in a few parts of China, not everywhere at first.
• 20:57
  Deng is not done yet.
• 20:58
  There's one other thing he does that's kind of wonky, but it's also super important.
• 21:02
  He changes how the country's finances work.
• 21:05
  For a lot of the Mao era, all the provinces and local governments basically sent their revenue right back to the central
• 21:13
  government.
• 21:14
  And in return, the central government would give them each a fixed flat budget.
• 21:18
  This was known as eating out of one big pot.
• 21:21
  And while it offers a kind of fairness across all the regions, Deng realized that it doesn't really incentivize local governments to try to earn more
• 21:29
  revenue.
• 21:29
  You get the same budget no matter how much tax revenue you bring in.
• 21:33
  So he changes it.
• 21:34
  So now, the local governments only have to send to the central government an agreed upon amount of their tax revenue every year.
• 21:41
  And anything above that, they get to keep for themselves, for their government.
• 21:46
  Interviewer: It means that not only do all these local officials in all these places have this personal incentive for generating economic activity, the governments themselves can now
• 21:54
  benefit from it.
• 21:55
  In other words, it's not just individuals wanting promotions.
• 21:58
  It's now governments that get money to play with.
• 22:00
  What it kicks off is local officials in rural areas, they start to go into business.
• 22:05
  They start factories that are owned by these towns.
• 22:07
  Towns and villages start to open factories.
• 22:09
  They're called township and village enterprises, TVEs.
• 22:12
  It's a factory that might be owned by the local government.
• 22:14
  Government might choose the managers of the factory.
• 22:16
  They might get a bank loan.
• 22:17
  Government can get the land.
• 22:19
  And the government collects the revenue when the factory succeeds.
• 22:21
  And TVEs are hugely profitable.
• 22:24
  They make tons of money.
• 22:26
  China's very rural.
• 22:27
  It's agricultural.
• 22:28
  And it finally starts to industrialize.
• 22:31
  speakers: The answer discusses local officials' motivations without a preceding question to provide context.
• 22:39
  Interviewee: Farmers across the country are now becoming trained factory workers.
• 22:42
  They're basically in the country, out in the country, is becoming industrial.
• 22:47
  And they have a phrase for it that is called leaving the land, but not the countryside.
• 22:50
  So you have like Western media noticing these small villages that are getting rich through a strange blend of communism and
• 22:58
  capitalism.
• 23:00
  speakers: Then it's the 90s.
• 23:01
  And instead of dung, we have this new guy in charge.
• 23:03
  And Beijing realizes that they have kind of a problem.
• 23:06
  Since the switch to eating in separate kitchens, they're like, we kind of miss the old days of having all this money that
• 23:14
  we used to get from the local governments.
• 23:16
  And so they switch it up again.
• 23:18
  It's complicated.
• 23:19
  But the very, very summarized version is that the local governments now owe a ton more money to the central government.
• 23:25
  They get to keep a lot less of their tax revenue.
• 23:28
  And what that means is that these TVEs, these factories, have been one of the best ways for local officials to get promoted for spurring economic
• 23:36
  development.
• 23:36
  Rural factories, they generate tons of tax revenue.
• 23:39
  They become less financially rewarding for local governments because Beijing is taking a bigger share of those taxes that they generate.
• 23:46
  So the officials in those places start looking for another way to get their promotions via economic activity
• 23:53
  and another way that the local governments actually can benefit from directly.
• 24:03
  The answer discusses the transition of farmers to factory workers without a preceding question to set the context.
• 24:11
  Interviewee: how we said that land in China is publicly owned.
• 24:14
  Interviewer: It's a little bit more complicated.
• 24:16
  Urban land is state owned.
• 24:18
  Rural land is owned by a village collective, which is not the same thing as the government's collective of the people who live there.
• 24:23
  So this is a town center.
• 24:25
  This is on state owned urban land.
• 24:27
  And then this is the outskirts of the town.
• 24:29
  It's rural land owned by a village collective.
• 24:31
  The state does not own it.
• 24:33
  But also that land is not very valuable yet.
• 24:35
  What the government will do is they requisition some of that land.
• 24:38
  They compensate the people who live there.
• 24:40
  But it's not buying it.
• 24:41
  They forcibly take the land.
• 24:42
  speakers: The answer discusses land ownership in China without a preceding question to clarify its significance.
