Speaker 1: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenebek on Bloomberg Radio.
Speaker 2: You know, every day we get a bunch of headlines
Speaker 2: out of China, and the most recent or at least
Speaker 2: over night, China's economic recovery losing some momentum after we
Speaker 2: saw an initial burst and consumer and business activity early
Speaker 2: in the year. So it's been prompting some calls from
Speaker 2: our policy stimulus to bolster growth. But I do feel
Speaker 2: like Matt, on any given day, we're either seeing the
Speaker 2: Chinese government get more involved in this sector, or there's
Speaker 2: concerns again about transparency or just figuring out China's role
Speaker 2: going forward.
Speaker 1: Yeah, I mean, I also think the next chapter, investors
Speaker 1: are hungry for more information on China, right. Investors here,
Speaker 1: I think would like to know as much as possible
Speaker 1: and would like to get more insight on and understanding
Speaker 1: on how China works.
Speaker 2: Right, And I think we thought we had the playbook,
Speaker 2: and there's actually our next guest has written a book
Speaker 2: that's called The New China Playbook. Beyond Socialism and Capitalism.
Speaker 2: Kayu Jin is the author. She's also professor of economics
Speaker 2: at the London School of Economics. She joins Matt and
Speaker 2: me here in studio. Kay, you really good to have
Speaker 2: you here with us. We only have six minutes. I
Speaker 2: wish we had like twenty because I love this subject.
Speaker 2: But our Adam Minta wrote a story about what the
Speaker 2: West gets wrong about China? What do we get wrong?
Speaker 2: In our conversations are questions and thinking about what China
Speaker 2: is up to right now?
Speaker 3: Well, first of all, that there's only one model that
Speaker 3: can work, Western style capitalism, where China.
Speaker 2: Has that we believe that that's the only thing that's
Speaker 2: the work.
Speaker 3: And that China has a centralized approach domined by an
Speaker 3: almighty state. It's not at all like that. It's the
Speaker 3: decentralized economic mechanisms, the Mayor economy which I wrote about,
Speaker 3: that has galvanized creativity, innovation, pushing for reforms, and even
Speaker 3: protecting the environment.
Speaker 1: So how I mean, aside from reading your book, which
Speaker 1: I'm sure is a great step, right, how can investors
Speaker 1: better understand the Chinese economy how it works when we're
Speaker 1: constantly looking at headlines that are rife with miss in
Speaker 1: I don't know if misinformation is too strong, but definitely
Speaker 1: they're biased.
Speaker 3: Right, It's really important to separate hype from reality and
Speaker 3: the macro versus micro And even if the great leaders
Speaker 3: of any country, US and China say a lot of things,
Speaker 3: you might want not to read too much into the
Speaker 3: message and see what's actually going on on the ground.
Speaker 3: People who visit China will have a better view. People
Speaker 3: who look at data, which my book does and systematic
Speaker 3: evidence will understand better. But right now there's a coexistence
Speaker 3: of irreconcilable things that the West beliefs that can actually
Speaker 3: coexist at the same time in China.
Speaker 1: But getting on the ground is kind of what I
Speaker 1: was where I was going. Do you tell your students
Speaker 1: go to China? I mean, you can read my book right,
Speaker 1: and you can study the country all you like, but
Speaker 1: if you don't go there, you're never going to really
Speaker 1: understand how this society works.
Speaker 3: If people can go there, they'll form a much more
Speaker 3: positive impression than if they won't. But it's also important
Speaker 3: to suspend this historical lens and this bias that we
Speaker 3: inherently have and look at China in a different perspectives,
Speaker 3: see it for its own, see through a different lens.
Speaker 2: Well, all right, slow down for a second, because what
Speaker 2: I mean, many would say you know, what is it
Speaker 2: in terms of China about human rights and restrictions. That's
Speaker 2: true right in terms of what's at on social media,
Speaker 2: But are you saying and that folks in China they're
Speaker 2: kind of comfortable with that and that protectionism that their
Speaker 2: leaders are giving them.
Speaker 3: There's an implicit contract historically since history between the people
Speaker 3: and the government that there's some level of deference, although
Speaker 3: not blind submission, in exchange for security, government accountability, responsibility,
Speaker 3: and economic delivery. That still holds today. They should talk
Speaker 3: to people on the ground and Chinese people think, ask
Speaker 3: them what they feel about these politicals.
