Keyu Jin: evaluation

Transcript context

…All right. So there has been this miracle in the Chinese economy from after Mao, under Deng Xiaoping, where the Chinese economy got transformed and grew incredibly. So can you explain what happened? The different transformations that happened, the different reforms that happened under Deng Xiaoping? Deng Xiaoping was by far our most pragmatic leader and I think everybody’s grateful to Deng Xiaoping. My father’s generation would not have seen that amount of prosperity and peace and opportunity without Deng Xiaoping. It started in the late 1970s when Deng Xiaoping came out with this open up and reform mandate. And it was very tough. Again, coming back to the big misunderstanding of China, it’s not as if one leader decides that that’s what we’re going to do and then everybody follows order and does that. No. There are tons of political barriers, tons of incentive compatibility problems at the local level. In the end, you need the local provincial governors, the mayors to do the job. And how many prefectures are there in China? A lot. And they have their own interests. We know this around the world, politically it’s the most difficult thing to do. But somehow Deng Xiaoping was able to break tradition, break convention, come out with this completely new way of thinking about society, life and economy. And it was so transformative. I remember people of that generation told me one time that society was going to focus on the economy. Really? Why would they do that? Wasn’t it politics? Wasn’t it everything about politics and struggle and ideology? So for them that the whole country and the government is going to focus on the economy was just so shocking. Even though we take it for granted now. That shows you that breaking that mold was incredibly difficult. But I think opening up was a really momentous thing that China did. And it wasn’t just joining the WTO, they were doing a decade of work in preparation leading up to that. What’s called Special Economic Zone is really to turn Shenzhen from a fishing village to an export platform, now to a Chinese-style Silicon Valley. And there was the agricultural reforms in the 1980s that meant that farmers could decide what they were going to grow and keep the surplus. Whereas it was a collective system before. You know that very well. And then of course, the ultimate transformation was when China actually joined the WTO in 2001. And the rest of it is history. We’re still talking about the aftermath. But reforms was the single biggest impetus to Chinese growth. And every time there was a major reform, it was followed by a good decade-long growth. Every time growth went down, there was a new series of major reforms rolled out and then, oops, that led to another wave of good growth. But I’d say that reform pace has slowed in the last 15 years, but are there reforms to be done? Yeah, absolutely. Has China reached even close to its potential? Not at all. But again, it comes back to politics. Now it’s less about economics, it’s more about national security, it’s more about politics. And I think that is probably the single biggest barrier to continued good economic growth. Maybe can you speak to what it takes in such a large system, in many ways such a successful economy, to do reform? So you mentioned pragmatism. Deng Xiaoping famously said that, “It doesn’t matter whether the cat is black or white, as long as it catches mice.” So there’s that pragmatism that I think underlies a lot of great reforms…

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