• 24:50
  Interviewer: It brings in revenue.
• 24:52
  It juices economic activity.
• 24:53
  And by this time, the 1990s, that goal of economic activity has taken a very particular shape at the top of the scorecard, an increase in the gross
• 25:00
  domestic product, GDP.
• 25:03
  This is how it gets formalized.
• 25:05
  And it becomes what's known in the evaluation system as a hard target.
• 25:09
  Things like providing health care, providing education and cleaning up the environment.
• 25:13
  Those are nice things to do, but not sufficient to get promoted.
• 25:18
  What you really need to do is make the economy grow.
• 25:21
  How high can you push economic growth?
• 25:23
  And there were periods of time when economic growth in China was very high indeed, in which particular poor provinces might be growing at 15%,
• 25:31
  20 % in the earlier years of economic reform.
• 25:34
  And now, because basically those TVEs, those factories, they're not giving the local governments the revenue stream they once did.
• 25:40
  Real estate and land development are doing that.
• 25:43
  And so something shifts dramatically.
• 25:47
  They pour money into infrastructure.
• 25:49
  So new roads, new port facilities, new telecommunications, a new airport.
• 25:55
  Short -term gains because you're creating jobs, you're creating value that way.
• 26:05
  speakers: Local officials in China are incentivized to promote economic growth to secure their positions.
• 26:13
  Interviewee: There's genuinely so much more I wish I could have included in this video.
• 26:16
  This one, the oligarchy one, the fascism one, all these videos that we've done on these big topics.
• 26:22
  Luckily, that's why NewPress .com exists, where we can go beyond the video and talk deeper about these topics.
• 26:28
  If you are watching this before October 20th, our producer, Adam, is going to be doing a live Q &A for NewPress members.
• 26:35
  You can go sign up at NewPress .com.
• 26:37
  Being a member supports this work, but it also gets you in on these types of Q &As, as well as letting you watch the videos early and ad -free.
• 26:45
  My documentary series, The Human Element, is coming out soon.
• 26:48
  The members made that happen.
• 26:49
  And so because of that, I am putting the episodes up early and ad -free on NewPress.
• 26:54
  Thank you, everyone who supports.
• 26:55
  I really appreciate it.
• 26:57
  Back to the video.
• 27:00
  Interviewer: By now, we've established that all over the giant country of China, local officials are competing with each other.
• 27:07
  They're juicing the economy however they can.
• 27:09
  And now, one of the most important tools in their toolkit is building stuff.
• 27:15
  When your boss arrives from Beijing or from the provincial capitals in your local city, you can bring them around and say, this
• 27:23
  is what I've achieved.
• 27:24
  Look at the high -rise building.
• 27:26
  Look at the five -star hotels that we have built.
• 27:28
  So those are kind of ostentatious political achievements that they can sell to their superiors, which will look good on their CV.
• 27:35
  Then they get promoted very quickly.
• 27:36
  Okay, but hang on a sec.
• 27:38
  speakers: The answer about local officials competing lacks a clear question that sets it up.
• 27:44
  Interviewee: They've got these rail networks that looked like this in 2008.
• 27:48
  And then by 2020, they looked like this.
• 27:50
  High -speed rail all over the country.
• 27:52
  This wasn't just some province leader trying to, like, get a win.
• 27:55
  These are nationally coordinated projects.
• 27:57
  No single local or provincial official could have made all of these happen.
• 28:01
  But here's the thing.
• 28:02
  Because if you look at something like where the High -Speed Rail Network got built, local officials in each of these cities and all of the stops along the way, each of them
• 28:10
  benefit from having a station built in their city.
• 28:13
  They wanted that for the reasons we've already talked about.
• 28:15
  The land value would increase.
• 28:17
  Economic development and activity would increase.
• 28:20
  And that's what they're scored on, remember.
• 28:22
  Which brings us back to some of those images that we saw at the beginning of the story.
• 28:26
  A train going through a building.
• 28:28
  An incredible skyline built over the course of just a few decades.
• 28:32
  High -speed trains.
• 28:33
  China's infrastructure today is the envy of the world.
• 28:36
  And when we wonder how China got these things, what we just explained is a huge part of the answer.
• 28:44
  Interviewer: This enormous nationwide competition among officials all over the country to develop, to grow, and
• 28:52
  especially to build.
