Keyu Jin: China's Economy, Tariffs, Trade, Trump, Communism & Capitalism | Lex Fridman Podcast #477

The following is a conversation with Keyu Jin, an economist at the London School of Economics specializing in China's economy, international macroeconomics, global trade imbalances, and financial policy. She wrote the highly lauded book on China titled The New China Playbook: Beyond Socialism and Capitalism that details China's economic transformation since 1978 to today, and it dispels a lot of misconceptions about China's economy that people in the West have. This is the Lex Fridman podcast. To support it, please check out our sponsors in the description and consider subscribing to this channel. And now, dear friends, here's Keyu Jin. What is the single biggest misconception the West has about China's economy today?

The biggest misunderstanding is somehow that a group of people, or even just one person, runs the entire Chinese economy. It is far from the v- reality. It is a very complex, large economy and even if there is an extreme form of political centralization, the economy is totally decentralized. The role that the local mayors, I call this the mayor economy, plays in reforms but also driving the technological innovation that we're seeing right now, it is actually not run by just a handful of people. It's more decentralized than the US is. And I think more broadly, a big misunderstanding is really the r- relationship between Chinese people and authority.

Can you elaborate on that?

Well, you know, people think that somehow there's almost blind submission to authority in China. We have a very nuanced relationship, uh, with authority, whether it is, you know, between kids and parents or, um, students and their teachers or with your bosses and the Chinese government. It's kind of the same thing. There's paternalism, uh, they think that they're responsible for you, um, but, uh, deference, a certain amount of deference to authority is not blind submission. It's been written implicitly in our contract, uh, for thousands of years that in exchange for some deference, uh, we are given stability, security, and peace, and hopefully prosperity.

So there is some element that we have in the West of freedom of the individual, so that a little bit of the rebel is allowed, uh, in balance with the deference to authority?

Yeah, absolutely. Without that, how can you have this radical, dynamic entrepreneurialism you see in China? If you don't have a sense of self, a sense of, uh, the fact that you can find opportunities, you look for opportunities, you, you, you drive opportunities, um, it's all self-motivated.

Is there still a young kid in China that's able to dream to be sort of the, the stereotypical Steve Jobs in the garage, start a business, and change the world by doing so?

There are millions of young kids like that in China. They might not be thinking about changing the world, and this is where the Chinese approach to innovation is very different from the Silicon Valley one, I'd say, um, but they see opportunity. They see a country with a billion consumers, they see scale, they see speed, they see that with their dreams and the team that you have in China with engineers and the digital transformation, you can do so many things and this generation of young people think about transforming their local economy. I, I think we're gonna get into this, but it's no longer gonna just be manufacturing. The young kids are entrepreneurs.