1 00:00:10,760 --> 00:00:14,920 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,000 --> 00:00:19,720 Speaker 1: I'm Joe Wisn't Thal and I'm Tracy all Away. So Tracy, 3 00:00:19,800 --> 00:00:23,400 Speaker 1: we've been talking about China a fair amount lately. We 4 00:00:23,480 --> 00:00:28,000 Speaker 1: had that recent episode with Dan Wong about um some 5 00:00:28,120 --> 00:00:31,360 Speaker 1: of the specific industries that China is cracking down on, 6 00:00:31,440 --> 00:00:34,760 Speaker 1: like online education and video games and so forth. And 7 00:00:34,840 --> 00:00:40,239 Speaker 1: we talked to Travis Lundie specifically about the stress to 8 00:00:40,360 --> 00:00:43,920 Speaker 1: say the least, at the real estate developer developer evergrand 9 00:00:44,440 --> 00:00:47,400 Speaker 1: But really it feels like we can't get enough of 10 00:00:47,800 --> 00:00:50,839 Speaker 1: the China story. And I every time we do one 11 00:00:50,840 --> 00:00:52,680 Speaker 1: of these episodes of My Head is just like filled 12 00:00:52,720 --> 00:00:57,400 Speaker 1: with like a hundred more questions all China, all the time. 13 00:00:57,480 --> 00:01:02,400 Speaker 1: I mean, both of those stories provoke some pretty big, 14 00:01:02,720 --> 00:01:06,720 Speaker 1: sort of existential questions about China and its economy. I 15 00:01:06,720 --> 00:01:10,600 Speaker 1: mean specifically the crackdowns. Uh. You know, we saw a 16 00:01:10,600 --> 00:01:14,000 Speaker 1: lot of people sort of scratching their heads and basically going, well, 17 00:01:14,440 --> 00:01:17,560 Speaker 1: China built up you know this market economy, um, it 18 00:01:17,600 --> 00:01:21,399 Speaker 1: built up it's stock market, it's technology sector. It's all 19 00:01:21,480 --> 00:01:25,920 Speaker 1: supposed to be kind of um capitalist in style, and 20 00:01:25,959 --> 00:01:28,080 Speaker 1: now it seems to be cracking down in a very 21 00:01:28,319 --> 00:01:32,360 Speaker 1: um centrally ordered way, and what does that mean for 22 00:01:32,720 --> 00:01:35,240 Speaker 1: China's market reforms? And then on the other hand, we 23 00:01:35,280 --> 00:01:37,720 Speaker 1: saw a lot of people going, well, you know, it 24 00:01:37,840 --> 00:01:41,280 Speaker 1: was never that free market. It's always been essentially ordered economy, 25 00:01:41,360 --> 00:01:43,800 Speaker 1: and this is everyone just sort of waking up to 26 00:01:43,880 --> 00:01:46,640 Speaker 1: that fact. But I think there is a big question 27 00:01:46,680 --> 00:01:52,160 Speaker 1: mark over where exactly the Chinese model is going right now. Yeah, 28 00:01:52,280 --> 00:01:54,280 Speaker 1: and it kind of occurred to me, like there is 29 00:01:54,400 --> 00:01:56,320 Speaker 1: this tension. So one of these things. One of the 30 00:01:56,320 --> 00:02:01,600 Speaker 1: things that Dan Wong points out is, Okay, China is 31 00:02:01,680 --> 00:02:06,000 Speaker 1: like very keen to remain an industrial powerhouse, to be 32 00:02:06,080 --> 00:02:08,240 Speaker 1: good at manufacturing, and of course that's been a theme 33 00:02:08,280 --> 00:02:10,960 Speaker 1: of all the conversations that we've had with Dan, is like, 34 00:02:11,120 --> 00:02:13,200 Speaker 1: you know, wants to be good at like hard tech 35 00:02:13,280 --> 00:02:17,440 Speaker 1: and building a wide body or planes and semiconductors, etcetera. 36 00:02:17,800 --> 00:02:20,480 Speaker 1: But on the other hand, you know, an ever grand 37 00:02:20,560 --> 00:02:22,560 Speaker 1: is sort of a perhaps a symptom of this. And 38 00:02:22,639 --> 00:02:25,200 Speaker 1: I think that you coined the term the giant wall 39 00:02:25,280 --> 00:02:28,360 Speaker 1: of money that just slashes around China, which is like, 40 00:02:28,840 --> 00:02:32,440 Speaker 1: from at least from my outside perspective, the Chinese economy 41 00:02:32,639 --> 00:02:35,840 Speaker 1: is whether it's real estate or people at home trading 42 00:02:35,960 --> 00:02:38,560 Speaker 1: like iron ore futures. It's an economy that's like it's 43 00:02:38,680 --> 00:02:43,560 Speaker 1: riven with speculation, right, hugely financialized, I think is the 44 00:02:43,680 --> 00:02:46,160 Speaker 1: right word. So like, on the one hand, yes, they 45 00:02:46,160 --> 00:02:49,200 Speaker 1: want to make things, uh, Dan spoke about this idea 46 00:02:49,200 --> 00:02:52,400 Speaker 1: of the German model and getting closer to you know, 47 00:02:52,880 --> 00:02:57,160 Speaker 1: high quality manufacturing. But on the other hand, it seems 48 00:02:57,240 --> 00:03:00,200 Speaker 1: like there is a lot going on in sectors is 49 00:03:00,240 --> 00:03:05,639 Speaker 1: real estate, construction, UM even banking, finance, fintech. Some of 50 00:03:05,680 --> 00:03:09,160 Speaker 1: the biggest companies in China of course have UM financial 51 00:03:09,360 --> 00:03:12,920 Speaker 1: payments arms as well. So it just feels very financialized 52 00:03:12,919 --> 00:03:16,280 Speaker 1: and sort of abstract at the same time. Yeah, and 53 00:03:16,320 --> 00:03:18,320 Speaker 1: I guess the last thing I would say about this 54 00:03:18,520 --> 00:03:20,919 Speaker 1: is putting it all together what we've talked about so far, 55 00:03:21,040 --> 00:03:23,280 Speaker 1: like and this is gonna sound sort of like trite. 56 00:03:23,360 --> 00:03:27,520 Speaker 1: Maybe it feels very real, like you know, it's always 57 00:03:27,560 --> 00:03:29,760 Speaker 1: you know, I feel like over the last several years 58 00:03:30,120 --> 00:03:32,639 Speaker 1: news out of China it's like, Okay, you know, they're 59 00:03:32,639 --> 00:03:35,600 Speaker 1: gonna they want to tamp down on real estate speculation, 60 00:03:35,720 --> 00:03:37,560 Speaker 1: or it's like are gonna make it harder to buy 61 00:03:37,560 --> 00:03:41,680 Speaker 1: a fifth home or whatever. It is something about this 62 00:03:41,840 --> 00:03:47,200 Speaker 1: moment feels extremely real, as in, let's take a turn 63 00:03:47,400 --> 00:03:49,600 Speaker 1: in a different direction. And I don't know if that's true, 64 00:03:50,200 --> 00:03:53,600 Speaker 1: but the combination of things, the letting, letting ever grand 65 00:03:53,680 --> 00:03:56,360 Speaker 1: get to where it is, the effect that that is 66 00:03:56,400 --> 00:03:59,520 Speaker 1: likely to have on the real estate sector, it feels like, um, 67 00:03:59,560 --> 00:04:02,000 Speaker 1: this is a this is a pretty big moment. Well. 68 00:04:02,040 --> 00:04:05,040 Speaker 1: I think also when you wipe out billions of dollars 69 00:04:05,040 --> 00:04:07,840 Speaker 1: worth of market value on some of your biggest companies 70 00:04:07,880 --> 00:04:11,160 Speaker 1: through the crackdowns, that tends to focus people's attention quite 71 00:04:11,160 --> 00:04:13,960 Speaker 1: a bit as well. Exactly right. So I want to 72 00:04:14,200 --> 00:04:18,320 Speaker 1: understand further where China is going, what its goals are, 73 00:04:18,480 --> 00:04:22,760 Speaker 1: how it understands the sort of how it sees economic management. 74 00:04:22,760 --> 00:04:26,320 Speaker 1: So I'm very excited about our guest today. She is 75 00:04:26,360 --> 00:04:28,240 Speaker 1: the author of a new book. We're gonna be speaking 76 00:04:28,240 --> 00:04:32,040 Speaker 1: with Isabella Vabor. She is an assistant professor of economics 77 00:04:32,160 --> 00:04:36,320 Speaker 1: at the University of Massachusetts Amherst and the author of 78 00:04:36,360 --> 00:04:41,400 Speaker 1: the book How China Escaped Shock Therapy the Market Reform Debate. 79 00:04:41,480 --> 00:04:44,279 Speaker 1: This book is getting a lot of praise taking a 80 00:04:44,320 --> 00:04:48,360 Speaker 1: big sweep at the big historical look at China's approach 81 00:04:48,400 --> 00:04:51,800 Speaker 1: to liberalization, or how it thinks about capitalism and markets. 82 00:04:52,080 --> 00:04:55,080 Speaker 1: So maybe the perfect person to contextualize this moment right 83 00:04:55,080 --> 00:04:58,520 Speaker 1: now Isabella. Thank you so much for joining us. Thank 84 00:04:58,560 --> 00:05:00,680 Speaker 1: you so much for having me on this so so 85 00:05:00,880 --> 00:05:03,400 Speaker 1: and crazy and it's a great privilege and honor to 86 00:05:03,520 --> 00:05:06,920 Speaker 1: join you today. Very very kind of you to say, 87 00:05:07,000 --> 00:05:09,320 Speaker 1: you know, let's just start, like, Okay, the title of 88 00:05:09,360 --> 00:05:14,919 Speaker 1: your book, how China Escaped Shock Therapy, What does that mean? 89 00:05:15,320 --> 00:05:18,360 Speaker 1: I mean, I guess I have some sense of shock 90 00:05:18,480 --> 00:05:21,240 Speaker 1: therapy in the development contexts, the idea of like we're 91 00:05:21,240 --> 00:05:23,960 Speaker 1: going to rip the band aids off, the nationalize all 92 00:05:24,000 --> 00:05:27,200 Speaker 1: the industries, free trade. Obviously China hasn't done that. But 93 00:05:27,720 --> 00:05:32,000 Speaker 1: why is this the lens that you've decided to take 94 00:05:32,040 --> 00:05:36,359 Speaker 1: to sort of like understand Chinese capitalism? Yeah, thank you. 95 00:05:36,440 --> 00:05:39,400 Speaker 1: That's a great question. To go back to the ninety 96 00:05:39,520 --> 00:05:42,520 Speaker 1: eighties to understand what's going on with China today is 97 00:05:42,520 --> 