• 28:54
  speakers: The answer discussing large infrastructure projects lacks a clear question that leads into it.
• 29:01
  Interviewee: But let's talk about some of the flip side here.
• 29:03
  Because this system also produced its own kind of weird outcomes.
• 29:07
  Guizhou province in China's southwest is a poor, inaccessible, heavily
• 29:15
  mountainous province.
• 29:16
  It's about the fourth poorest province in China.
• 29:19
  When I was traveling around in Guizhou, I spent about five days cycling through the province.
• 29:24
  What I noticed was that it has much better infrastructure than essentially anywhere in New York or California.
• 29:31
  Interviewer: Guizhou.
• 29:32
  Which is only slightly larger than the state of New York.
• 29:36
  But for some reason has twice as many highways.
• 29:39
  Look at some of these bridges.
• 29:42
  These bridges go over massive gorges.
• 29:45
  They're some of the tallest in the world.
• 29:47
  This is the Wajang Canyon Bridge in Guizhou, China.
• 29:50
  And it's just another reason
• 29:51
  speakers: The answer discussing ghost cities lacks a clear question that sets it up.
• 29:57
  Interviewee: But weirdly, if you look around, you see that these are kind of bridges to nowhere.
• 30:03
  Interviewer: You might remember that 15 years ago, news started going around of these Chinese ghost cities.
• 30:09
  Ghost cities.
• 30:11
  Ghost cities.
• 30:11
  Ghost cities.
• 30:12
  Ghost cities.
• 30:13
  Ghost cities.
• 30:14
  Like this one, Kangbashi in Inner Mongolia.
• 30:17
  Look at Zhongdong here in Henan province.
• 30:19
  Entire cities built not necessarily for people, but to juice GDP.
• 30:25
  Totally empty.
• 30:26
  Okay, but it's not that simple because look at Kangbashi today.
• 30:31
  Look at Zhongdong.
• 30:32
  People eventually did move into a lot of these places.
• 30:35
  They did start using those bridges to nowhere.
• 30:39
  So these ghost cities or these bridges to nowhere don't necessarily show us that China built too much or in a stupid way.
• 30:47
  Sometimes
• 30:47
  speakers: The answer about poverty elimination lacks a clear question that introduces it.
• 30:55
  will always be more people to come move into your city or use your trains.
• 31:01
  And that has been a decent bet in a country that has one and a half billion people.
• 31:05
  But unlimited demand is not real.
• 31:08
  China becomes, and they see this coming, they know this is coming for many years, very literally a victim of their own success.
• 31:19
  So if we go back to the chart of China eliminating poverty, the percent of China's population in poverty, if you look at it, you do see a kind of
• 31:27
  inflection point, right?
• 31:28
  In the early 2010s where it almost gets to zero and then kind of slows down a little bit, right?
• 31:33
  Again, incredible accomplishment, but it does slow down a little bit.
• 31:36
  Close to zero, not quite there.
• 31:37
  And if you look at a chart of their GDP growth, in other words, like how much higher was their GDP than last year?
• 31:44
  For decades, this version of the chart shows like 1985 to 2010.
• 31:48
  Interviewer: China's GDP growth was like around 10 % every year, which is crazy, right?
• 31:53
  Like places like the U .S.
• 31:54
  have been lucky to hit 4 % or 5%.
• 31:56
  But if you expand the chart past like 2010, you see that at that same moment in the early 2010s, China's GDP growth slows
• 32:04
  down, right?
• 32:04
  At that same inflection point.
• 32:06
  And those two things are related to each other because what they represent is basically like a magic trick that you can only do once.
• 32:12
  The children of factory workers go to college.
• 32:15
  They get better jobs.
• 32:16
  Standard of living goes way up.
• 32:18
  People buy nice apartments.
• 32:20
  People start owning smartphones.
• 32:22
  You cannot lift your whole country out of poverty two times.
• 32:26
  You can build your way from poverty to a kind of prosperity.
• 32:30
  But once you are there, you hit diminishing returns.
• 32:34
  And China's economy slows down.
• 32:36
  But they still have all this stuff.
• 32:39
  Like all the stuff that came out of this period of rapid GDP growth and insane building.
• 32:45
  It's all still there.
• 32:46
  They have this incredible looking country.
• 32:48
  But a lot of it comes out of this.
• 32:50
  What we now understand as a specific period in history.
• 32:53
  This 40 -year boom that they had.
