Is the West Getting China Wrong? - Keyu Jin & Gideon Rachman | Intelligence Squared

hello everyone and welcome to this pre-recorded edition of intelligent squared with Cajun and Gideon rackman I'm Connor I'm senior producer at Intelligence Squared and we recorded this session in the studio on the 12th of May to discuss keu's new book which is called the new China playbook in which she says there are a lot of myths in the west that would need to be dispelled and she also wants to shed light on how the new generation the younger people growing up in China today differ from the cultural revolution generation and also I suppose people in their 40s and 50s who grew up under the capitalist reforms of Deng Xiaoping from the 1980s onwards it's a really interesting conversation and we hope you enjoy it and thank you for all your support of Intelligence Squared now let's go to the episode we're recording on Friday May the 12th from our studio in London and I'm excited to introduce Our Guest Kay Eugene who's an economist and professor at the London School of economics she's an advisor to the China banking Regulatory Commission on fintech has advised and consulted with the World Bank and the IMF she's born and raised in Beijing in China but she attended high school and college in the United States so is a rare but completely bicultural person and we'll touch on that during the discussion your new book is the new China Playbook Beyond socialism and capitalism and you deal I think in a fascinating way with a lot of fundamental questions about how China's developing socially and economically and I'll get onto that very quickly but as I mentioned you're somebody who who's at home in both the US and China and yet now there's enormous tension between those two countries um it must be a kind of difficult period for for you thinking about that well first of all it's great to be with you Gideon uh thanks so much for having me uh indeed it's for me but also for a large swath of Chinese people who have had education in the west and to actually do work around um both countries uh to feel extremely sad and frustrated um it's uh it's a period where you know it's two countries where we see could have enormous possibility in spurring each other forward and collaboration even competitive collaboration um but it's it's really sad to see the misunderstandings that have shrouded even rationality and it's become increasingly dangerous uh to to not see each other's perspective yeah I mean you talk about it as misunderstanding and I'm sure there's a lot of that I worry that it could be something even worse that it's actually a clash of interest that these two countries uh say of in an issue like Taiwan just want fundamentally different things and that no amount of discussion is going to talk that away there are many people feel that uh there's almost very little hope because the two countries have two different World Views different political systems and different value systems and even with economic convergence there has been very little conversions elsewhere but we also have to remember that this is a vicious circle to believe that nothing can be worked out and then it's a self-fulfilling prophecy so we must do at most utmost to avoid that but we have to look at the practicalities the economic issues the substantive issues because frankly the two economies are in their worst state of the economy for various reasons as well as is the rest of the world but there could be things to be done and I mean it's interesting also because the histories of the two countries have become certainly the economic histories are so tightly bound together over the last 30 40 years I mean I doubt the the rise of China would be nearly as rapid without the opening of the American Market but also the American economy is being transformed by uh the way in which it's called operation with China we also often forget that China is no longer an exporter of cheap uh furniture and toys but actually a main exporter and importer of intermediate products which accounts for two-thirds of global trade we just don't see that but these intermediate products makes companies more profitable makes companies more productive the likes of Apple the likes of Western companies and Chinese companies there's a lot of things that are not in the headline news that are just as important we're talking about trillions of dollars at stake with economic dis engagement between a 15 trillion and a 21 trillion dollar economy well we'll get back to disengagement at some point later but I'd like to go back to if you like the beginning the opening of China because as you make clear on your book you you were of the generation that grew up when China was still poor your family experienced rationing and you've seen this incredible transformation just give me a sense of what's happened over the course of your lifetime and what you witnessed in the early 1980s we lived in communal kitchens and or let me start again in the 1980s we lived on Russian food and cooked from Communications and even 11 square meter Apartments were considered a luxury and I remember reading poems with my father under Candlelight three nights of blackouts every week in Beijing and fast forward now my classmates have you know houses and computers and cars and they've seen everything it's a big transformation but for me personally to have come to the West when I was a teenager and to see that the first thing they asked me was just about you know the political issues around China but then a few years later in college people were learning Chinese they were going to China for American students by the way to seek jobs to seek opportunities all of that within 10 15 years an enormous amazing transformation and uh Kitty must be incredible contrast with the experience of your parents generation because your father was caught up in the cultural revolution like so many of that generation indeed like XI Shin ping sent out to the countryside and then has seen this political I mean the Communist party is still in charge but it's an unrecognizable country from that period how how much it's it's difficult for your generation to understand the experiences of the cultural revolution generation well one of the big themes in my book