Speaker 2: Everybody, though, help me out here with a younger generation,
Speaker 2: Like there's differently stories about you know, unemployment rate in
Speaker 2: China surging to a record of twenty percent. Tell me
Speaker 2: that there aren't younger Chinese individuals Like this isn't working
Speaker 2: for me.
Speaker 3: The new generation is super important for China's future. It's
Speaker 3: going to shape it, and it's meaning a relationship with
Speaker 3: the world. They're a positive force because look, they like
Speaker 3: to spend and borrow, not to save as much, and
Speaker 3: they're quite open minded and their values converge with the West.
Speaker 3: But today the pressing problem is that education has raised
Speaker 3: ahead of the economy, and many of the highly educated
Speaker 3: are not productively deployed.
Speaker 1: We do see an opaqueness though, right when jack Ma
Speaker 1: disappears or when a Bloomberg journalist is arrested and not
Speaker 1: heard from for a year, that's difficult for us to
Speaker 1: wrap our heads around. Is that something that Chinese people
Speaker 1: grow up understanding? Is that something that Chinese people accept
Speaker 1: and what are we.
Speaker 2: Getting wrong about that? Because that's happening.
Speaker 3: Yeah, that spooks people, That spooks investors and confidence, which
Speaker 3: is what is missing the Chinese economy today. But look,
Speaker 3: you know the old playbook, it was about building factories, industrialization.
Speaker 3: You didn't need that much in.
Speaker 2: Go back to missing journalists or missing Jackma.
Speaker 3: Jackma is called back now he's.
Speaker 2: A year later. But it was really odd, right, and
Speaker 2: here's a very prominent, you know, technology global figure and
Speaker 2: someone that China was proud of in terms of what
Speaker 2: he had built. So how do what did we get
Speaker 2: wrong about that? Or how do you in.
Speaker 3: The in the US capital it can arguably arguably rises
Speaker 3: above politics in China, that can never be the case.
Speaker 3: This is why China is not a capitalist society. Jackma
Speaker 3: uh without going to his exceptional case is now needed
Speaker 3: very much entrepreneurs like him because the economy is needed
Speaker 3: and so important thing to know is that policy can
Speaker 3: swift radically, change dramatically. Never read anything as permanent.
Speaker 1: But are you saying that it's okay for a government
Speaker 1: to just disappear people that makes investors? Does that not
Speaker 1: make you uncomfortable even as a citizen. That would worry
Speaker 1: me as a person.
Speaker 3: It's not It's not okay at all. And the government
Speaker 3: is learning the painful lesson of by by seeing that
Speaker 3: the economy hasn't rebound as quickly, that investors are not
Speaker 3: rushed back to look into China, that private entrepreneurs might
Speaker 3: be holding back. It's all happening today. That's a lesson, ky.
Speaker 2: You what is the global value chain going forward? In
Speaker 2: China's role in that because it's been the manufacturer to
Speaker 2: the world and we were all we all benefited by it, right,
Speaker 2: goods cost very little, But what is you know, their
Speaker 2: value chain going forward?
Speaker 3: China's aspiration is not really to compete become like a US.
Speaker 3: It wants to be a bigger, smarter Germany. That means,
Speaker 3: bolstered by the triangle of AI communications and data. They
Speaker 3: want to think themselves as a technical industrial power, not
Speaker 3: a knowledge financialized economy like the UTH.
Speaker 2: But can they get there with the concerns and kind
Speaker 2: of nervousness that many other worlds feel right now?
Speaker 3: Now you see it comes to China. Is why it's
Speaker 3: so hard to lead China, right, It's so hard to
Speaker 3: if you step from mouse how you're thinking, Oh, this
Speaker 3: environment can never foster innovation. I don't. I don't agree
Speaker 3: necessarily with that because on the ground, the domestic innovation
Speaker 3: system is all encompassing. This is a massive market. Foreign
Speaker 3: companies think that this is the fitness ground to train
Speaker 3: their own their own companies, and there's a close proximity
Speaker 3: proximity between AI autonomous vehicles and chip industries that stimulate demand.
Speaker 3: So I would underestimate China's central advantages in technology.
Speaker 2: Ran out of time.
Speaker 1: Come back, I need more time.
Speaker 2: I'd love to. I wish we had great I wish
Speaker 2: we had more time. So come back and let's continue this.
Speaker 2: I would love it. Ku Jin Professor Economics at LC
Speaker 2: the London School of Economics. Her book is called The
Speaker 2: New China Playbook, Beyond Socialism and Capitalism. It is out
Speaker 2: now this is Bloomberg,