How China's Economy Actually Works

Professor Chenggang Xu (Cheung Kong Graduate School of Business) explains what the world commonly misunderstands about Chinese economic growth and reform.

[holdinmuhl]

I did not expect that there is a continuity from the Cultural Revolution through Deng Xiao Ping's reforms to today's economic structure and achievments. This is the best I have heard about the Chinese economic system for years. Thank you!

[Daddyisanuncle]

As a foreigner who serves the Chinese, Singaporean and the Hong Kong consumers over the past decade, I can safely say those days where Chinese were found shitting by the streets are gone, where Hong Kongers stupidly belittled China for lack of culture are gone. Their resilience took them through the global culture shock, painstakingly endured the economic change, with more holistic and civic-conscious education. Their values of staying brave in the face of humiliation is something I don’t find in other nations.

[fturla___]

Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing. A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"

[TheLeaderr]

There was a difference in focus. Before the late 70s, the main focus was to prepare for the next war or revolution, hence the production capacity did not produce much that can be measured by modern economic metrics.

For example, to prepare for an invasion against the USSR, project "Third Front" was initiated in 1964, i.e. splitting research institutes and factories into multiple units and moving those units from major cities into the mountains and far reaching countryside. Another symbolic project was the R&D of nuclear weapons and its launching systems, i.e. ICBMs. Such enormous projects had contributed absolutely nothing to this so called GDP growth, but were carried out purely from a survival standpoint.

What Deng Xiaoping did in the late 70s was to switch China from a war/revolution mode to an economic development mode, as he anticipated a rather peaceful global environment, i.e. no WW3 were to happen in the coming 30-40 years. The rest is history...

This guy's view is pretty ridiculous, he has made it sounds like China was nothing, and bang! Everything showed up out of nowhere during the 80s, a textbook neoliberal narrative, which fits his resume quite well.

A few very simple metrics that should be taken into context, 1) the live expectancy in China was about 40 years in 1949, and it went up to 65 in 1979; 2) the literacy rate in china in 1949 was around 20% and it went up to 70% in 1979. There are countless metrics like these, that have greatly contributed to the economical development of China in the past 40+ years, intentionally leaving them out is a great injustice to say the least.

[SportsIncorporated]

This was absolutely great. But at the same time, it only feels like Part I.

[KunjaBihariKrishna]

I love the way he randomly smiles in syncopation with his sentences

[nigerianprince]

Definitely needs a part 2. Awesome interview

[DAVIDDAVID-nvse]

Mr.Xu's explanations are well-articulated and being developped in a clear way. Look forward to the next part.

[johnmaisonneuve]

So good to get a very good explanation/account of China’s economic development that provides much insight rather than the usual journalistic account. This is really informative.

[mifkan]

This is dialectics in actions. Material analysis leads to theory, theory leads to practice, which leads to analysis of material conditions. Any society that loses this agility to self correct and experiment is doomed.

[Iknowknow]

It should also be kept in mind that for 100s of years China was the wealthiest and self-sufficient economy possibly in history!
Once China was forced to interact with Western Europe it quickly fell from being rich and able to poor and helpless. The same is s true for most of the world to varying degrees.
China is leading the way out of the illness of Western domination which is why it's cast as a threat and a villain.

[cboy]

Amazing analysis. This is why I love this channel. This definitely needs a Part II.

[albertdittel]

At the beginning he says, that China cannot be called a superpower because its per capita GDP is so much lower than the one of the US. So I would like to ask:can the US ever challange the current super power and world hegemon Luxembourg?

[chicagofineart]

This perspective has deepened my appreciation of Chinese culture. I've always felt there is something in, call it the "Chinese System", that succeeds beyond any single philosophy that overlays it. There isn't any one thing that explains the dogged persistence of Chinese people to succeed in spite of all obstacles. And as a personal observation I am struck at the importance of Family Reputation in maintaining social connections. Yet, for many possibly most Chinese, life remain rather grim. Still there is a sense that China will endure all things.

[kindface]

Fantastic summary of the economic reform in China.

[ipfreak]

also a bit more than 80% of labor forces work for private sectors, state enterprises only employ less than 20% of labor forces. "The combination of numbers 60/70/80/90 are frequently used to describe the private sector’s contribution to the Chinese economy: they contribute 60% of China’s GDP, and are responsible for 70% of innovation, 80% of urban employment and provide 90% of new jobs. Private wealth is also responsible for 70% of investment and 90% of exports.” Today, China’s private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group".

[AnitaCorbett]

A very articulate explanation Prof. “ in English!” Thank you for sharing a valuable insight.

[lamrof]

Townships, Provinces and then Regions competing for GDP instead of profit, such a simple concept but effective. Can you imagine in the US cities control their economy and compete for GDP and as to who improved whose people's lives? Can you imagine that? me too, I can't.

[jasonlahey]

It’s nice to hear an educated mainland Chinese person speak without endless amounts of propaganda and skirting the topic.

[lokechanmun]

China is a closed system with an open mind. The US is an open system with a closed mind.