is about this change in generation and we have to understand that China going forward is going to be shaped and determined by a completely different generation from the generation my parents more prosperous confident grew up in relative Prosperity uh compared to my parents generation who have gone through physical and psychological hardship they're invariably risk-averse the new generation consumes and has an act for a lifestyle consumption and borrows my parents generation say for a rainy day and that has come to become the defining future of the Chinese economy but all that is about to change with the Rival New Generation the new generation has offered also forgotten some of that memories of the cultural evolution of the Great Famine they look at the world with more open and cleared-eyed Views they um data have shown that they're more open-minded than the previous generation the range of issues including including diversity even they care about social issues like the environment and animal Wildlife which is all progress so we're about to see a new playbook powered by a new generation with a different Outlook and I would say with more values that converge with the younger generation around the world so they are a positive force for China but they also have pressing challenges themselves currently and I mean you know there's a fascinating chapter in your book about them being also the generation marked by the one child policy and which I think comes in more or less at the same time as dong choping opens up the economy uh and I think you've said in your book that in your school class like everybody was a single child there was one exception a uyghur uh classmate of mine had a sibling but other than that 40 kids all single absolutely well I mean have you been able to I guess because everyone's like that it's hard to assess what the psychological impact of that is but although you talk about it a bit and it seems to me a combination of intense pressure and also perhaps a sense of entitlement underestimate or don't fully understand the profound social and economic consequences that one child policy has played on China and frankly the rest of the world this generation is highly educated but also grew up in super competition overburdened very lonely I mean don't forget the Chinese are the inventors these Generations are the inventors of the only singles day uh in the world a day in which they splurge and borrow and Alibaba gets to process half a million orders per second at the same time they have obligations to their parents who now only have themselves only have one child and so they have to uh face as the Chinese people in general have to do have to balance between deference to Authority at the same time uh uh you know their free willed independent thinking and that education that has empowered them it's always a balancing act so they have a unique set of problems and of course now with a rising housing prices can they afford to have a bigger family and they have shown in the statistic that they don't want to get married anymore and they don't want to have as many children all of these are social consequences some somewhat related to the one child policy and of course the the government has now reversed the one child policy but from what you're saying there may be an irreversible social change already in train the habit of having no siblings small families is one thing I think the government is desperately trying through a variety of factors including cracking down the education system and even coming up with very creative ways to encourage single women to have children something that is radical considering such a traditional a culture and society and including the real estate raining in the real estate sector all has somewhat to do with a new generation but the fact is uh 25 of college students last year didn't get a job the high youth unemployment rate of 20 above a big gap of uh between expectations and and reality of not fulfilling their dreams are all a present challenge for the Chinese government yeah and that's stunning statistic because you know if I just think about it from first principles here you've got this economy that's been growing at incredible pace for the last 40 years a very small rising generation because it's a one-child generation and yet you say 20 of graduates are unemployed how can that be it's interesting that um there are 30 million manufacturing jobs uh that need to be filled and that can't be filled by 2025 and in high-tech sectors like semiconductors there are 300 000 uh vacancies uh this year this shows you that the present problem is not that you know there are not enough jobs but there there's a big gap in terms of Education skill now these Chinese students very smart and very very educated very well educated and impressive however they don't have internships many of them don't have don't show the kind of business Acumen and flexibility mental flexibility because they have been overburdened by a competitive test taking rote memorization kind of education system so they're not that appealing to the private businesses that demand passion interests ethics and some experience so I think that there are lots of things to fix and they will be a positive force for them New Generation but the whole economy has to change someone yeah but there's an interesting again anecdote in the book where you say that there was a a cigarette making plant where the the people assembling the cigarettes were all graduates and some of them postgraduates on that line top Masters and college students uh and cigarette factories nannies uh that have Master degrees from Colombia these are all things that have caused a social uproar you got to ask you know the Chinese families what what what what is it all about their their hope right it's all about the Next Generation for a long period of time the bottom run of society was uh happy and content because they knew that their children could have a better future that's what's sustained that was the Bedrock to social stability today it's a completely different issue with reduced expectations that even if you pour and about 25 of household expenditure are devoted to educating one child if you are investing that much resources in the end your