• 32:55
  But that most people agree we have kind of moved on from at this point.
• 32:59
  I talked to one of our New Press members.
• 33:02
  Her name is Vivian.
• 33:03
  And she has spent a ton of time in China, mostly in Shanghai.
• 33:06
  And she has tons of close friends who are Chinese citizens.
• 33:09
  speakers: The answer discussing GDP growth lacks a clear question that leads into it.
• 33:15
  I talked to her because she was posting on the New Press site under your post about this video.
• 33:24
  And she had a lot that was really, really interesting.
• 33:26
  I really wanted to talk to her.
• 33:27
  And we had this long conversation.
• 33:28
  One of the things she told me was that the friends of hers who are Chinese citizens, they find it legitimately funny that like Americans have these reactions to the
• 33:36
  way China looks.
• 33:37
  When we like gawk at it, we're like, this is amazing.
• 33:39
  They're curious why we have this opinion from an outside view.
• 33:42
  Like foreigners always think China's great.
• 33:44
  Why do you think that?
• 33:45
  I think she was born in the UK.
• 33:47
  So she's not from mainland China.
• 33:48
  And her parents, who lived in the UK for many years, they actually have retired to a city in mainland China.
• 33:55
  They're probably more British than Chinese in some ways.
• 33:59
  They're also doing the influence -y thing of being like, China's great.
• 34:02
  And the point of that stuff is that it is very, very common for outsiders to see the best in China, for us to notice specific things
• 34:10
  about it.
• 34:11
  But among citizens, and especially among young people there right now, we have seen like actually kind of a malaise takeover in the last few
• 34:18
  years.
• 34:19
  I love this phrase from a few years ago, this idea of lying flat that Chinese young people sometimes talk about, like as in lying down, like disengaging from the rat race that is supposed
• 34:27
  to make them wealthy, but maybe no longer necessarily is.
• 34:30
  You know, you can't not mention that the way that the country handled COVID was really unpopular and alienated a lot of people.
• 34:37
  But the point is that there's like a powerful sense
• 34:45
  The impact of Gorbachev's resignation on China's political landscape is significant.
• 34:54
  Interviewee: The Iron Curtain between East Germany and West Berlin has come tumbling down.
• 34:59
  Okay, so we've kind of told you this story up to present day.
• 35:03
  We've obviously left out a lot about China for simplicity, but there's one more thing we cannot leave out.
• 35:11
  Mikhail Gorbachev, the eighth and last ruler of the communist empire founded by Lenin, announced he was quitting.
• 35:17
  It's the late 1980s, early 90s.
• 35:22
  Interviewer: Deng Xiaoping and the Chinese Communist Party are facing some truly existential threats.
• 35:29
  First, they're looking over here at Russia, the original model of their entire political system, the Soviet Union, and
• 35:37
  it's declining.
• 35:38
  And this was a warning sign that a communist regime could rule for 70 years and then poof.
• 35:43
  And in China itself, this really starts to feel like a threat.
• 35:47
  There was a growing middle class that had aspirations that went beyond economic growth.
• 35:51
  All of this led to student -led and worker -led protests, especially in Tiananmen Square in Beijing.
• 35:57
  Deng is really the force behind the decision to send in the military and massacre
• 36:02
  speakers: The answer discussing existential threats lacks a clear question that introduces it.
• 36:11
  Interviewee: Remember, this is Deng Xiaoping.
• 36:16
  Deng Xiaoping was a king.
• 36:16
  This is the guy
• 36:17
  Interviewer: we see that Deng wasn't doing this just to be, like, a nice guy.
• 36:20
  speakers: The answer about Deng Xiaoping lacks a clear question that leads into it.
• 36:26
  Interviewee: He saw this as a survival tactic.
• 36:28
  If you're satisfied with the way things are going for you and you're optimistic about the future, you're less likely to be frustrated
• 36:36
  and be supportive of change.
• 36:38
  Look at this article from 1997.
• 36:40
  It's about America's China policy.
• 36:43
  And it says that, quote,
• 36:53
  This was the 90s.
• 36:54
  Interviewer: We had just, quote, won the Cold War.
• 36:57
  Democracy and capitalism were going to take over the whole world.
• 37:00
  China was the last, like, communist bastion that was going to fall.
• 37:03
  And all it needed to do was get connected to the world, make a lot of money, and democracy would come to China.
