16 korrents from this recording
Every claim below is a statement made in this recording, quoted word for word and linked to the second it was said, so you can hear it rather than take our word for it. The wording comes from the transcript published alongside the recording; the sentence above each quote is our reading of the claim, not their wording.
0:00:52 · watch on youtube.com↗
Their wordsThe biggest misunderstanding is somehow that a group of people or even just one person runs the entire Chinese economy. It is far from the reality. It is a very complex, large economy, and even if there is an extreme form of political centralization, the economy is totally decentralized.
0:03:54 · watch on youtube.com↗
Their wordsI’ve rarely seen a more capitalist society than China, from the pure economic side. I’ve rarely seen companies that are as competitive as Chinese companies. People as ambitious and obsessed with making money as Chinese people. Kind of ruthless actually. And look, consumers shop, firms invest. If you invest well financially, you’ll get great returns. What is not capitalistic about the Chinese economy? At the same time, the social fabric is highly socialist.
0:21:54 · watch on youtube.com↗
Their wordsI say now that China’s biggest challenge is consumption, it’s not production. We know that China’s very, very competitive in production and supply. China needs to be a consuming country to be a rich country.
0:26:47 · watch on youtube.com↗
Their wordsIndustrial policy was heavily criticized and again, if I talk to my Harvard professors, they’ll be very, very, very skeptical about the role of the state, especially in such a major way. But if you look at the Chinese experience, the evidence for success is all there. The cities that have pushed the most on supporting that particular sector ultimately did the best in terms of production, but also in terms of innovation, measured by patents. It’s all in the data.
0:36:54 · watch on youtube.com↗
Their wordsDo you want technological supremacy and radical breakthroughs? Well, yes. If you do, then you have to tolerate that there are going to be some people who are just going to be uncomfortably rich, like in the United States. You can’t say that you detest the financial system for its greed, but then not accept the fact that it is what fuels innovation, right?
0:43:48 · watch on youtube.com↗
Their wordsAnother big misunderstanding, and a fundamental one, is that people somehow think that the state suppresses the private sector. It’s not at all as simple as that. For the most part, if we look at the local government’s incentive system, they want to help the best, private companies, which are the most promising, because it makes them look good.
0:45:59 · watch on youtube.com↗
Their wordsOne interesting point is that, in China, you ask the companies to innovate first, and then you regulate after, right? So, that has led to things like P2P platforms. It’s led to lots of kind of financial innovations, some of which has actually been very helpful and good, some of which had been disastrous, but the intention to regulate after the fact is to really not slow down or hinder the innovation. This is a very different approach from Europe. You regulate first, and then companies have to work around that.
0:51:11 · watch on youtube.com↗
Their wordsIn the US, capital controls politics, one could argue. In China, it has to be the other way around. Capital must be reigned in by politics. As part of the capitalist class, do not have the ambition to exceed the powers of the political class, is really at the core of it, I’d say, is the biggest difference between US and China.
0:57:28 · watch on youtube.com↗
Their wordsThe US will lead for some time on breakthroughs on disruptive technologies, the zero to one technologies that ultimately change the world. But innovation is a process. It goes from invention to production and commercialization and diffusion, diffusing technology throughout all parts of the economy. And on those two stages, I think that China has a unique advantage, even if it still can’t do the zero to one breakthroughs, because in the end, how much this technology is adopted by the countries and by the various parts of the economy is fundamentally crucial to how much productivity will be unleashed.
1:03:50 · watch on youtube.com↗
Their wordsAnd remember that DeepSeek happened in times of crisis, urgency, not in times of comfort. A lot of these technological breakthroughs and leapfrogging happens in times of crisis. This is called crisis innovation. And you got to thank the US for that. When the Chinese were comfortably importing chips from the US, the whole industry stalled for 20 years.
1:06:55 · watch on youtube.com↗
Their wordsAnd what’s more, you use your leverage once, and that leverage has a half-life. It becomes a lot less effective the second time around because other countries, other companies are going to try to substitute away. If China uses the rare earth leverage, which I think it is now a little bit, there will be alternatives and substitutes.
1:16:55 · watch on youtube.com↗
Their wordsTariffs, this kind of highly protectionist method is very distortionary and it’s going to be bad for the US. I’d actually argue that both China and the US have totally taken advantage and also enjoyed the global economic realm under the US liberal order.
1:20:07 · watch on youtube.com↗
Their wordsThe trade deficits have widened since Trump, right? They haven’t closed the imbalance with China and with the rest of the world because ultimately the US saves less than it invests. And that’s a macrophenomenon. It’s not a trade phenomenon
1:33:11 · watch on youtube.com↗
Their wordsMaybe on the good side, it’s actually a golden age for Chinese women because the Chinese girls never had as much education investment apportioned to them as they’ve had after being the only child in the family. And you raised a daughter like a son. And if we look at all the skill gaps and the education gaps and the returns to education, actually girls fared better.
1:39:33 · watch on youtube.com↗
Their wordsIf you look at the most recent evidence on this issue, they found that post-1990, aging economies became richer. Not the other way around, which was true for the pre-1990 sample. And the reason is that these aging societies much more rapidly adopted new technologies, automation that actually helped the entire economy.
1:40:31 · watch on youtube.com↗
Our reading
China's economy will not collapse, whatever the West has been predicting on and off since the 1980s.
Their wordsCollapse is such a strong word, and the West has been using this word repeatedly. If I remember correctly, maybe four to five times, maybe even six times since 1980s during the period of China’s fastest growth. I tend to not think that Chinese economy will collapse.