kid doesn't get a good job then what what is your hope what are you what are you how are you going to look into the future and the kid itself must feel horribly demoralized because all the family's hopes are poured into them and then perhaps through no fault of your own you haven't delivered there's a new phenomenon called lying flat uh basically giving up uh now that's become a focal point for the Chinese leaders uh they don't think that this is something that should be encouraged um but you know I want to take a different perspective on this lying flat is not about being utterly disgruntled and giving up per se it's also come to characterize a a part of the new generation that is more relaxed that's less ambitious that is less hungry now don't forget that when China joined the WTO one of the core reasons that's why 2001 that was in 2001 when it was when it was so successful was not because of the subsidies but because there was a large swath of really productive and super hard-working labor force where the Foxconn workers opted for three nights three shifts a night that generation is is gone that's not the current generation of new workers so we want to think about China it's new generation as having a better lifestyle life consumption balance and work work-life balance and have a different Vision different perspective they're not going to compete and race for the bottom and that's that kind of job is going to be passed on to other countries it's always a cycle of renewal what about the um kind of social political implications of that because as you said you cite in the book a few kind of world values surveys which suggest that perhaps surprisingly too many in the west Chinese people are basically among the more contented in the world I don't know you know what the methodology of these things are but let's take them at face value but if you now have a rising generation who have disappointed expectations that must be a concern with a concern to any government but to a a one-party state which which relies on its legitimacy performance legitimacy as a phrase the Chinese have often quoted at me are they concerned about that they they're currently now very focused on the new generation let's not forget that the Young Generation were a critical part of ending the pandemic controls and so uh their credibility their legitimacy rests on the the the the trust of this new generation so there are a variety of things that the Chinese government is doing for instance expanding the capacity and quality vocational schools that the Gap in manufacturing as I spoke about is because China is primarily still a manufacturing-based economy so they want to educate and equip these students the new generation with the right skill set to fill that Gap they are expanding the service sector where many of these Highly Educated people can be absorbed more than manufacturing sectors so and and even you know the common Prosperity uh uh policies which includes you know trying to crack down on technology and education sectors of course it was unfortunately implemented and had severe consequences on the economy but by Design and intention they were trying to make the society more harmonious less competitive this is where they said they almost overnight said private tutoring illegal is and that why why was that done because they felt too much money and too much pressure on people too much pressure on the kids overburdened by tutorials it's a race to the bottom because everybody spends to have more tutorial oils and that doesn't get you anywhere just give me a picture of the kind of social life that involved for the children involved what was going on they have the busiest schedule of everybody uh Saturdays and Sundays packed with five classes a day and tutorials even after classes uh during the weekday even um people from the working class are sending their kids to tutorials you know really spending a lot of money but to what effect in the end it's all the same it's all just test taking yeah and so it's overnight the government said okay this is going to stop there were also motivation of these private tutorial companies so I think the intention is not a wrong one but you can be basically killed a part of the industry overnight and this these kind of dramatic moves we often find so uh so radical and in in the Chinese government sometimes they're first of all meant to um make a loud you know make a big Point um to signal and then they're gradually rolled back so it's a it's a process of constant recalibration and fine-tuning uh and the Pendulum often swings but it's often very dramatic in the beginning yeah but it also tells you something about how dramatically the Chinese government's way of operation differs from say a standard Western Government I can't imagine the UK government saying overnight okay no more private tutoring that's it couldn't be done we the Western governments have argued for a long time about regulating big Tech regulating Ai and little is done uh China for all what you disagree with their implementation procedures 10 to can move quickly once they've made up their mind so there's pros and cons of both yeah just on this aging thing I mean one of the great things that you hear all the time is this this phrase that China will get owned before it gets Rich that the uh inadvertently Deng jumping kind of put a landmine under the Chinese economy because dependency ratios are going to go wild out of whack you'll have a shrinking population an aging population and that this is what in the end will slow the Chinese economy down cause a big problems what's your take on that I don't I don't agree with this the The View that aging is what's going to cause the Chinese economic slowdown as I mentioned I think uh just deploying the most productive and educated part of the labor force today is a more pressing issue but also I tend to believe that the economy is endogenous that Technologies and demographics interact with each other uh that there will be more adoption of labor-saving Technologies just as the case in Japan and we're now talking about artificial intelligence displacing many jobs the question is can you get the right kind of education to deal with a modern economy can you get the people who are present who