00:05:45,640 Speaker 1: a somewhat unorthodox decision. But at the same time, in 98 00:05:45,680 --> 00:05:48,679 Speaker 1: the context of the increasing talk around the new Code 99 00:05:48,680 --> 00:05:50,479 Speaker 1: War and so on, I think it makes sense to 100 00:05:50,560 --> 00:05:53,279 Speaker 1: go back to the end of the previous Code war 101 00:05:53,640 --> 00:05:58,039 Speaker 1: and to go back to the initial decade of market 102 00:05:58,120 --> 00:06:01,720 Speaker 1: reforms in which I think to some extent China's approach 103 00:06:01,760 --> 00:06:06,600 Speaker 1: to marketization and its basic state market relations were shaped. Now, 104 00:06:06,760 --> 00:06:10,280 Speaker 1: why to focus on shock therapy. In the eighties, shock 105 00:06:10,360 --> 00:06:13,479 Speaker 1: therapy was a policy doctrine that really swept the word 106 00:06:13,640 --> 00:06:16,040 Speaker 1: in some sense, even the Foker shock can be thought 107 00:06:16,080 --> 00:06:19,680 Speaker 1: about as as one form of shock therapy. But more concretely, 108 00:06:19,720 --> 00:06:23,200 Speaker 1: in the context of the transitions from socialists or communists 109 00:06:23,279 --> 00:06:27,320 Speaker 1: or whatever you want to call it economies to market economies, 110 00:06:27,600 --> 00:06:31,080 Speaker 1: that kind of was the policy choice of the day. 111 00:06:31,240 --> 00:06:34,719 Speaker 1: This was technically speaking, a policy package that was composed 112 00:06:34,720 --> 00:06:38,359 Speaker 1: of four elements, that is, price liberalization and macro economic 113 00:06:38,400 --> 00:06:42,640 Speaker 1: austerity as the first two elements, which taken together is 114 00:06:42,680 --> 00:06:45,880 Speaker 1: considered the big bank. Where the idea is that liberalizing 115 00:06:45,880 --> 00:06:48,840 Speaker 1: all prices helps you to get prices right, and then 116 00:06:48,880 --> 00:06:53,520 Speaker 1: imposing microeconomic restraint helps you to keep the general price 117 00:06:53,600 --> 00:06:57,160 Speaker 1: level under control. Then this was meant to be complimented 118 00:06:57,200 --> 00:07:01,680 Speaker 1: with trade liberalization to integrate the economies into the global market, 119 00:07:02,160 --> 00:07:07,080 Speaker 1: and with privatization to basically lay the institutional foundations for 120 00:07:07,279 --> 00:07:11,640 Speaker 1: a functioning market economy. Now, even the most diehard shock 121 00:07:11,720 --> 00:07:16,480 Speaker 1: therapist thought that privatization was a slow and complicated process 122 00:07:16,520 --> 00:07:19,840 Speaker 1: of rebuilding institutions, so that the most shocking element of 123 00:07:19,840 --> 00:07:24,000 Speaker 1: shock therapy was really price liberalization and market economic austerity. 124 00:07:24,080 --> 00:07:28,080 Speaker 1: So much on the technical composition of these policies, but 125 00:07:28,120 --> 00:07:30,640 Speaker 1: I think in a more broader sentence, the idea of 126 00:07:30,640 --> 00:07:35,120 Speaker 1: shock therapy and encompasses the idea that you have to 127 00:07:35,240 --> 00:07:39,880 Speaker 1: create markets by having the state withdraw from the economy 128 00:07:40,040 --> 00:07:43,760 Speaker 1: and basically by destroying the plan to make space for 129 00:07:43,880 --> 00:07:49,200 Speaker 1: markets to emerge spontaneously. Now, we think of China's state 130 00:07:49,480 --> 00:07:54,080 Speaker 1: as UM very powerful, and as the recent episodes have showed, 131 00:07:54,560 --> 00:07:58,720 Speaker 1: UM continuing to be incredibly powerful in the economy. Right, 132 00:07:58,800 --> 00:08:04,080 Speaker 1: so we tend to think that gradualism, experimentalism, pragmatism are 133 00:08:04,160 --> 00:08:08,360 Speaker 1: just inherent in China's approach, and therefore this is just 134 00:08:08,440 --> 00:08:11,880 Speaker 1: like somehow what China does, which to some extent is true. 135 00:08:12,320 --> 00:08:14,640 Speaker 1: But by going back to the nineteen eighties and to 136 00:08:14,760 --> 00:08:19,080 Speaker 1: the struggles over market reforms, I'm kind of complicating this 137 00:08:19,240 --> 00:08:22,920 Speaker 1: story by suggesting that in fact, in the first decade 138 00:08:23,000 --> 00:08:27,640 Speaker 1: and to some extent throughout the reform period, that we're 139 00:08:27,760 --> 00:08:31,920 Speaker 1: alternative ways of thinking about marketization and the idea of 140 00:08:32,080 --> 00:08:35,960 Speaker 1: shock therapy or the basic idea of needing to have 141 00:08:36,480 --> 00:08:39,720 Speaker 1: the state withdraw from the economy in order to create 142 00:08:39,880 --> 00:08:44,440 Speaker 1: functioning market economy was very much present in China, um 143 00:08:44,520 --> 00:08:47,640 Speaker 1: and in many ways has been a position. It has 144 00:08:47,679 --> 00:08:52,600 Speaker 1: been advanced throughout the last decade. Could you maybe talk 145 00:08:52,640 --> 00:08:55,960 Speaker 1: a little bit more about how what you just described, 146 00:08:56,040 --> 00:08:59,360 Speaker 1: you know, the market reforms of the eighties under Dang 147 00:08:59,360 --> 00:09:04,800 Speaker 1: Shao Ping, how those actually stacked up against the socialist 148 00:09:05,040 --> 00:09:08,120 Speaker 1: philosophy that was prevalent at the time. Because again, I 149 00:09:08,400 --> 00:09:11,080 Speaker 1: think this is I believe Joe mentioned this in the intro, 150 00:09:11,160 --> 00:09:13,240 Speaker 1: but this is sort of one of the tensions that 151 00:09:13,400 --> 00:09:16,720 Speaker 1: people struggle to understand in China. On the one hand, 152 00:09:16,760 --> 00:09:21,079 Speaker 1: it's a self professed communist state that's trying to take 153 00:09:21,120 --> 00:09:25,440 Speaker 1: care of everyone and wants to centrally direct resources. But 154 00:09:25,520 --> 00:09:28,120 Speaker 1: on the other hand, certainly in the nineteen eighties they 155 00:09:28,120 --> 00:09:31,640 Speaker 1: were talking about price liberalization and other types of things 156 00:09:31,640 --> 00:09:37,920 Speaker 1: that one wouldn't necessarily associate with that kind of socialism. Yeah, 157 00:09:38,040 --> 00:09:42,120 Speaker 1: great question. Um So I think to understand what was 158 00:09:42,160 --> 00:09:44,520 Speaker 1: going on, one kind of has to go back to 159 00:09:44,559 --> 00:09:48,440 Speaker 1: the late nineties seventies and ask oneself where was Chinese 160 00:09:48,480 --> 00:09:52,280 Speaker 1: economy and society yet at the dawn of reform, and 161 00:09:52,360 --> 00:09:54,960 Speaker 1: I mean this is a moment um. A couple of 162 00:09:55,040 --> 00:09:58,120 Speaker 1: years after Male's death in nineteen seventy six, the count 163 00:09:58,200 --> 00:10:01,839 Speaker 1: revolutionists clearly all for people who have been leading the 164 00:10:01,920 --> 00:10:06,320 Speaker 1: Kaich Revolution arrested. But in addition to the failure of 165 00:10:06,360 --> 00:10:10,800 Speaker 1: the idea of continuous revolution and ever more communist forms 166 00:10:10,840 --> 00:10:16,080 Speaker 1: of political organization and mass um mass mobilization during the 167 00:10:16,120 --> 00:10:22,280 Speaker 1: Kaich Revolution, there's also a failure under a mouse dedicated 168 00:10:22,360 --> 00:10:26,559 Speaker 1: hair Hua film, which is a failure of a renewed 169 00:10:26,760 --> 00:10:32,360 Speaker 1: attempt at big push industrialization. Now, a big push industrialization 170 00:10:32,559 --> 00:10:35,679 Speaker 1: in some sense was the Stalinist kind of idea of 171 00:10:36,120 --> 00:10:40,160 Speaker 1: planned industrialization. In that case, there was a big ten 172 00:10:40,240 --> 00:10:43,880 Speaker 1: year plan, and the idea was that China's catch up 173 00:10:43,920 --> 00:10:47,960 Speaker 1: ambition could finally be realized in this ten year plan. 174 00:10:48,600 --> 00:10:54,360 Speaker 1: That ten year plan failed quite dramatically, basically because of 175 00:10:54,400 --> 00:10:57,160 Speaker 1: reasons that in some sense are quite timely, which are 176 00:10:57,679 --> 00:11:02,920 Speaker 1: in the seventies. China was finding quite substantial petroleum resources, 177 00:11:03,040 --> 00:11:07,240 Speaker 1: and the basic plan had been to export petroleum and 178 00:11:07,280 --> 00:11:12,720 Speaker 1: then import um international technology know how in capital goods 179 00:11:12,800 --> 00:11:18,600 Speaker 1: and then basically achieved rapid planned industrialization but fueled with 180 00:11:18,720 --> 00:11:23,120 Speaker 1: foreign knowledge and technology. Now, the projected petroleum findings were 181 00:11:23,160 --> 00:11:26,880 Speaker 1: not forthcoming, so that by the late seventies this model 182 00:11:26,960 --> 00:11:30,520 Speaker 1: had very quickly run out of steam. But China was 183 00:11:30,559 --> 00:11:34,160 Speaker 1: still a very poor country. It yes, it had achieved 184 00:11:34,480 --> 00:11:39,360 Speaker 1: basic industrialization, advancement, its public health, infrastructure and so on 185 00:11:39,440 --> 00:11:43,920 Speaker 1: during the MAOIs period. Nevertheless, just to give you a sense, 186 00:11:43,960 --> 00:11:47,640 Speaker 1: the GDP per capital in China in night was still 187 00:11:47,720 --> 00:11:50,160 Speaker 1: less than that of Sudano Haiti, So we are really 188 00:11:50,200 --> 00:11:54,760 Speaker 1: talking pretty severe poverty for large parts of the country. 