The nine-dash line. The militarized islands in the S. China Sea. Harassing flights and ships around Taiwan. The Belt and Road Initiative (BRI). Surveillance cities. Tik Tok. Networking technologies. Eileen Gu. Semiconductor chip bans. DeepSeek.
The headlines around the People’s Republic of China (PRC) come thick and fast, with a variety of narratives, many of them adversarial. There are predictions of the country having reached “peak China” and dropping fast. Others suggest that the population demographics will leave the country hurting and no contender for the number 1 economic slot in the world. Others suggest that there are ulterior motives on so many dimensions of China, “Chinese whispers,” if you will.
The New China Playbook: Beyond Socialism and Capitalism (2023) uses a biographical and economical-professional frame to discuss China. To hear Dr. Keyu Jin, professor of economics at the London School of Economics and Political Science, tell it, China is on an upward swing and is only getting started. It is working its economic and political levers to position the country for ever greater things.
She writes:
In the early 1980s, my family—and all the families I knew—were living on rationed food coupons. Eggs, cooking oil, sugar, meat, cloth, soap, and many other daily necessities were subject to strict monthly rations. Life in a twenty-square meter apartment with a shared communal kitchen and lavatory was considered luxurious. We cooked our meals on coal-burning stoves. Electric power was so unreliable that blackouts were considered the rule rather than the exception, even in Beijing, the nation’s wealthiest city.
Born into privilege, the single child of an official in Beijing and his wife, Jin watched as Deng Xiaoping’s policies went into action and unleashed the formerly restrained potential of the Chinese people. She recalls a pair of pink boots her father brought home from his trip to Korea and how she basked in the attention from that well-made footwear. In 1997, she became a teenage Chinese exchange student at the Horace Mann School in NYC. That youthful experience challenged her sense of what was universal truth and laid the groundwork, in a sense, for her career to come. She writes:
In the decades that followed my high school studies in the Bronx, China has forged a unique economic model well suited to its purposes, aligned with its national conditions, and authentic to its culture…The rule of law, sound corporate governance, and intellectual property protection—all long held up as essential to long-term growth—have been weak during much of China’s economic upsurge. Yet somehow China’s approach seems to have succeeded. A large segment of China’s population has been lifted into the middle class. Twenty million private firms have sprung up like mushrooms, when only thirty years ago they couldn’t even legally conduct normal business. In 2019, China had the world’s largest number of unicorn companies (private firms valued at $1 billion or more).
Jin boasts undergraduate and graduate degrees from Harvard University. She worked at the China Banking and Insurance Regulatory Commission, the World Bank, and the IMF, prior to her work in academia. She brings a cosmopolitan sensibility to this book and a finesse in touching on potentially politically touchy issues.
Her audience seems to be the larger world. For example, she writes:
Extended skirmishes, export bans of semiconductors, and tariffs are reinforcing China’s assertiveness and setting it on a course of national mobilization to attain self-reliance.
She also seems to have a warning for China (but perhaps also for the U.S.): “The mindset of self-sufficiency without continued global engagement is a dangerous one in a world where prosperity and technological proficiency are increasingly network based and interdependent.”
In this book, she offers a sense of both long history (back to the days of emperors) but also more recent history. She also brings a data-fied and economics approach in describing China.
She offers a straightforward narrative to explain why the country pursued manufacturing with breakneck speed and powerful investments, albeit with less in the way of focuses on IP protections and perhaps government oversight. She explains how government incentives for GDP growth has led to bridges to nowhere and ghost cities and other build-outs.
As a large country, the PRC’s changes take time and vision and incentives. In the intervening years, the private sector has come more to the fore. Jin observes:
it is the private sector that accounts for more than 60 percent of national output, 70 percent of the nation’s wealth, and 80 percent of urban employment. Thirty years ago, it was the other way around.
A core understanding of this book is that there are perception gaps between what the world thinks of the PRC and the on-ground realities, which can lead to unfounded fears and suspicions.
In the period when much of China’s businesses and industries were state-owned enterprises (SOEs), the focus on the size of each entity ended up with unintended consequences. She writes:
With growth as the primary measure of success, many SOEs heedlessly gathered assets of all kinds and ventured into areas far removed from their core business or expertise. A customer walking into one defense contractor’s office tower could buy a painting on the third floor and a missile system on the twenty-seventh; that same company also sold sports cars and operated national theaters, opera houses, and the third-largest art auction house in the world.
The “socialism with Chinese characteristics” reads like an N = 1, even as some of the policy approaches are positive to apply perhaps in other socio-political contexts. The other terms referring to China’s approach is “managed capitalism” and “the mayor economy.” Here, the state plays a paternalistic role in both economics and politics. China has political centralization and economic decentralization, in her telling. She suggests that the state can be a huge boon to “immature markets.”
A regular point of comparison is between China and the U.S., the respective #2 and #1 in terms of the world economy. In one anecdote, she compares two airports, one stateside and one in Beijing. In this comparison, the U.S.’s comes across as “legacy” and “incumbent” in negative ways. She notes: “China has strong state capacity and weak institutions, whereas advanced countries like the United States have strong formal institutions but state capacity is gradually eroding.” In another section, she describes the challenge to the U.S. dollar as the world’s reserve currency.
The entrepreneurs in China have to contend with surprise policies that may emerge from the state. As such, they have to work through complex social environments, and they have to adapt. Jin writes: “Consumers, entrepreneurs, and the state: in China none of them behaves like a conventional economic agent.” She describes the balance that the state makes to allowing some corruption to motivate human agents…but the importance of their putting a limit to corruption or else risk the functioning of the system.
She lays down a few markers for how China’s economic model might vindicate itself:
First, China must make the shift from being a $10,000 per capita income nation to a $30,000 per capita income nation. Getting there will not be as easy as reaching the first goalpost of $10,000 was. Second, it needs to demonstrate that it can do a better job than free market economies of addressing the most intractable problems of capitalism and globalization, such as rising inequality, displacement of jobs by technology, and the diminishing expectations of the younger generation, which in an age of unprecedented abundance is more disillusioned than generations that had much less.
Keyu Jin looks at the new generation of one-child individuals as fundamentally changing the country. She sees them as much more willing to spend moneys instead of saving. She also sees them as socially conscious. There is more of an ability for them to take risks and be entrepreneurial. While there is greater openness for different points of view, most are savvy enough not to touch the third rail of Chinese politics, especially in the much-surveilled spaces of social media:
So long as postings do not touch the third rail—subversive views of the party itself or attacks on very senior party officials—a wide range of politically and socially sensitive issues are tolerated.
Scoring systems affect many aspect of Chinese citizens’ lives, including the ability to be in lottery drawings to bid to buy high-end properties (such as in Shanghai). Staying in good standing requires knowing which redlines to avoid.
Near the end of the text, Jin does a quick audit. She writes:
China can manufacture generic drugs, but not branded pharmaceuticals. It is proficient in designing semiconductors, but it doesn’t have foundries that manufacture integrated circuits. Chinese medical companies are successful service providers, but they still rely on imports for the latest medical equipment. It is the world’s manufacturer and deployer of green energy technologies, but not their inventor.
She makes no bones about it: China is going for it, to be #1.
The New China Playbook: Beyond Socialism and Capitalism moves between micro and macro economics. It may serve as a readable primer for how to engage one of the more complex markets in the world today—as an investor, as a business owner, and as a buyer. That said, knowing is only one part of it. The actual doing becomes that much more challenging.
Shalin Hai-Jew has worked in higher education for many years. She has edited dozens of nonfiction educational books and authored a dozen with a number of publishers.