are educated to do self-fulfilling jobs and here I think the government can play a big role and by the way if you look at the economic impact of democrat Geographics across countries internationally something I've done research on it doesn't show up as a significant factor driving a major slowdowns in the economy countries like Japan and other places which have had aging issues there were other really really pressing macroeconomic factors that were more dominant as driving force yeah well I mean you mentioned the the deflation of the Japan bubble and obviously those parallels or in everyone's minds I think well maybe you know China will be a bit like Japan have this incredible search and then suddenly slow and one well one thing that sorry it's one thing that did strike me as a paralyzed property with that there was a big property bubble in Japan and there does seem to be one in China as well you make the point that people on salaries that are like maybe a quarter of an American middle class salary are paying similar prices for Flats in Shanghai that they would be paying for in Boston the Japanese last decade was in large part due to the collapse of a big asset bubble we have not seen the collapse of a big asset bubble in China not least at least not yet uh even with the reigning in the property sector we've seen Investments slow down negative investment growth but the prices have not Fallen dramatically and the reason is multiple fold but one is that there still a huge pent-up demand for urban properties if you think about the Chinese rule population by the way 600 million of which have not even reached middle income by International standards they all want an apartment in urban areas it's a status symbol as I mentioned in the book Bachelors want to have a property to to to kind of showcase that they are eligible so the pent-up demand is there there was an oversupply for a period of time because property for uh for for for for all this time was a cheap sorry a quick win uh and that has just completely changed but it's nowhere like Japan where there was a big collapse and a break of the bubble uh currently so I don't think that China is going to suffer from a Japanese economic decline but just give us a sense again of what it feels like socially having these very high prices again there's an incredible anecdote in the book where you talk about the the difficulty of getting an apartment in Shanghai which somehow led a young person to get their parents to divorce so that they could buy a company just explain to me how why that would be necessary how does that happen property has been an obsession for Chinese and part of the reason is that if you look at the financial system what can you invest in uh if you have some money uh stack it under your mattress is one putting in the in Banks and earning a zero real rate of return is another or putting to the roller coaster stock market which haven't really paid off so there are not a lot of choices so even as an investment property has been a very popular for Chinese households now in places like Shanghai the demand is so high that you'll have these kind of very creative ways and by the way not surprising at all uh to deal with and to circumvent these restrictions and we have to understand there are so there's a restrictions being more being that you're not eligible to purchase a second house unless you meet certain certain criteria so divorce was one of the possibilities um but they're also all kinds of rules that I can't keep track of but we have to understand there's a big heterogeneity throughout which within China the first and second tier cities which do show the first tier cities show evidence of a of a property bubble whereas for the rest of the country there is no evidence of property bubble because the growth of property prices has been roughly in line with household income growth uh and so for many third fourth tier cities the price can still keep on going up yeah but but in in Shanghai Beijing et cetera they the prices are at least by Western standards kind of out of whack with income well no we have to think about in this way housing price is an expectations of the future if you believe Beijing and Shanghai is going to be a Cosmopolitan Global City of the likes of New York and Tokyo then high prices show up today so it could also reflect highly optimistic views about the future and now you can say that is no longer rationalized so there will be an adjustment but for a long period of time they were looking for it and by the way there are a lot of really wealthy Chinese people all around sir yeah I mean it this is again you talked about how the younger generation have certain parallels with the issues that young people in the west have and you must have a view on both because you're teaching the lse so you know lots of kind of you know uh Western students but you also you know have teach in Beijing and so on um is there the same sense amongst the Chinese young that the system isn't working for them anymore or rather that if you remember the elite if you've already got money or if you've got connections you'll be okay but if you're not you're kind of looking looking uh from the outside in I mean I remember when I was in Beijing at one point talking to a student at qingwa he was he made it you know but he was from a small City and he said you know there's so many kids in my class from a few schools in Beijing uh you know from my city maybe one person got to this University and it reminded me of the kind of laments you get here in Britain about oh well you know the sort of the rich still dominate universities all Harvard Legacy students I do see a parallel meritocracy has always been the Bedrock of society Chinese Society especially in the last 40 years there's an argument to be made that there's somewhat of an erosion of maritaki meritocracy which I find to be uh very frustrating and high a big challenge uh to China but still until very recently if you look at the surveys the expectations of the young is still pretty Rosy in China a big contrast to the uh a younger generation around the world it was only during the pandemic where many of the University students felt extremely frustrated I think that some of that sentiment has changed but