189 00:11:54,840 --> 00:11:58,240 Speaker 1: So there's a sense of we need to redo the 190 00:11:58,280 --> 00:12:02,280 Speaker 1: economic system in order to um to move forward, in 191 00:12:02,360 --> 00:12:04,840 Speaker 1: order to realize the ambition of the revolution that was 192 00:12:05,000 --> 00:12:10,400 Speaker 1: not only about creating a non alienated society and all 193 00:12:10,440 --> 00:12:13,080 Speaker 1: of that at least like big political ambitions, but it 194 00:12:13,160 --> 00:12:19,320 Speaker 1: was also about making China escape from backwardness and poverty. Right, 195 00:12:19,400 --> 00:12:26,040 Speaker 1: So in that context, there's basically re orientation in the 196 00:12:26,160 --> 00:12:30,520 Speaker 1: understanding of communism and socialism, where the idea is that 197 00:12:30,720 --> 00:12:35,880 Speaker 1: under Mound China had tried to achieve two revolutionary forms 198 00:12:35,920 --> 00:12:41,000 Speaker 1: of um of organization without having the material foundations in place. 199 00:12:41,440 --> 00:12:46,120 Speaker 1: So ifone goes back to kind of orthodox historical materialism 200 00:12:46,240 --> 00:12:50,079 Speaker 1: or an orthodox reading of marks understanding of the development 201 00:12:50,120 --> 00:12:55,040 Speaker 1: of history. Then there is a sense that the social 202 00:12:55,080 --> 00:12:59,080 Speaker 1: relations or the social organization of society should, to some 203 00:12:59,240 --> 00:13:03,920 Speaker 1: extent plays correspond with the material foundations of society. Right. 204 00:13:03,960 --> 00:13:09,280 Speaker 1: In other words, you cannot leap from a medieval agricultural 205 00:13:09,400 --> 00:13:13,360 Speaker 1: society straight into for communism or something like that. Right. Um. 206 00:13:13,480 --> 00:13:17,320 Speaker 1: So in the late seventies there is basically this huge 207 00:13:17,440 --> 00:13:21,120 Speaker 1: ideological shift where the idea is that in order to 208 00:13:21,640 --> 00:13:25,680 Speaker 1: lay the foundations for socialism and the future UM, China 209 00:13:25,840 --> 00:13:30,720 Speaker 1: had to backtrack on socialist organization in the present and 210 00:13:30,800 --> 00:13:35,480 Speaker 1: had to quote unquote make up lessons from capitalism in 211 00:13:35,600 --> 00:13:40,120 Speaker 1: order to lay the foundations the material foundations that economic 212 00:13:40,200 --> 00:13:44,679 Speaker 1: development foundations um Um that that would be necessary in 213 00:13:44,800 --> 00:13:51,320 Speaker 1: order to achieve um higher forms of socialist organization or 214 00:13:51,360 --> 00:13:54,560 Speaker 1: maybe even in the very long run, eventually some form 215 00:13:54,600 --> 00:13:57,920 Speaker 1: of communism um in the distant future. So as such, 216 00:13:58,360 --> 00:14:02,720 Speaker 1: the socialist ambition has been um in some stence postponed 217 00:14:03,160 --> 00:14:07,240 Speaker 1: to some future date, which then raises a question whether 218 00:14:07,520 --> 00:14:11,600 Speaker 1: this applies that it has actually been given up. So 219 00:14:11,760 --> 00:14:13,840 Speaker 1: this actually no, this is great because this sort of 220 00:14:13,880 --> 00:14:16,120 Speaker 1: gets it where I was going to go with the 221 00:14:16,200 --> 00:14:19,000 Speaker 1: next question. And I think if you like talk to 222 00:14:19,160 --> 00:14:25,840 Speaker 1: people about China, there is this assumption of a linear trajectory. 223 00:14:25,920 --> 00:14:27,920 Speaker 1: And I don't mean experts, I mean just sort of 224 00:14:27,960 --> 00:14:31,400 Speaker 1: like general commenters, people in business, etcetera. That there is 225 00:14:31,400 --> 00:14:35,960 Speaker 1: this assumption of a linear but perhaps slow trajectory towards 226 00:14:35,960 --> 00:14:40,360 Speaker 1: something that looks like a fully liberalized economy, a liberalized 227 00:14:40,520 --> 00:14:45,560 Speaker 1: capital account, an economy in which they're understanding the Chinese 228 00:14:45,640 --> 00:14:49,640 Speaker 1: understanding of IP laws are roughly similar to what they 229 00:14:49,680 --> 00:14:53,680 Speaker 1: are in other they're developed economies, an economy in which 230 00:14:53,720 --> 00:14:57,560 Speaker 1: foreign foreign companies can more or less do business at 231 00:14:57,560 --> 00:15:01,840 Speaker 1: the same level, the same plane field as local companies, 232 00:15:01,920 --> 00:15:05,600 Speaker 1: And obviously China is not there, but it's a sub 233 00:15:05,600 --> 00:15:09,720 Speaker 1: sort of like, Okay, this ongoing process of liberalizing step 234 00:15:09,720 --> 00:15:12,560 Speaker 1: by step and so forth in one day, maybe that's 235 00:15:12,640 --> 00:15:15,280 Speaker 1: where China get to. But you know, it seems like 236 00:15:15,720 --> 00:15:19,480 Speaker 1: both like what you're saying and also what we've seen 237 00:15:19,600 --> 00:15:23,160 Speaker 1: with some of lately is maybe this assumption of a 238 00:15:23,280 --> 00:15:27,440 Speaker 1: straight line liberalization on a slow It's definitely not shocked therapy, 239 00:15:27,720 --> 00:15:32,200 Speaker 1: but a straight line liberalization. However, slow may just be 240 00:15:33,000 --> 00:15:38,800 Speaker 1: the wrong premise to begin with. Yeah, um, so the 241 00:15:38,840 --> 00:15:41,640 Speaker 1: subtitle of the book is the Market Reform Debates, right, 242 00:15:41,680 --> 00:15:46,800 Speaker 1: And it's really about two competing understandings of how market 243 00:15:46,800 --> 00:15:50,640 Speaker 1: economies work. And one understanding of a market economy is 244 00:15:50,760 --> 00:15:54,080 Speaker 1: that basically there's one model of market economies which is 245 00:15:54,120 --> 00:15:57,880 Speaker 1: pretty much what we think of as best than market economies, 246 00:15:58,000 --> 00:16:00,600 Speaker 1: or a form of market economy that can more or 247 00:16:00,680 --> 00:16:05,280 Speaker 1: less capture with one economic model, so that marketization basically 248 00:16:05,400 --> 00:16:10,360 Speaker 1: means moving towards one kind of fully liberalized type of 249 00:16:10,400 --> 00:16:13,640 Speaker 1: market economy, right, which is basically in line with what 250 00:16:13,680 --> 00:16:15,680 Speaker 1: you just said, and which is in some sense the 251 00:16:15,840 --> 00:16:21,360 Speaker 1: underpinning assumptions of the most extreme case that is shock therapy. 252 00:16:21,440 --> 00:16:25,400 Speaker 1: On the other hand, the idea of experimentalist gradualism that 253 00:16:25,600 --> 00:16:30,960 Speaker 1: ultimately prevails in China. These markets not as the goal 254 00:16:31,080 --> 00:16:35,680 Speaker 1: in itself, but these markets as a tool in China's 255 00:16:35,720 --> 00:16:42,160 Speaker 1: own process of transformation, where they are bigger political, developmental, economic, 256 00:16:42,520 --> 00:16:46,280 Speaker 1: social goals in which the market can be used to 257 00:16:46,520 --> 00:16:53,560 Speaker 1: serve China to move towards the implementation of these goals. 258 00:16:53,600 --> 00:16:58,920 Speaker 1: But marketization is not a goal in itself. Now, that 259 00:16:59,080 --> 00:17:02,920 Speaker 1: of course always bears the potential that if you I mean, 260 00:17:02,960 --> 00:17:07,280 Speaker 1: if you pursue the second approach and you have intense marketization, 261 00:17:07,640 --> 00:17:11,040 Speaker 1: it always leaves open the first approach because as you 262 00:17:11,080 --> 00:17:15,480 Speaker 1: get more markets, markets take on their own dynamic they 263 00:17:15,520 --> 00:17:19,240 Speaker 1: I mean, powerful interests are created and so on. So 264 00:17:20,200 --> 00:17:23,520 Speaker 1: in essence, I think that China did try to pursue 265 00:17:23,600 --> 00:17:27,400 Speaker 1: the second approach in the nineteen eighties, but the challenge 266 00:17:27,480 --> 00:17:31,879 Speaker 1: from the first approach kind of has been there all along. UM, 267 00:17:31,960 --> 00:17:36,120 Speaker 1: and the understanding of commentators of what China is doing 268 00:17:36,160 --> 00:17:40,560 Speaker 1: has also often been primarily guided by the first idea 269 00:17:40,640 --> 00:17:44,880 Speaker 1: of marketization being basically the same as for liberalization being 270 00:17:44,920 --> 00:17:49,960 Speaker 1: the same as bestinization. So using maybe the second framework 271 00:17:50,040 --> 00:17:52,240 Speaker 1: and the idea that you touched on earlier of China 272 00:17:52,400 --> 00:17:56,639 Speaker 1: sort of having to postpone some of its socialist goals 273 00:17:56,680 --> 00:17:59,680 Speaker 1: in order to get the market reforms under way. When 274 00:17:59,720 --> 00:18:03,320 Speaker 1: you see what China is doing now, when you look 275 00:18:03,320 --> 00:18:07,600 Speaker 1: at the various crackdowns, um and things going on, I mean, 276 00:18:07,640 --> 00:18:11,560 Speaker 1: there have been so many headlines over the past few weeks, 277 00:18:11,560 --> 00:18:14,240 Speaker 1: but there's certainly been a lot of statements about creating 278 00:18:14,240 --> 00:18:18,320 Speaker 1: a more equal society, making sure that you know, education 279 00:18:18,440 --> 00:18:22,159 Speaker 1: is a priority and parents don't have to necessarily spend 280 00:18:22,480 --> 00:18:25,560 Speaker 1: a ton of money in order to um secure their 281 00:18:25,600 --> 00:18:28,919 Speaker 1: kids education. There are a lot of socialist principles that 282 00:18:29,000 --> 00:18:33,360 Speaker 1: are running through some of these crackdowns. So I'm curious 283 00:18:33,359 --> 00:18:36,400 Speaker 1: how you're viewing that in the context of your historical 284 00:18:36,440 --> 00:18:39,879 Speaker 1: framework and whether or not it is maybe like the 285 00:18:40,000 --> 00:18:45,840 Speaker 1: long awaited return to Chinese socialism. Yeah, well, I'm I'm 286 00:18:45,880 --> 00:18:49,359 Speaker 1: not sure if I can decide, but it's the big 287 00:18:50,119 --> 00:18:52,760 Speaker 1: way to return to social that's fair enough, But I 288 00:18:52,800 --> 00:18:57,800 Speaker 1: can't try to provide some some historic perspective. So part 289 00:18:57,840 --> 00:19:01,560 Speaker 1: of that second approach to market ice station was also 290 00:19:01,680 --> 00:19:06,040 Speaker 1: to start from the non essential parts of the system 291 00:19:06,119 --> 00:19:09,360 Speaker 1: and basically create a market dynamic in ways that allowed 292 00:19:09,359 --> 00:19:12,560 Speaker 1: the state to keep control over the core parts of 293 00:19:12,600 --> 00:19:17,320 Speaker 1: the system. So keep control over the essential strategic industries, 294 00:19:17,440 --> 00:19:20,919 Speaker 1: keep control over, if you want so, the commanding heights 295 00:19:21,040 --> 00:19:24,480 Speaker 1: of the economy. So there is a sense that your 296 00:19:24,680 --> 00:19:28,520 Speaker 1: unleash market dynamics at the margins of the system. But 297 00:19:28,560 --> 00:19:32,560 Speaker 1: then eventually, if these margins actually become core of the system, 298 00:19:32,720 --> 00:19:37,439 Speaker 1: then there might be a re calibration of the relationship 299 00:19:37,520 --> 00:19:40,320 Speaker 1: between the state and the market in these areas. So 300 00:19:40,359 --> 00:19:44,800 Speaker 1: if you take for example, private tutoring, as long as 301 00:19:44,840 --> 00:19:49,840 Speaker 1: private tutoring is just something that a few elites relying 302 00:19:49,880 --> 00:19:52,360 Speaker 1: on in order to make sure that their kids get 303 00:19:52,400 --> 00:19:56,200 Speaker 1: into the right schools. Then this is maybe not socialists, 304 00:19:56,880 --> 00:19:59,720 Speaker 1: but it's a marginal phenomenon. When it comes to a 305 00:20:00,000 --> 00:20:03,840 Speaker 1: point that private tutoring becomes so important that basically all 306 00:20:04,119 --> 00:20:08,640 Speaker 1: middle class families fear that without private tutoring, their children 307 00:20:08,680 --> 00:20:12,199 Speaker 1: have no chance of passing the university entrance exams and 308 00:20:12,280 --> 00:20:16,320 Speaker 1: basically have no future, then suddenly private tutoring becomes part 309 00:20:16,800 --> 00:20:21,840 Speaker 1: of a very essential element of the economy and society. 310 00:20:21,920 --> 00:20:25,520 Speaker 1: It becomes an essential part of the education system. So 311 00:20:25,600 --> 00:20:28,159 Speaker 1: I think that to some extent, what we see what 312 00:20:28,280 --> 00:20:32,520 Speaker 1: these crackdowns is a redefinition of the relationship between the 313 00:20:32,520 --> 00:20:34,520 Speaker 1: state and the market, as some of these sectors that 314 00:20:34,720 --> 00:20:37,720 Speaker 1: used to be much I have crossed the line towards 315 00:20:37,760 --> 00:20:41,760 Speaker 1: becoming really essential. This is I think similar with a 316 00:20:41,760 --> 00:20:45,320 Speaker 1: lot of the e commerce platforms. Where as long as 317 00:20:45,359 --> 00:20:50,199 Speaker 1: this is just a bookshop for some second handbooks, then 318 00:20:50,240 --> 00:20:53,920 Speaker 1: it's a kind of really secondary, right. But once this 319 00:20:54,080 --> 00:20:57,480 Speaker 1: becomes the main form of retail, as the pandemic has 320 00:20:57,880 --> 00:21:01,960 Speaker 1: illustrated quite dramatically, then suddenly this is a platform that 321 00:21:02,119 --> 00:21:06,240 Speaker 1: is basically running the retail economy of the country. Right, 322 00:21:06,320 --> 00:21:09,560 Speaker 1: So from that perspective, I think we can, i mean, 323 00:21:09,600 --> 00:21:13,679 Speaker 1: maybe make sense of why in certain sectors there is 324 00:21:13,720 --> 00:21:16,960 Speaker 1: such a regaining of control that of course does not 325 00:21:17,160 --> 00:21:19,919 Speaker 1: explain the timing and why it's happening. Now, this is 326 00:21:19,960 --> 00:21:22,080 Speaker 1: more like saying okay, kind of fits in a more 327 00:21:22,119 --> 00:21:25,280 Speaker 1: general pattern, but it's it's it's not predictive in the 328 00:21:25,320 --> 00:21:27,320 Speaker 1: sense that we could have said okay, therefore it would 329 00:21:27,359 --> 00:21:46,800 Speaker 1: have happened in So the big thing, you know, you 330 00:21:46,880 --> 00:21:50,760 Speaker 1: mentioned the tutor tutoring and so forth, But the sort 331 00:21:50,800 --> 00:21:53,560 Speaker 1: of the big elephant in the room, at least from 332 00:21:53,560 --> 00:21:57,800 Speaker 1: my perspective, seems to be the sort of extreme level 333 00:21:57,920 --> 00:22:01,520 Speaker 1: of financialization in speculation. And I mentioned this in the intro. 334 00:22:02,240 --> 00:22:05,479 Speaker 1: But you know, I've followed Tracey's writing on China for years, 335 00:22:05,800 --> 00:22:08,160 Speaker 1: and you know, people in the US like to trade 336 00:22:08,160 --> 00:22:10,800 Speaker 1: stocks and cryptocurrencies, but it seems like even like more 337 00:22:10,840 --> 00:22:13,480 Speaker 1: extreme in China. And you have like people at home 338 00:22:13,880 --> 00:22:17,840 Speaker 1: trading iron or futures from their computers and trading oil 339 00:22:17,960 --> 00:22:20,120 Speaker 1: futures in a way that I don't think very many 340 00:22:20,160 --> 00:22:23,000 Speaker 1: people in the US do. And then of course you 341 00:22:23,119 --> 00:22:26,880 Speaker 1: have housing, which okay, on the one hand, is probably 342 00:22:26,920 --> 00:22:30,359 Speaker 1: sort of like a core basic and necessity, but it's 343 00:22:30,400 --> 00:22:35,720 Speaker 1: obviously a highly financialized, speculative world, and we see this 344 00:22:36,359 --> 00:22:39,200 Speaker 1: sort of coming to a head with evergrand how much 345 00:22:39,560 --> 00:22:44,480 Speaker 1: has that financialization essentially been I mean, is that a failure, 346 00:22:44,680 --> 00:22:47,160 Speaker 1: the fact that so much of the economy has been 347 00:22:47,560 --> 00:22:52,280 Speaker 1: so much speculation, so much financialization. Do Chinese elites perceive 348 00:22:52,440 --> 00:22:55,280 Speaker 1: that as having been a failure to let that become 349 00:22:55,880 --> 00:23:00,359 Speaker 1: so rampant? Yeah, that's a great question. Um, certainly, I 350 00:23:00,400 --> 00:23:03,640 Speaker 1: think there is a sense that speculation has gotten out 351 00:23:03,640 --> 00:23:08,159 Speaker 1: of hand, hence the crackdown. Right at the same time, 352 00:23:08,320 --> 00:23:12,800 Speaker 1: I think that this massively rapid marchetization that we have 353 00:23:12,960 --> 00:23:16,480 Speaker 1: observed throughout the last decades is part of the dynamic 354 00:23:16,520 --> 00:23:20,560 Speaker 1: that the party itself has created, and that has led 355 00:23:20,600 --> 00:23:24,400 Speaker 1: also to this massive markeetization of the behavior of individuals 356 00:23:24,440 --> 00:23:28,120 Speaker 1: who have become market oriented in ways. Um, I fully 357 00:23:28,160 --> 00:23:31,280 Speaker 1: agree with what you say, a really unusual now beyond 358 00:23:31,680 --> 00:23:34,120 Speaker 1: what I have seen in the US or I'm from Germany, 359 00:23:34,200 --> 00:23:37,560 Speaker 1: clearly beyond what people in Germany are doing. I think 360 00:23:37,560 --> 00:23:40,720 Speaker 1: that kind of goes back to another point, Um, that 361 00:23:40,760 --> 00:23:43,120 Speaker 1: you made in the intro, which is this idea that 362 00:23:43,520 --> 00:23:47,359 Speaker 1: UM we either see China as being totally capitalists and 363 00:23:47,480 --> 00:23:52,240 Speaker 1: market or UM as the centrally ordered or planned economy. 