• 37:09
  But that's not
• 37:10
  speakers: The answer discussing Cold War perceptions lacks a clear question that sets it up.
• 37:17
  And part of the reason why was because by the 90s, a new priority item had been moved to the top
• 37:25
  of the local official's scorecard.
• 37:27
  Remember the scorecard?
• 37:28
  The second big metric was how much can you tamp down on what they call mass incidents, which essentially means protests.
• 37:35
  Maintaining social stability.
• 37:36
  Maintaining social stability.
• 37:39
  Now, remember, economic development was like a hard target, something you can easily measure with a number.
• 37:45
  You can see if it goes up.
• 37:46
  You can see if it goes down, by how much.
• 37:48
  But social stability is what we call a veto target.
• 37:53
  It's a yes or no question.
• 37:55
  Do you have social stability in your province or your town?
• 37:59
  What even is that?
• 38:00
  For China, social stability is like protests, making sure that people aren't angry or frustrated, making sure there's not, like, crime or terrorism.
• 38:07
  It's a bunch of different things.
• 38:09
  But it is now an important marker on your resume if you want to move up in the party.
• 38:13
  The city that you preside over needs to have zero protests.
• 38:17
  People are extremely happy.
• 38:19
  They've got nothing to protest about.
• 38:20
  So as of the 90s, these were the two most powerful pressures on local officials across China.
• 38:27
  And it turned out doing both of these at the same time isn't exactly easy.
• 38:32
  There are some very beautiful Chinese cities.
• 38:35
  But here's a couple of things that you need to know about how they were built in the first place.
• 38:51
  Interviewer: Before these beautiful buildings were built, some of them were adequately compensated.
• 38:55
  But a lot of people were compensated below what the worth of the land was.
• 39:00
  And when you don't want to leave because you know the land is worth more, you were forcefully removed.
• 39:05
  So that happened a lot in China.
• 39:06
  And that's the source of a lot of societal tension.
• 39:08
  The source of a lot of societal tension.
• 39:11
  And so this is the issue faced by local officials or a big issue faced by local officials all across China.
• 39:18
  Right.
• 39:18
  The development imperative, GDP, requires local officials to build.
• 39:23
  But building can make people mad.
• 39:26
  That is kind of the reason that it is so hard to build in the U .S.
• 39:28
  Because building makes people mad.
• 39:30
  But you don't want people to be mad.
• 39:33
  You need economic development and you need social stability.
• 39:36
  So you have to build, but not in a way that makes people mad at the government or the party.
• 39:42
  speakers: The answer discusses compensation without a clear question about it.
• 39:47
  You look very bad.
• 39:48
  Local leaders get fired and lose their position.
• 39:50
  So those two items can easily be in conflict with each other.
• 39:53
  And the challenge becomes, for the party, how do you coerce people without it bouncing back on the government or the party?
• 40:01
  Repression in the West is commonly understood as, let's say, police arrest, you know, ICE agent
• 40:09
  arresting immigrants.
• 40:11
  But Chinese -style repression is really under your skin.
• 40:16
  Lin Anong, who studies this stuff, talked to me about like two of the most common ways that that kind of repression happens.
• 40:21
  All sorts of demolition and land -grab projects typically involve gangsters.
• 40:27
  Morbillise a bunch of youth, punks, unemployed people from the street.
• 40:32
  Go do intimidation, which they can turn around and say, you know, these people have got nothing to do with them.
• 40:39
  Interviewer: It's random people from the street making trouble.
• 40:42
  The second strategy doesn't involve violence.
• 40:45
  These are people in the 50s and 60s who have served in various roles in the community.
• 40:51
  These are retirees.
• 40:53
  People know and respect them.
• 40:55
  And some of them would even volunteer to do these jobs for the government because they think, you know, development is actually good for the community.
• 41:03
  And so why are you resisting, right?
• 41:05
  And they are retirees.
• 41:06
  They kind of still believe in the CCP value.
• 41:10
  So they go out there and convince their neighbours.
• 41:13
  You are being very stubborn.
• 41:15
  speakers: The answer discusses community roles without a clear question prompting it.
• 41:20
  Interviewee: You refuse to sign the papers.
• 41:22
  All the people in this community have signed.
• 41:25
  Your selfishness, self -centeredness has held up other people's future.
• 41:31
  You become social outcasts.