there there is not the sense that the system isn't working for them it's the you know whether the economy can recover enough that there will be confidence that there will be jobs and yes there's a greater frustration with the circumstances but these young people look at what's happening outside of China they look and they are not inspired they look at what what's happening with democracies what's happening with the random police shootings in the U.S or the democracies that have been transposed onto foreign soil in various parts of the world they look at the chaos in Hong Kong they're not inspired they don't think that there's an alternative of a better model and that shows in the surveys in surveys they ask the younger generation whether China would be suited for a different an alternative model and the majority of them do not believe so even though they admit that they're huge challenges for the Chinese yeah I was actually kind of um had an open question about those figures these site because you say that you know 38 of young Chinese say that a western political model would not be suitable for China but that leaves open the possibility that the other sort of two-thirds might think it was suitable the the sentiment towards the West changed in 2017 so I'd say that before 2017 many of them were quite attracted by different forms of political systems at least as a possibility for China and looking at the west but things did take a dramatic change move in 2017 among them Trump as an example and of course with Rising tensions of U.S China now of course 2017 is also the year that she amends the Constitution and allows extends his period in power so that could also cause a few question marks yeah but that's that's the the time when um the the Western Perceptions in particular have uh turned shifted uh for the negative we just have to understand that they're superficial globalization you know the fact that we like Hollywood and NBA et cetera et cetera that is very very appealing for for the young Chinese but their cultural roots are overwhelmingly local as I show in my book the statistics 80 of the students from 2013 have returned to China not only because it's close to home because they have good Chinese food of course that's important but also because of the opportunities that are afforded them the entrepreneurial Spirit the fact that people had great jobs in Google and Facebook also opt to go back to China to make their their life and the fact that they're creating their homegrown kind of culture modern culture cosmicology and culture so vibrant in the second tier cities so they they are fostering a different environment there yeah I mean how has the pandemic and the handling of the pandemic affected the relationship between people and the government because you mentioned it ended very suddenly when there were young people demonstrating and that was quite striking uh that the government shifted so quickly um what what do you make of that episode more than an episode a couple of years I was reassured that when there was concerted pressure from the younger generation but also from the people potentially even the local governments that such a you know such a such a a long-term kind of or or steadfast policy was broken it shows that there are mechanisms this is a very important point that there are mechanisms embedded in the systems uh whether it's from the people and social media or the competitive mechanism within the Chinese government that makes it so that preferences are still revealed and potentially shaped the outcomes of political and economic decisions now of course that is the ongoing challenge as the Chinese government has to manage a much more complex society going forward not like the time when I was born and everybody was content with having a growing income today it's increasingly complex but this new generation Young Generation overturning key policy was more positive for me but we also forget but you said the preference is revealed I mean they're revealed by people them demonstrating on the streets it wasn't particularly sophisticated polling exercise absolutely but it's a two-way monitoring system and social media creates that kind of platform not only for the Chinese government to uh to watch what was happening on the ground but other way as well and I think that um basically um the the complex well anyway let me start over um I think the complexity of the society is a big challenge for the Chinese government and that they do listen they do listen now I still think the ongoing challenge is how do you have the political mechanism to include the much more important participants of the economy like the private businessmen on the entrepreneur in that system if they don't do it and they don't adapt the system is not going to be as powerful or will enable the Chinese dreams aspirations that it has laid out and you use the phrase the Chinese Dream It's one that XI Shin ping uses and he talks about the great Rejuvenation of the Chinese people but I know some economists worry that she is so statist uh once they see it that he's in danger of killing that entrepreneurial spirit and they Point particularly to the fate of Jack ma who was the the icon of Chinese business appeared to say something or do something the government didn't like and is now as far as we know sort of teaching students in Tokyo um he's called back now oh really is he what yeah well tell me first what you made of that episode but also what more broadly what it said about the government's relationship with the most dynamic business elements in society well the first thing to note is broadly speaking there can be a coexistence of seemingly paradoxical and irreconcilable things in China that's something that perhaps a western audience ought to keep in mind and that no policy is permanent and they're constantly being fine-tooed so the pretext of this is Under the Umbrella of common Prosperity under President XI how to achieve Equitable growth but I think more may perhaps what the audience can relate to is that in xi's view China doesn't want to be like the U.S highly a high growth a great economy but highly inequitable and uh politics sing to the tunes of corporates China wants an olive shaped income distribution narrow