364 00:23:52,480 --> 00:23:56,000 Speaker 1: So then either we see the fanitialization simply as the 365 00:23:56,040 --> 00:24:00,560 Speaker 1: result of of this um massive capitalist economy, or we 366 00:24:00,600 --> 00:24:03,679 Speaker 1: see it as a totally abnormal phenomenon in relation to 367 00:24:03,760 --> 00:24:06,640 Speaker 1: what is supposed to be a centially ordered economy. Right, 368 00:24:07,000 --> 00:24:11,320 Speaker 1: I'm kind of proposing a third perspective, which is that 369 00:24:12,160 --> 00:24:16,400 Speaker 1: it's a state constituted market economy where the state has 370 00:24:16,440 --> 00:24:22,320 Speaker 1: been the driving force behind marketization, has unleashed markets and 371 00:24:22,400 --> 00:24:27,000 Speaker 1: finance realization in across the economy and across sectors in 372 00:24:27,119 --> 00:24:30,440 Speaker 1: the hope of unleashing in a massive growth dynamic, which 373 00:24:30,440 --> 00:24:32,720 Speaker 1: they have achieved, but always at the danger of kind 374 00:24:32,760 --> 00:24:36,440 Speaker 1: of like dancing with the tiger, where this can take 375 00:24:36,520 --> 00:24:39,920 Speaker 1: on a dynamic of its own that is so so 376 00:24:40,040 --> 00:24:44,520 Speaker 1: powerful that things get out of control. As regards financial 377 00:24:44,600 --> 00:24:47,680 Speaker 1: stability and real estate, there is the sense of being 378 00:24:47,720 --> 00:24:51,040 Speaker 1: at the brink of things getting out of control, hence 379 00:24:51,960 --> 00:24:55,640 Speaker 1: the crackdown. This is actually what I wanted to ask 380 00:24:55,680 --> 00:24:59,320 Speaker 1: you next, which is you know, again using that sort 381 00:24:59,359 --> 00:25:03,399 Speaker 1: of framework that you just describe a sort of middle path, 382 00:25:04,200 --> 00:25:07,080 Speaker 1: how should we be looking at ever, grand So it 383 00:25:07,359 --> 00:25:10,280 Speaker 1: does feel like China is in a tight spot here, 384 00:25:10,280 --> 00:25:13,640 Speaker 1: in a difficult situation, because on the one hand, it 385 00:25:13,720 --> 00:25:18,040 Speaker 1: has said repeatedly that it wants to introduce moral hazard 386 00:25:18,119 --> 00:25:22,040 Speaker 1: into the system, It wants more fiscal discipline from its 387 00:25:22,040 --> 00:25:26,040 Speaker 1: real estate developers, precisely because they've built up so much debt. 388 00:25:26,200 --> 00:25:28,320 Speaker 1: But on the other hand, as you mentioned, a lot 389 00:25:28,359 --> 00:25:33,320 Speaker 1: of that financialization was basically driving China's economic growth. So 390 00:25:33,640 --> 00:25:37,200 Speaker 1: the authorities presumably also want to avoid a really big 391 00:25:37,240 --> 00:25:42,040 Speaker 1: destabilizing shock of a big failure that then cascades through 392 00:25:42,080 --> 00:25:45,879 Speaker 1: the property market. So it seems like they're in a 393 00:25:46,000 --> 00:25:51,040 Speaker 1: really difficult position. Yeah, I've actually been surprised how little 394 00:25:51,119 --> 00:25:55,560 Speaker 1: referenced there is to the seven Asian financial Crisis and 395 00:25:55,720 --> 00:26:00,720 Speaker 1: the Langdong housing market turmoid in that context, and by 396 00:26:00,720 --> 00:26:03,240 Speaker 1: no means an expert of that, I can just really 397 00:26:03,240 --> 00:26:06,080 Speaker 1: talk of the cuff on this topic. But my sense 398 00:26:06,119 --> 00:26:09,000 Speaker 1: is that in the late nineties, UM there was this 399 00:26:09,400 --> 00:26:13,919 Speaker 1: slogan of basically the forest being about to catch fire, 400 00:26:14,440 --> 00:26:17,760 Speaker 1: and there were also big companies that were basically let go, 401 00:26:18,000 --> 00:26:21,399 Speaker 1: even state owned companies, companies that were also active in 402 00:26:21,440 --> 00:26:24,720 Speaker 1: the real estate sector. So I think that to some 403 00:26:25,200 --> 00:26:30,320 Speaker 1: degree we see something very similar happening where there is 404 00:26:30,359 --> 00:26:33,159 Speaker 1: a sense that the situation in the real estate sector 405 00:26:33,200 --> 00:26:37,320 Speaker 1: has become exceedingly dangerous, as you point out, unless many 406 00:26:37,359 --> 00:26:40,480 Speaker 1: people have been saying for a long time, so that 407 00:26:40,760 --> 00:26:44,719 Speaker 1: there's an attempt of basically letting go of ever grant 408 00:26:45,240 --> 00:26:48,560 Speaker 1: before the whole forest catches fire. So it's kind of 409 00:26:48,600 --> 00:26:51,760 Speaker 1: like preparing for a big storm to come, so you 410 00:26:51,880 --> 00:26:54,640 Speaker 1: kind of get rid of the weakest parts in order 411 00:26:54,680 --> 00:26:57,199 Speaker 1: to make sure that if the storm actually comes you 412 00:26:57,240 --> 00:27:00,520 Speaker 1: are you are prepared. So in that sense, um, this 413 00:27:00,840 --> 00:27:05,080 Speaker 1: might be more targeted than it looks at the surface. 414 00:27:05,160 --> 00:27:07,320 Speaker 1: And that seems to also be an important difference with 415 00:27:07,400 --> 00:27:11,080 Speaker 1: the with the Lehman brother moment um. I mean, there 416 00:27:11,200 --> 00:27:13,879 Speaker 1: was this whole build up to this, this um, this 417 00:27:14,000 --> 00:27:19,320 Speaker 1: situation with the three lad Ryans and the increased capitalization 418 00:27:19,320 --> 00:27:22,560 Speaker 1: requirements and all of that that from the perspective of 419 00:27:22,760 --> 00:27:28,000 Speaker 1: the Chinese government clearly must have led to turmoil in 420 00:27:28,000 --> 00:27:31,119 Speaker 1: in in the real estate sector. Right, So as such, 421 00:27:31,160 --> 00:27:35,359 Speaker 1: I think this is preparing, I mean, basically cutting parts 422 00:27:35,359 --> 00:27:39,000 Speaker 1: that are clearly very unstable in order to kind of 423 00:27:39,600 --> 00:27:44,760 Speaker 1: secure the larger market, so kind of preventing the contation 424 00:27:44,840 --> 00:27:47,159 Speaker 1: before it even happens. But whether this will work or not, 425 00:27:47,320 --> 00:27:50,320 Speaker 1: it's it's an open question. And this is obviously a 426 00:27:50,359 --> 00:27:54,720 Speaker 1: speculative interpretation, right, I mean, it's it's very interesting, this 427 00:27:54,880 --> 00:27:57,640 Speaker 1: sort of like prairie fire idea. It's like you try 428 00:27:57,680 --> 00:28:00,600 Speaker 1: to have some you have a burn, but you sort 429 00:28:00,600 --> 00:28:02,679 Speaker 1: of hope that it could be a controlled burn and 430 00:28:02,720 --> 00:28:07,000 Speaker 1: then the ecosystem becomes healthier. Are there other times? I 431 00:28:07,040 --> 00:28:10,600 Speaker 1: mean if you look at the sort of like the 432 00:28:10,680 --> 00:28:15,159 Speaker 1: long scope of Chinese I guess Chinese usage or Chinese 433 00:28:15,240 --> 00:28:19,480 Speaker 1: taming of market, or you can think of similar approaches 434 00:28:19,640 --> 00:28:22,480 Speaker 1: of having done some sort of like let someone go 435 00:28:22,840 --> 00:28:26,119 Speaker 1: or let some pain persisted some parts of the economy, 436 00:28:26,160 --> 00:28:28,960 Speaker 1: and the hope that in the grand scheme of things, 437 00:28:29,000 --> 00:28:32,800 Speaker 1: it makes the system more resilient and robust. I've already 438 00:28:32,840 --> 00:28:37,879 Speaker 1: mentioned the Asian financial crisis. I think the privatizations of 439 00:28:37,920 --> 00:28:41,880 Speaker 1: the late nineties actually might be another one where there 440 00:28:41,920 --> 00:28:44,880 Speaker 1: was this whole slogan of grasping the big and letting 441 00:28:44,880 --> 00:28:47,080 Speaker 1: go of the small, where basically the idea was to 442 00:28:47,960 --> 00:28:55,360 Speaker 1: let go off small unprofitable state on enterprises with largely 443 00:28:55,400 --> 00:28:59,280 Speaker 1: outdated capital stocks in order to consolidate the state on 444 00:28:59,400 --> 00:29:05,200 Speaker 1: enterprise actor and UM thereby basically strengthen the viable parts 445 00:29:05,280 --> 00:29:08,360 Speaker 1: of the state and enterprise system. So in some sense 446 00:29:08,400 --> 00:29:12,480 Speaker 1: this is also to preserve the phil at pieces and 447 00:29:12,840 --> 00:29:16,000 Speaker 1: getting rid of the bones if you want so. Obviously, 448 00:29:16,000 --> 00:29:19,040 Speaker 1: this is a very different kind of scenario compared to 449 00:29:19,080 --> 00:29:23,240 Speaker 1: the realistic estate sector now, and in some sense it's 450 00:29:23,360 --> 00:29:26,280 Speaker 1: it's a reverse logic in in in that it is 451 00:29:26,360 --> 00:29:28,360 Speaker 1: letting go in the sense of letting go to the 452 00:29:28,400 --> 00:29:33,040 Speaker 1: market of the small enterprises. But nevertheless, I think this 453 00:29:33,040 --> 00:29:40,240 Speaker 1: this underpinning logic of preserving the essential, viable UM strategically 454 00:29:40,280 --> 00:29:46,760 Speaker 1: most significant parts of the system by sacrificing some other 455 00:29:46,840 --> 00:29:52,120 Speaker 1: parts might be to some extent a parallel. So one 456 00:29:52,160 --> 00:29:54,840 Speaker 1: of the things that stands out from talking to you 457 00:29:54,880 --> 00:29:58,480 Speaker 1: now is this idea of UM. You know, I think 458 00:29:58,560 --> 00:30:01,040 Speaker 1: Joe mentioned this as well, but the idea of China's 459 00:30:01,120 --> 00:30:05,120 Speaker 1: economic development not necessarily being a straight line in terms 460 00:30:05,120 --> 00:30:08,080 Speaker 1: of ideology. So you know, you can have trade offs 461 00:30:08,120 --> 00:30:15,000 Speaker 1: and interactions between free market reforms and socialist goals. And 462 00:30:15,440 --> 00:30:17,800 Speaker 1: there's an argument that's been made and I think we're 463 00:30:17,800 --> 00:30:21,400 Speaker 1: hearing it more and more that the West is sort 464 00:30:21,440 --> 00:30:27,120 Speaker 1: of growing more similar to China's economic model UM than 465 00:30:27,400 --> 00:30:30,840 Speaker 1: perhaps the opposite case, the idea of China actually growing 466 00:30:30,880 --> 00:30:34,280 Speaker 1: more capitalist in western in style UM. Some of our 467 00:30:34,320 --> 00:30:37,440 Speaker 1: previous add thoughts, guests like Victor Schwetz over at McQuary 468 00:30:37,640 --> 00:30:41,440 Speaker 1: has has made this argument, the idea that because of 469 00:30:41,560 --> 00:30:44,920 Speaker 1: covid UM, because of the pandemic and the economic crisis 470 00:30:44,960 --> 00:30:48,160 Speaker 1: after that, a lot of people feel that governments should 471 00:30:48,240 --> 00:30:51,560 Speaker 1: have more of an active role in how the market 472 00:30:51,600 --> 00:30:53,960 Speaker 1: works and how the economy works. A lot of people have, 473 00:30:54,160 --> 00:30:58,440 Speaker 1: you know, received unemployment benefits, a lot of people are 474 00:30:58,480 --> 00:31:01,760 Speaker 1: in favor of in first structure spending or maybe some 475 00:31:01,840 --> 00:31:05,440 Speaker 1: type of green deal, that sort of thing. So I 476 00:31:05,480 --> 00:31:10,040 Speaker 1: guess my question is what lessons can the West learn 477 00:31:10,600 --> 00:31:15,400 Speaker 1: from China's economic development? Yeah, great question, thank you, If 478 00:31:15,400 --> 00:31:16,960 Speaker 1: you don't mind, I would like to make a quick 479 00:31:16,960 --> 00:31:19,480 Speaker 1: comment on the idea of not a straight line. So 480 00:31:19,520 --> 00:31:21,960 Speaker 1: one of the things that I actually found in my 481 00:31:22,040 --> 00:31:24,479 Speaker 1: research on the nineteen eighties that a lot of the 482 00:31:24,560 --> 00:31:29,760 Speaker 1: first generation revolutionary leaders repeatedly we're arguing that China had 483 00:31:29,800 --> 00:31:32,960 Speaker 1: to go back to the strategies of UM the Civil 484 00:31:33,320 --> 00:31:37,760 Speaker 1: War and the immediate post liberation era, when the communists 485 00:31:37,800 --> 00:31:41,080 Speaker 1: were fighting and economic warfare against the nationalists in the 486 00:31:41,120 --> 00:31:45,720 Speaker 1: context of rampant hyper inflation. In that context, the communists, 487 00:31:45,720 --> 00:31:50,120 Speaker 1: as revolutionaries, as career fighters, as um as people who 488 00:31:50,160 --> 00:31:54,200 Speaker 1: were dedicating their life to the project of a communist revolution, 489 00:31:54,680 --> 00:31:57,560 Speaker 1: we're actually playing the market, and we're building up commerce 490 00:31:57,600 --> 00:32:02,640 Speaker 1: structures and we're recreating market links in the so called 491 00:32:02,680 --> 00:32:06,520 Speaker 1: liberated based areas. So in that sense, at the very 492 00:32:06,600 --> 00:32:10,920 Speaker 1: beginning of the Communist revolution, in the decades of revolutionary 493 00:32:11,000 --> 00:32:15,600 Speaker 1: struggled towards the revolution, the use of the market as 494 00:32:15,640 --> 00:32:21,560 Speaker 1: a tool in pursuit of socialist goals was an essential element. 495 00:32:21,760 --> 00:32:24,760 Speaker 1: So as such, yes, there's no straight line, because then 496 00:32:24,880 --> 00:32:27,400 Speaker 1: there is of course the whole moul Is period and 497 00:32:27,440 --> 00:32:32,760 Speaker 1: the treachers search for for an economic model in that context. Nevertheless, 498 00:32:32,880 --> 00:32:35,520 Speaker 1: this theme of using the market is one that is 499 00:32:35,560 --> 00:32:39,920 Speaker 1: really quite deeply ingrained in Chinese history. To the question 500 00:32:40,000 --> 00:32:42,400 Speaker 1: of how this links to the West and whether the 501 00:32:42,480 --> 00:32:46,200 Speaker 1: West can learn from China. In the book, I actually 502 00:32:46,240 --> 00:32:49,640 Speaker 1: also have a chapter on the World War two economy 503 00:32:49,760 --> 00:32:53,960 Speaker 1: and the immediate post war economy in the United States, 504 00:32:54,080 --> 00:32:56,440 Speaker 1: And that is for a reason in the sense that 505 00:32:57,120 --> 00:33:00,280 Speaker 1: in the eighties, when China was starting to create a 506 00:33:00,320 --> 00:33:03,560 Speaker 1: new kind of economic model, it was also looking to 507 00:33:03,720 --> 00:33:08,240 Speaker 1: the experience of the United States with planning, price controls 508 00:33:08,440 --> 00:33:13,760 Speaker 1: and pretty direct guidance of the state over the economy 509 00:33:13,800 --> 00:33:16,760 Speaker 1: in the war and its aftermath. So in that sense 510 00:33:17,560 --> 00:33:22,680 Speaker 1: we are seeing a increasing appreciation of industrial policy and 511 00:33:22,720 --> 00:33:25,400 Speaker 1: a certain rethinking of the state market relationship in the 512 00:33:25,480 --> 00:33:28,800 Speaker 1: vest that is inspired by China. But I think it 513 00:33:29,280 --> 00:33:33,479 Speaker 1: is not simply following China's example, but in fact it 514 00:33:33,560 --> 00:33:36,920 Speaker 1: is also quite deeply rooted in in the postal history 515 00:33:37,240 --> 00:33:39,920 Speaker 1: of the United States itself. So what I'm trying to 516 00:33:39,960 --> 00:33:42,440 Speaker 1: get here is that I think, um, it is a 517 00:33:42,480 --> 00:33:46,520 Speaker 1: good idea to not simply think in terms of China 518 00:33:46,560 --> 00:33:51,320 Speaker 1: and the United States, is these totally opposite models that 519 00:33:51,480 --> 00:33:55,800 Speaker 1: always have been different and that inherently are somehow completely 520 00:33:56,160 --> 00:33:59,720 Speaker 1: um not alike, but rather to see that there are 521 00:33:59,760 --> 00:34:03,920 Speaker 1: has worka constellations that are in the US that have 522 00:34:04,080 --> 00:34:07,040 Speaker 1: inspired China, and then there are also elements now in 523 00:34:07,160 --> 00:34:10,840 Speaker 1: China that are inspiring um the bdonomics and the redoing 524 00:34:10,840 --> 00:34:13,400 Speaker 1: of public investments on in the US. But in some 525 00:34:13,480 --> 00:34:17,480 Speaker 1: sense this is part of a history of mutual inspiration 526 00:34:17,800 --> 00:34:22,440 Speaker 1: rather than too economic models that have developed in silos 527 00:34:22,480 --> 00:34:25,440 Speaker 1: and that now like suddenly are looking at one another. 528 00:34:43,520 --> 00:34:45,839 Speaker 1: I want to bring up another sort of like I guess, 529 00:34:45,920 --> 00:34:49,520 Speaker 1: complicating aspect of the story. In China. We've talked about 530 00:34:49,560 --> 00:34:53,399 Speaker 1: real estate, and this is something that you know, Matt 531 00:34:53,520 --> 00:34:57,120 Speaker 1: Klein and Michael Petters brought uh discussed a lot in 532 00:34:57,160 --> 00:35:00,560 Speaker 1: their book trade Wars or class Wars, which is that 533 00:35:01,520 --> 00:35:05,000 Speaker 1: there is this class dynamic obviously in China. And part 534 00:35:05,040 --> 00:35:08,200 Speaker 1: of the reason, for example, that we may or that 535 00:35:08,520 --> 00:35:11,400 Speaker 1: there has been so much real estate speculation or so 536 00:35:11,480 --> 00:35:15,720 Speaker 1: much investment in housing, is because many in many people 537 00:35:15,800 --> 00:35:21,280 Speaker 1: have been deprived of savings opportunities, investment opportunities, so called 538 00:35:21,360 --> 00:35:26,239 Speaker 1: financial oppression. That there are basically policies designed to minimize 539 00:35:26,320 --> 00:35:29,880 Speaker 1: the incomes of workers and to maximize the wealth of 540 00:35:29,960 --> 00:35:34,280 Speaker 1: the elites. That the social safety net is not particularly 541 00:35:34,920 --> 00:35:39,480 Speaker 1: robust in China, and therefore that requires people to save 542 00:35:39,520 --> 00:35:42,840 Speaker 1: a lot for themselves, that deprives domestic demand and so forth. 543 00:35:43,440 --> 00:35:46,080 Speaker 1: I'm curious from your perspective, you're talking about these like 544 00:35:46,120 --> 00:35:50,040 Speaker 1: different tracks, these different models for thinking about Chinese economic development. 545 00:35:50,440 --> 00:35:53,319 Speaker 1: But how much of a problem or how much will 546 00:35:53,360 --> 00:35:57,640 Speaker 1: the rubber hit the road in your view, if China 547 00:35:57,719 --> 00:36:00,800 Speaker 1: continues to sort of go down to path in which 548 00:36:01,160 --> 00:36:05,719 Speaker 1: there really are sort of deprivation of safety net and 549 00:36:05,840 --> 00:36:10,800 Speaker 1: income opportunities for the typical working class. One of the 550 00:36:10,880 --> 00:36:16,680 Speaker 1: outcomes of marketization was the dismantling of the social safety 551 00:36:16,760 --> 00:36:19,879 Speaker 1: net that was there under the plant economy. Right. So 552 00:36:20,040 --> 00:36:24,800 Speaker 1: whereas in the European context, at least, we often think 553 00:36:25,040 --> 00:36:28,480 Speaker 1: of the social safe safety net as part of the 554 00:36:28,520 --> 00:36:33,080 Speaker 1: economy that is basically protected from marketization, and it is 555 00:36:33,200 --> 00:36:38,439 Speaker 1: organized based on principles of state provisioning rather than some 556 00:36:38,560 --> 00:36:44,200 Speaker 1: profit driven individual incentives of private or state firms. In China, 557 00:36:44,480 --> 00:36:47,359 Speaker 1: a large part of what we would consider as part 558 00:36:47,360 --> 00:36:51,680 Speaker 1: of of socio baffare has been very deeply marketized. So 559 00:36:51,719 --> 00:36:55,000 Speaker 1: in that sense, to go back to your