• 41:35
  Interviewer: It's the kind of thing that as a visitor or even like a foreigner living in an expensive city, there is absolutely no reason that you would ever encounter this.
• 41:43
  For the people who go there for the first time expecting, you know, a very heavy presence of repression on every street corner,
• 41:51
  that's not what you see.
• 41:52
  Especially when you visit, it's easy to come over with a very positive impression.
• 41:56
  But Chinese citizens all know that this happens.
• 41:58
  They are fully aware.
• 41:59
  It is a facet of Chinese life that affects not everybody, but affects enough people that everyone is aware of it and everyone knows
• 42:07
  someone who has encountered it.
• 42:09
  You know how in the United States, most people don't suffer from like crushing medical debt that has ruined their lives, right?
• 42:16
  Like most people have not had to set up a GoFundMe to pay for something.
• 42:18
  But we all know someone who has.
• 42:20
  Yeah.
• 42:21
  But repression in China is kind of a version of that.
• 42:23
  And so at this point, Xi Jinping has been in power almost 15 years, right?
• 42:26
  And under him, the security state that oversees all this stuff has expanded tremendously, right?
• 42:30
  speakers: The answer discusses social outcasts without a clear question leading to it.
• 42:43
  Interviewee: There was this estimate when he took power around 2013 that China had around 30 million surveillance
• 42:51
  cameras installed around the country.
• 42:52
  And just a few years later, 2019, a study found that it was over 200 million.
• 43:00
  Xi Jinping is obsessed with social stability.
• 43:12
  speakers: For a long time, China has had what scholars sometimes describe as a kind of bargain with its people.
• 43:19
  Everyone sort of knows the terms.
• 43:21
  The party delivers growth, prosperity, stability, security, and the people do not get to choose who governs them.
• 43:28
  But the big question, the big debate that no one really knows the answer to is what happens when delivering that growth
• 43:36
  gets much harder, when they're not able to do it like they used to?
• 43:40
  What we know for sure is that the years after Mao Zedong and before Xi Jinping,
• 43:47
  that gave us the China that we see today, at least most of it.
• 43:52
  And Xi is dismantling a lot of what defined that era.
• 43:58
  GDP growth is no longer as important in party evaluations as it once was.
• 44:02
  Today, under Xi, things like loyalty and ideology, those things matter much more.
• 44:08
  A lot of people think that Xi has decent reasons for moving away from that era.
• 44:13
  That obsession with GDP and growth did lead to China overbuilding, over -speculating.
• 44:21
  But China is now in uncharted territory.
• 44:38
  The answer discusses surveillance cameras without a clear question prompting it.
• 44:43
  His beehive of incentives.
• 44:45
  In other words, these images are kind of an echo.
• 44:48
  And no one really knows what's going to happen next.
• 44:58
  Interviewer: They don't show us how this stuff got built or why.
• 45:02
  They don't show us who got displaced.
• 45:04
  They don't show us what happens next.
• 45:06
  speakers: The answer discusses video perceptions without a clear question about it.
• 45:11
  What I've concluded is that they mostly show us ourselves reacting to a country
• 45:19
  that has truly surprised all of us.
• 45:24
  And we wonder, why can't we have that too?
• 45:29
  And the answer to that turns out to be not dictatorship, authoritarianism.
• 45:35
  That doesn't explain the whole thing.
• 45:37
  Because there are plenty of democracies that aren't the U .S.
• 45:40
  that actually do have great trains.
• 45:42
  And plenty of autocracies that don't.
• 45:45
  Which means that the answer to the question of what can we learn from China isn't necessarily that people
• 45:53
  need to not have rights.
• 45:56
  It's something else.
• 45:57
  Interviewer: Remember, at the end of the day, this whole thing has been a story of incentives.
• 46:03
  What the people in charge get rewarded for.
• 46:06
  And what they're encouraged to do with their power.
• 46:11
  In a place like China, those incentives come from the top.
• 46:14
  speakers: The answer discusses accountability without a clear question leading to it.
• 46:20
  From a party system.
• 46:22
  But in a democracy like the one I live in, they come from the bottom.
• 46:27
  They come from us.
• 46:30
  We keep our leaders accountable.
• 46:33
  So the question is, what do we choose to reward?
• 47:03
  We keep our leaders accountable.
• 47:08
  We keep our leaders accountable.