on the ends and fat in the middle it wants the corporates to sing to the politics to sing to the tombs of politics and so this initial dramatic sweeping regulatory clampdowns and technology companies that had consequences for personalities and private businessmen such as Jack ma was of course a devastating blow to the economy because of the confidence issue however it was like a trillion dollars off the stock yes it did because yeah because of American investors didn't couldn't make what was was going to happen to the private entrepreneurs and that's all very understandable now that's a painful lesson for the Chinese government understanding that whatever they say their intentions their Ambitions have real economic and immediate Capital markets consequences that was not the case in the old Playbook which was economy built on industrialization in the new playbook around Innovation and encouragement of entrepreneurs they have to have credibility and commitment something the Western Government struggled with for a long period of time to learn now is the learning process for the Chinese government however that said now you see that in the recent past and the recent last few months the state has role pull back some of these heavy blows invited Jack ma to come back and there's a lot of luring private businessmen and trying to restore that confidence because guess what today's China's economy the private sector is firmly in the driver's seat and they do the heavy lifting of the economy unlike during the financial crisis of 2009 they call on team China State Banks flush with cash and state-owned Enterprises uh splurging on infrastructure and you get the economy back going that no longer longer works so even if the West believes that there's a status approach a president XI in control and soes the reality is that pretty much everything about the economy is driven by the private sector and the government is keenly aware of that yeah and obviously now the both the development of the economy but also this emerging struggle between the US and China that we started on a technology is absolutely key to it and how um and there's a debate uh some in the in the US say you know China because it's not as open as society as us is not going to be able to advance as rapidly technologically others say well look at mobile payments for example where China was way ahead um and that uh China will in fact um surprise if you like liberal theorists and prove that you can have technology rapid technological advance in a one-party State what what do you think is happening I mean just on the ground As You observe these various sort of groundbreaking Technologies if there is a race between China and America who's ahead I think that we ought to be a little bit more nuanced when you talk about technology which is a very broad concept uh China is very strong on Innovations around business models and applications and frankly coming up with practical solutions to real problems by the way developing countries their biggest problem is not that they don't have access to the most Advanced Technologies but they don't have access to technology they can actually use and these would be Chinese Technologies more suitable for them for 80 of the global population than American Technology so I believe that because they're cheaper or simpler to you because they're cheaper uh and cheaper reliable quality all that access and that they solve practical problems so they're more user friendly for developing countries well give me a couple of practical examples for instance solar panels or you know the Renewables is a very good example EVS will be a very prominent example remember that the technology controversial technology Force technology transfers if you will didn't make China leap ahead in traditional automotives but it's often in Green Field Technologies where China has speared ahead and EVS is one one of such examples but even in the financial times no less that next year China will become the world's largest exporter of cars China China has became the largest consumer and producer of EVS within a decade not least thanks to the government rolling out 4 million Chargers around the country as opposed to 140 000 in the U.S so talk about an end the State Coordinating Supply chains around these EV companies so that that comes back to the point about technology right yes the US is printing out a bunch of you know aggressive policies to try to hobble China's technological growth but we have to remember China has an all-encom passing Innovation ecosystem within the country there's close proximity between the downstream players like EVS on hummus vehicles and um and artificial intelligence companies with chip companies their close proximity means that their demand will drive these Innovation efforts and we just we have to remember that there are a lot of unexpected consequences of American policies because that just gives a huge boost to the domestic industry so it's much more complex than saying U.S China technology company competition and decoupling and I mean one thing that everybody's been waiting for is the moment at which China becomes the world's largest economy I I think in purchasing power it happened actually in 2014 but uh but even when that happens it will still on a per cap per capita basis be much poorer than the United States or Western Europe and you write quite a lot in the book about can they make this leap from a ten thousand dollars per person uh economy to a thirty thousand dollar per person economy and that that will be very difficult I mean are you confident it'll happen well that's the hard part the catching up growth I don't want to uh under underestimate you know this remarkable economic success story but catching up is much easier than becoming a rich country and to become the thirty thousand dollar income per capita a nation you need Innovation because productivity growth is only sustainable source of economic growth and lots need to change for instance institutions needs to be better the financial system which supports Innovative companies needs to totally reform they are the last old dinosaur in the Chinese economy why because the Chinese State likes control they don't want to see control they want to protect retail