entry question 560 00:36:55,040 --> 00:36:58,680 Speaker 1: of the of whether it's a capitalist or plant economy, 561 00:36:58,960 --> 00:37:01,960 Speaker 1: and that sense, China economy, even though the state plays 562 00:37:02,040 --> 00:37:04,799 Speaker 1: such an important role in the market, actually in some 563 00:37:04,840 --> 00:37:09,920 Speaker 1: sense it's more capitalist than some of the European countries. Now, 564 00:37:09,960 --> 00:37:13,080 Speaker 1: to go back to your question of class relations and 565 00:37:13,239 --> 00:37:16,319 Speaker 1: how viable that that is in in in the medium run, 566 00:37:16,960 --> 00:37:22,640 Speaker 1: I think that the tensions um within China are of 567 00:37:22,680 --> 00:37:27,120 Speaker 1: course considerable as regards inequality and so on. But my 568 00:37:27,200 --> 00:37:32,800 Speaker 1: sense is that um the pandemic has actually created pretty 569 00:37:32,840 --> 00:37:37,719 Speaker 1: widespread sense of proud within the Chinese people and a 570 00:37:37,800 --> 00:37:40,680 Speaker 1: sense that the system is actually I mean, it has 571 00:37:40,719 --> 00:37:43,760 Speaker 1: its flaws and all of that, but um as regards 572 00:37:43,760 --> 00:37:46,720 Speaker 1: public safety and so on, it is actually working quite 573 00:37:46,719 --> 00:37:50,279 Speaker 1: well for them, which which was quite unexpected when we 574 00:37:50,280 --> 00:37:54,239 Speaker 1: look back to early UM twenty. Now from a more 575 00:37:54,280 --> 00:37:58,200 Speaker 1: marker economic perspective, I think there's can be little doubt 576 00:37:58,400 --> 00:38:03,560 Speaker 1: that an increase in domestic demand is absolutely important. Um 577 00:38:03,680 --> 00:38:06,560 Speaker 1: So in that sense, I agree with the analysis of 578 00:38:06,920 --> 00:38:11,680 Speaker 1: Klient and Patties, even though as regards trade I wouldn't 579 00:38:11,680 --> 00:38:14,520 Speaker 1: see the class tension only in China, but I would 580 00:38:14,600 --> 00:38:17,480 Speaker 1: see this as as being linked also to class tensions 581 00:38:17,520 --> 00:38:21,080 Speaker 1: and in the rest of the wor. But on the 582 00:38:21,239 --> 00:38:25,399 Speaker 1: social safety net question, like there has been at least, 583 00:38:25,400 --> 00:38:27,319 Speaker 1: that's one of the questions I've had in my mind 584 00:38:27,440 --> 00:38:30,040 Speaker 1: is like, is that going to get built in a 585 00:38:30,080 --> 00:38:33,000 Speaker 1: more robust way. Is there going to be a significant 586 00:38:33,400 --> 00:38:38,200 Speaker 1: investment in say public health or something resembling social security 587 00:38:38,719 --> 00:38:40,880 Speaker 1: such that, I mean, as you mentioned, are ways with 588 00:38:41,080 --> 00:38:44,440 Speaker 1: China's maybe even more capitalist than Europe. Do you expect 589 00:38:44,520 --> 00:38:48,160 Speaker 1: that to be part of, part of part of this 590 00:38:48,239 --> 00:38:53,360 Speaker 1: new path. I think so yes. I think that as 591 00:38:53,400 --> 00:38:57,120 Speaker 1: as Dan Juan was also saying, UM, the doing circulation 592 00:38:57,200 --> 00:38:59,880 Speaker 1: and common prosperity at two big slogans that as the 593 00:39:00,560 --> 00:39:04,920 Speaker 1: pretty wake, but that kind of complementary the sense that 594 00:39:05,000 --> 00:39:10,120 Speaker 1: doural circulation means strengthening of domestic demand and UM common 595 00:39:10,160 --> 00:39:13,759 Speaker 1: prosperity means the goal, whether this will be achieved or not, 596 00:39:13,920 --> 00:39:18,040 Speaker 1: of moving towards that kind of olive shaped income distribution, 597 00:39:18,520 --> 00:39:23,240 Speaker 1: and also improved provisioning of public services for large parts 598 00:39:23,239 --> 00:39:27,120 Speaker 1: of China's population, which these two things go hand in 599 00:39:27,160 --> 00:39:30,080 Speaker 1: hand in the sense that if there is an improved 600 00:39:30,719 --> 00:39:34,759 Speaker 1: social safety net, then households have to save less privately, 601 00:39:34,920 --> 00:39:39,919 Speaker 1: can spend more. Therefore can enhance UM domestic demand UM 602 00:39:39,920 --> 00:39:42,719 Speaker 1: and therefore this is I think quite consistent with the 603 00:39:42,760 --> 00:39:46,359 Speaker 1: idea of tour circulation. I think one aspect that might 604 00:39:46,400 --> 00:39:50,840 Speaker 1: be interesting to take into account in the most recent 605 00:39:50,880 --> 00:39:55,440 Speaker 1: developments is that my impression is that there's a sense 606 00:39:55,560 --> 00:40:00,560 Speaker 1: in China of UM preparing for via the realist his sector, 607 00:40:00,640 --> 00:40:07,680 Speaker 1: but also more broadly preparing for a continued heightened instability 608 00:40:07,800 --> 00:40:11,680 Speaker 1: in the global economy, so that the timing of this 609 00:40:12,719 --> 00:40:19,360 Speaker 1: regaining control over strategically important sectors I think is also 610 00:40:19,960 --> 00:40:24,360 Speaker 1: connected to an attempt to kind of ring fans the 611 00:40:24,480 --> 00:40:29,520 Speaker 1: Chinese economy and prepare the Chinese economy for um possibly 612 00:40:29,800 --> 00:40:35,200 Speaker 1: pretty major turbulences had um And of course these attempts themselves, 613 00:40:35,600 --> 00:40:38,160 Speaker 1: as for example, in regard to climate change, can then 614 00:40:38,200 --> 00:40:41,640 Speaker 1: again unleashed termoils as we have just seen in the 615 00:40:41,960 --> 00:40:45,480 Speaker 1: energy market. Right, So it's not not necessarily the case 616 00:40:45,560 --> 00:40:50,319 Speaker 1: that trying to prepare for turmoil and trying to come 617 00:40:50,400 --> 00:40:54,720 Speaker 1: up with with policies that facilitate the kind of fast 618 00:40:54,800 --> 00:40:59,040 Speaker 1: structure change that seems to be um necessary not only 619 00:40:59,040 --> 00:41:00,920 Speaker 1: in China but around the I in order to respond 620 00:41:00,960 --> 00:41:04,440 Speaker 1: to climate change. Maybe a smooth right, But I think 621 00:41:04,480 --> 00:41:06,880 Speaker 1: that this is kind of part of the context in 622 00:41:07,000 --> 00:41:08,879 Speaker 1: terms of what we have been seeing and what we're 623 00:41:08,880 --> 00:41:12,640 Speaker 1: probably gonna see in the next months to come. So 624 00:41:13,360 --> 00:41:15,320 Speaker 1: this is one more thing that I realized we haven't 625 00:41:15,360 --> 00:41:18,239 Speaker 1: touched on during this entire conversation, which is going to 626 00:41:18,840 --> 00:41:22,760 Speaker 1: influence the question, but to what degree is China actually 627 00:41:22,800 --> 00:41:26,520 Speaker 1: worried about the middle income trap? Because we used to 628 00:41:26,600 --> 00:41:29,359 Speaker 1: hear all the time that you know, this was like 629 00:41:29,480 --> 00:41:32,680 Speaker 1: the ultimate threat to China's economy. They were really really 630 00:41:32,719 --> 00:41:35,440 Speaker 1: worried that they would go the same route as various 631 00:41:35,440 --> 00:41:38,319 Speaker 1: other Asian emerging markets and they would never be able 632 00:41:38,400 --> 00:41:40,080 Speaker 1: to get out of it, and that this was sort 633 00:41:40,080 --> 00:41:43,840 Speaker 1: of informing all of their economic policy decisions in the 634 00:41:43,840 --> 00:41:47,160 Speaker 1: way they were structuring their economy. But I don't know, 635 00:41:47,280 --> 00:41:50,560 Speaker 1: it feels like you don't hear so much about that anymore. 636 00:41:50,600 --> 00:41:53,080 Speaker 1: So I'm wondering if that's no longer perceived as like 637 00:41:53,680 --> 00:41:58,360 Speaker 1: a major threat. Yeah, interesting question. I mean, it seems 638 00:41:58,480 --> 00:42:02,960 Speaker 1: like that, at least until very recently, has been a 639 00:42:03,000 --> 00:42:06,480 Speaker 1: sense of new confidence in in China in terms of 640 00:42:06,520 --> 00:42:09,640 Speaker 1: its UH, its economic model and so on. But I 641 00:42:09,680 --> 00:42:15,880 Speaker 1: think that the strengthening of industry and the attempt to 642 00:42:15,920 --> 00:42:22,280 Speaker 1: reach and resources into semiconductor industries and to basically ensure 643 00:42:22,520 --> 00:42:27,040 Speaker 1: that China is um is strong in the upstream technology 644 00:42:27,360 --> 00:42:30,239 Speaker 1: intensive industries that has also been touched upon in the 645 00:42:30,320 --> 00:42:34,160 Speaker 1: interview with then One, in some sense can be seen 646 00:42:34,400 --> 00:42:38,640 Speaker 1: as part of china strategy to try to avoid being 647 00:42:38,880 --> 00:42:42,560 Speaker 1: trapped in in a middle income situation. Since I think 648 00:42:42,560 --> 00:42:46,239 Speaker 1: this is seen as some sort of a precondition for 649 00:42:46,320 --> 00:42:53,720 Speaker 1: the creation of native companies that have global competitiveness, which 650 00:42:54,000 --> 00:42:58,239 Speaker 1: again is at least one element of trying to um 651 00:42:58,280 --> 00:43:02,960 Speaker 1: not get stuck in a income trap, but instead for 652 00:43:03,200 --> 00:43:08,360 Speaker 1: to head to the technological frontier in key sectors, which 653 00:43:08,400 --> 00:43:13,720 Speaker 1: then has implications for the growth model. Well, uh, Isabelle, 654 00:43:13,840 --> 00:43:16,040 Speaker 1: I think that's a great place to leave it. Really 655 00:43:16,200 --> 00:43:18,880 Speaker 1: appreciate you coming on. Congrats on the new book and 656 00:43:18,960 --> 00:43:21,400 Speaker 1: all the praise it's getting. And thank you for joining 657 00:43:21,480 --> 00:43:24,520 Speaker 1: us on Outlock. Thank you so much for having me. 658 00:43:24,640 --> 00:43:27,000 Speaker 1: This has been great pleasure. Thank you for your great questions. 