investors but the longer they protect the the the longer it will take for them to learn and you can never get a dynamic vibrant Financial system of course with all the problems in the US I would still argue that it's one of the key critical contributors to Us's Innovation uh system uh and and then of course um as we were mentioning how do you get a wider diverse set of preferences from businessmen to students to people to be reflected on the top all of that is really important it's easier to copy Goods but it's very difficult to copy good institutions talking of which I mean the as I referred to earlier she is now you know entering his third term and there's some Chinese liberal put it to me it's not the third term that worries me it's the fourth it's the fifth do you think that Chinese institutions have this flexibility that you think they need political reforms have lacked economic reforms I'm not saying that there there has been none there have been but it's significantly uh slower uh and um much less um visible um I think it is a big challenge I think the system has always been able to adapt uh to the evolution of society and the economy even in the last 40 years more competition more checks and balances of course it's taken a few steps back uh in the recent years and I do think it's a big challenge but with today I mean at least for the short term let's just hope that the fact that she's Inner Circle our loyalists means that there's going to be more trust in the Inner Circle and that there will be more delegation at least in terms of practical issues like the economy to The Experts and to the technocrats and to trust them yeah and uh and since there has just been a reshuffle a lot of these names won't be familiar to people in the west but who are the key people in the Inner Circle will be driving things like economic reform well I would say that Lee Chang the premier is the most important figure and we have to remember all these uh standing committee members probably Bureau members have all been deep profound beneficiaries of Reform and opening up and they're not going to forget that that's what changed their personal lives and Lee child's background is also very interesting because he rose to the Top by helping private businessmen succeed and he had made famous speeches even when he was more lowly uh you know on lowly Municipal levels of if you guys have great ideas come to me we're all going to support them and he thoroughly understands the Deep frustrations and challenges that face private businessmen so he made it he has made it clear that he wants to support them and by the way when he was Shanghai mayor that's when Tesla also moved their factories there and he was very encouraging of these foreign businesses so I think we have an eminently practical and sensible person in charge of the economy okay we've talked a lot about the things that made China's growth and this uh economic miracle I think you can say take place over the last 40 years uh and you mentioned things that were crucial Innovation the private sector and so on but I guess one thing that was really crucial was peace that this has been a long you know China hasn't been at War since 1979 um but now I think certainly in Washington it's quite striking and alarming how many people openly talk about the possibility of a war with China I haven't been to Beijing since the since the pandemic but people tell me the mood is quite nationalistic there um just to finish on a depressing note but uh how you know as somebody again who knows both societies very well are you concerned about this Prospect of war and over sort of mirroring nationalism because the uh people say that the rising generation of Chinese who said they're more confident but that they're some say they're also pretty nationalistic and then that's reflected at the top levels of government and there's a potential for a clash I think the whole world is becoming more nationalistic including in the US and many countries in the wild world and that is deeply worrying you mentioned something that's absolutely correct that's deep in the Chinese people's heart even today and especially leaders and it is peace uh the the cost of war is still very fresh in the memory uh China has not fought a war for decades as you mentioned so even on this very timely issue the critical issue of today of Taiwan we can't forget that well they haven't had the experience of these military uh uh uh confrontations and so peace is still very much at the core of the leadership's top agenda they understand that for China to reach the aspirations including president xi's aspirations which is by the way the most important making the Chinese economy the biggest in the world requires peace and nobody nobody is going to forget that however um I think that errors in judgment Miss calculations are increasingly more likely and on both sides on both sides and one cannot tell where the escalation is coming from it's interactive it's Dynamic it's endogenous and the risk of a miscalculation is is real and I think both sides understand that but what we do see is that when the temperature has been too hot for both both sides the presidents have respectfully tried to cool it down I think maybe there's a view in China that left to the parties across the Taiwan Strait there's more possibility of working out a solution a peaceful solution but the the military conflict is really the very last resort that China would want to see okay well with that quite relatively hopeful note thank you very much for joining me and uh thanks to the listeners for listening in it's been a pleasure Gideon thank you cheers

Channel: Intelligence Squared

Views: 194,167

Keywords: intelligence squared, debate, intelligence squared debate, top debates, best debates, most interesting debates, intelligence2, intelligencesquared, iq2, iq2 debate, iq squared, Intelligence Squared +, IntelligenceSquared, Intelligence squared plus, IntelligenceSquaredPlus, IntelligenceSquared+, intelligencesquaredplus, intelligencesquared+, china, chinese economy, china politics, keyu jin, technology, artificial intelligence, debate competition, is the west getting china wrong?, a.i.

Id: NeIXR8vcnXw

Length: 43min 35sec (2615 seconds)

Published: Sat Jun 10 2023