659 00:43:27,040 --> 00:43:29,560 Speaker 1: It's an honor to join you. Thanks. That was so good. 660 00:43:29,880 --> 00:43:44,960 Speaker 1: Really appreciate it. Thank you so much. So I found 661 00:43:45,000 --> 00:43:49,600 Speaker 1: it really helpful, Tracy, this sort of big picture historical sweep. 662 00:43:49,680 --> 00:43:53,759 Speaker 1: I mean, I think that like, look, this idea that hey, 663 00:43:54,000 --> 00:43:57,040 Speaker 1: you know other Dan has talked about this before another, 664 00:43:57,239 --> 00:44:00,560 Speaker 1: this idea of like markets serving a broader purpose and 665 00:44:00,719 --> 00:44:03,600 Speaker 1: markets not being an end to themselves. But I think, uh, 666 00:44:04,120 --> 00:44:06,759 Speaker 1: Isabella did a really good job sort of talking about 667 00:44:06,800 --> 00:44:09,879 Speaker 1: this just like it's kind of dangerous, it's risky, like 668 00:44:10,160 --> 00:44:12,319 Speaker 1: things can get out of control. And I think she 669 00:44:12,400 --> 00:44:14,640 Speaker 1: used the term dancing with the tiger at some point, 670 00:44:15,600 --> 00:44:19,080 Speaker 1: and I think thinking about like Evergrand or maybe the 671 00:44:19,239 --> 00:44:22,520 Speaker 1: rise of say the private tutoring industry, even though it 672 00:44:22,520 --> 00:44:25,920 Speaker 1: doesn't have the same financial implications, sort of a good example. 673 00:44:25,920 --> 00:44:28,680 Speaker 1: It's like you can aim for that, and China has 674 00:44:28,760 --> 00:44:33,320 Speaker 1: arguably done a good job, you know, obviously lifting millions 675 00:44:33,320 --> 00:44:36,040 Speaker 1: of people out of poverty, but there are risks left 676 00:44:36,080 --> 00:44:39,719 Speaker 1: it right to the model when you introduce markets to 677 00:44:39,760 --> 00:44:43,000 Speaker 1: the world, right, I mean to me, Evergrand is sort 678 00:44:43,040 --> 00:44:47,120 Speaker 1: of the the ultimate expression of that tension. But I 679 00:44:47,160 --> 00:44:50,759 Speaker 1: think two things that stood out for me from that conversation. 680 00:44:51,239 --> 00:44:54,760 Speaker 1: One was this idea that you know, China is willing 681 00:44:54,880 --> 00:45:00,239 Speaker 1: to allow markets to build up certain industries and kind 682 00:45:00,239 --> 00:45:05,600 Speaker 1: of ignore them until they actually become pervasive and important. Um. 683 00:45:05,640 --> 00:45:07,680 Speaker 1: And again, like, I think this is something that you've 684 00:45:07,680 --> 00:45:12,279 Speaker 1: seen most clearly recently with the consumer tech crackdowns. Um, 685 00:45:12,320 --> 00:45:15,560 Speaker 1: it does feel like everyone realized what an enormous part 686 00:45:15,560 --> 00:45:18,160 Speaker 1: of the economy those had actually become, and so the 687 00:45:18,200 --> 00:45:21,239 Speaker 1: authorities started paying more attention to them. And then the 688 00:45:21,280 --> 00:45:23,240 Speaker 1: other thing that stood out to me was this idea 689 00:45:23,560 --> 00:45:30,680 Speaker 1: of a sort of fluid relationship between socialism and capitalism. 690 00:45:30,719 --> 00:45:34,440 Speaker 1: So this idea, that it doesn't develop in a straight line, 691 00:45:34,800 --> 00:45:39,040 Speaker 1: or your ideology doesn't necessarily um unfold in a straight line, 692 00:45:39,600 --> 00:45:42,640 Speaker 1: and that um, you know, China and the West can 693 00:45:42,760 --> 00:45:47,480 Speaker 1: actually share some characteristics. So Isabella had that great example 694 00:45:47,680 --> 00:45:51,360 Speaker 1: of you know, Western economies after World War Two in 695 00:45:51,400 --> 00:45:54,040 Speaker 1: the nineteen fifties and nineteen sixties, where there was a 696 00:45:54,040 --> 00:45:59,399 Speaker 1: lot of government expenditure on infrastructure and social programs. Um. 697 00:45:59,480 --> 00:46:02,000 Speaker 1: And I that's also a great reminder that these things 698 00:46:02,120 --> 00:46:08,600 Speaker 1: can ebb and flow. Yeah. Absolutely, that is super helpful. 699 00:46:08,640 --> 00:46:11,200 Speaker 1: And you know, I guess maybe another way I'm thinking about, 700 00:46:11,520 --> 00:46:14,839 Speaker 1: you know, because we started, when we started doing these 701 00:46:14,880 --> 00:46:18,200 Speaker 1: recent series of China episodes. I'm sure we'll do more 702 00:46:18,320 --> 00:46:21,359 Speaker 1: in the near future. You know, as I keep going 703 00:46:21,360 --> 00:46:23,319 Speaker 1: back to this question, like what is the what is 704 00:46:23,320 --> 00:46:26,280 Speaker 1: the goal here? What what's the so called like endgame? 705 00:46:26,360 --> 00:46:30,000 Speaker 1: And I'm starting to feel like maybe it you know, 706 00:46:30,040 --> 00:46:33,160 Speaker 1: it's like you have these like two tracks, the something 707 00:46:33,239 --> 00:46:37,440 Speaker 1: that resembles more socialists, something that resembles more sort of 708 00:46:37,480 --> 00:46:42,080 Speaker 1: like Western style liberalism and capitalism. Does feel like what 709 00:46:42,120 --> 00:46:45,719 Speaker 1: we're seeing right now is a sort of recognition that 710 00:46:46,320 --> 00:46:50,359 Speaker 1: China perhaps had gone too far down the sort of 711 00:46:50,400 --> 00:46:53,919 Speaker 1: like liberalized track, it is trying to make a hard 712 00:46:53,960 --> 00:46:57,200 Speaker 1: pivot to the other one. And I think maybe you know, 713 00:46:57,960 --> 00:47:00,000 Speaker 1: Isabella brought up like this idea. It's like, Okay, it's 714 00:47:00,040 --> 00:47:03,759 Speaker 1: one thing if an e commerce company sells books or 715 00:47:03,840 --> 00:47:06,640 Speaker 1: use books online. It's another thing if like they also 716 00:47:06,760 --> 00:47:10,600 Speaker 1: run like every like payment system that everyone uses. And 717 00:47:10,719 --> 00:47:14,239 Speaker 1: so maybe there's just the sort of recognition that right 718 00:47:14,239 --> 00:47:17,160 Speaker 1: now there's this moment to like skip over to the 719 00:47:17,200 --> 00:47:20,280 Speaker 1: other skip back to the other track, and remind everyone 720 00:47:20,360 --> 00:47:23,480 Speaker 1: what the purpose of all this is. Yeah, totally. And 721 00:47:23,840 --> 00:47:26,680 Speaker 1: again we've spoken about this before, but there are plenty 722 00:47:26,800 --> 00:47:30,200 Speaker 1: of Western governments out there who would probably like to 723 00:47:30,320 --> 00:47:33,680 Speaker 1: do a similar thing with their tech companies, And of 724 00:47:33,719 --> 00:47:35,840 Speaker 1: course the difference would be, you know, they would do 725 00:47:35,880 --> 00:47:37,680 Speaker 1: it in a different way, and it would take years 726 00:47:37,680 --> 00:47:39,480 Speaker 1: and years to get done, and no one would agree 727 00:47:39,520 --> 00:47:42,520 Speaker 1: on what actually needed to be done, um, in order 728 00:47:42,560 --> 00:47:45,600 Speaker 1: to curb big tech. But um, you know where we are. 729 00:47:45,640 --> 00:47:47,920 Speaker 1: And again, it kind of like goes back to that 730 00:47:48,080 --> 00:47:52,480 Speaker 1: idea of similarities between the two economic models, or at 731 00:47:52,520 --> 00:47:56,040 Speaker 1: least they sort of like switch back and forth maybe 732 00:47:56,160 --> 00:48:00,200 Speaker 1: between socialism and capitalism more than we actually real eyes 733 00:48:01,040 --> 00:48:04,080 Speaker 1: absolutely well, lots more. I'm sure we'll be talking about 734 00:48:04,080 --> 00:48:06,879 Speaker 1: this a lot more in the in the weeks to come. Yeah, 735 00:48:06,920 --> 00:48:08,960 Speaker 1: so much more to come. Okay, shall we leave it there? 736 00:48:09,520 --> 00:48:12,680 Speaker 1: Yeah's leave it there? All right. This has been another 737 00:48:12,719 --> 00:48:15,799 Speaker 1: episode of the All Thoughts Podcast. I'm Tracy Alloway. You 738 00:48:15,800 --> 00:48:19,279 Speaker 1: can follow me on Twitter at Tracy Alloway and I'm 739 00:48:19,400 --> 00:48:21,800 Speaker 1: Joe Why Isn't All? You can follow me on Twitter 740 00:48:21,960 --> 00:48:25,320 Speaker 1: at the Stalwart. Follow our guest Isabella Faber on Twitter. 741 00:48:25,480 --> 00:48:29,719 Speaker 1: She is at Isabella M. Faber, Assistant Professor of Economics, 742 00:48:29,880 --> 00:48:33,240 Speaker 1: UMass and the author of the new book China Escaped 743 00:48:33,360 --> 00:48:37,280 Speaker 1: Shock Therapy the Market Reform Debate. Be sure to follow 744 00:48:37,320 --> 00:48:41,360 Speaker 1: our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. 745 00:48:41,640 --> 00:48:45,640 Speaker 1: Follow the Bloomberg head of podcast, Francesco Levi at Francesca Today, 746 00:48:46,040 --> 00:48:49,040 Speaker 1: and check out all of our podcasts at Bloomberg under 747 00:48:49,080 --> 00:49:16,680 Speaker 1: the handle at podcasts. Thanks for listening to