I think it's really important to push the needle in the direction of the stories and the evidence behind why China's rise is actually good for the world. And that's something I've been doing a lot in the last year and pointing out to evidence that shows why China's rise is good for the world. Welcome to the New Enlightenment podcast from Adam Smith's Panmir House. I'm Adam Dixon. Today I'm joined by Dr. Yostin Ha
who is a political economist and an assistant professor in development studies at the University of Cambridge
based at the center of development studies and the department of politics and international studies. He is the
author of The Future of the Factory: How Mega Trends Are Changing Industrialization, which was published
by Oxford University Press, a book that investigates how industrialization pathways are shaped by recent
technological developments, new forces of globalization, and the threat of ecological collapse. It also charts new
pathways for industrial policy and global governance. But today our focus will be mainly about China.
Specifically, how we should understand China and how we can discuss and debate the rise of China in a reasonable and
dispassionate way. Yellowstein, welcome to the New Enlightenment. Thank you very much for having me here, Adam. So, let's get straight into the question of China, which is always uh a great topic to discuss. Uh China is such a powerful for force in the global economy. The tensions between China and the United States and to a degree Europe have increased over the last years and it's uncertain what those relationships will look like. Now at the same time, China has industrialized rapidly. It's a major manufacturing center and increasingly
China is showing its resolve in becoming a major innovator particularly in areas of green technology but also automobiles um artificial intelligence and so on and
so forth. In other words, China is not simply the factory of the world. It is also the producer and the designer of
many of the new technologies that the world and economies around the world are depending on. Now in your view just to
set the scene what are the key structural and institutional factors behind the recent success of China and in particular if I may what are the limitations behind let's say the the China model and what are the limits if you like because of the relatively tight control of the political system assuming that there's significant tight control.
Jostein Hauge
Yeah. Um I think we need to start with um a commitment to a a a very strong commitment to policy that aims to develop industry manufacturing over the long term starting with industrial policy. So if you look at China's rise, the rise has been in large part a surge in manufacturing production. um it is now accounting for roughly 35% of global manufacturing production. That's a humongous increase from the late 1990s where it was around 6%. So this is at the core of China's uh economic rise. China's transformation is a strong commitment to industrial policy
which we're talk here we're talking about state state intervention for the purpose of transforming the economy
towards a desired structure in the long term with specific focus on you know technology productivity growth and so on so that's been incredibly important we know that a lot of countries do industrial policy the US has industrial policy the EU has industrial policy you can find elements of industrial policy all over the world. But in China, this has been very very strong. We see, for
example, you know probably all about this, the the role of the stateowned enterprises in China. It's somewhere
between 300,000 and and 3 million if I'm not mistaken, which is by far the largest number of stateowned enterprises in the world. So while we see industrial policy everywhere in the world to some
degree in China, it's been extremely extremely strong. And this has been a commitment for a long time period.
They've had five-year plans that set out what is to be achieved in certain time frames. In 2015, they launched a very
specific innovation and industrial policy plan called made in China 2025.
And the idea was to become competitive or become leading in a range of sectors
by 2025 which they achieved. Um so this is this is key here. Now you
talked about you know the possible limitations of this model and in particular touched upon the tightly
controlled system. In some ways this is both a both a strength and limitation. I
I think um I heard a a a a UK based journalist saying that because China
doesn't have the same style of liberal democracies that many countries in Europe or that North America does, they
can actually plan over the long term, which is interesting, right? Um,
if you look at the United States, you have a system where you you kind of have
a system that's developed whereby one president tries to dismantle everything
that the previous president did just because they were their opponent. The political system has developed in such a
way that it's all about uh all about discrediting whoever was in power before
you. if that was uh a person from the opposite party. Um and we're seeing that
this is to some degree hampering the ability of the United States to plan for
the very long term whereas China does not have this uh constraint. So in in
some respects the fact that China is not a liberal democracy like western most western countries are
is a strength for industrial policy. Now, this is of course not saying that this kind of authoritarianism will
always work. We've seen the shortcomings of authoritarian regimes lots of places
in the world. Um, and then, you know, I'd like to bring a scholar named Peter Evans into this debate. He distinguishes
between developmental authoritarian states and predatory authoritarian states and saying, you know, for long
run economic development, what we want are the developmental authoritarian states. Now, of course, and maybe we'll
get into this during the discussion, we should discuss to what degree China is is democratic or not, right? Because
there are there are there are things we need to pay attention to about how state legitimacy is formed in China um and the
pros and cons about that. But it's important to understand the nuances here and simply say that because China does
not adopt a liberal democracy like Western countries, it is de facto just an authoritarian regime and we stop
there. That is not what we should do. So if I may, what I find fascinating about the the discussions around Chinese
industrial policy is yes there's a degree of this top-down long-term
planning. However, if you look at particular sectors, you see um massive
amounts of what is very very intense competition such that you know take
electric vehicles uh for example the number of brands has havedved over time
and there's significant competition where yes BYD is big but BYD wasn't big
10 years ago and it was one of countless both state-owned and privatelyowned
Chinese companies and now it is won the race and it's increasingly becoming a globally recognized and competitive
brand. By that I mean in China we can we can is there not let me pose this as a
question. And is it not the case then that yes, there is a longerterm plan that sets the the the the end point, but
then the amount of support during that trajectory is actually less than
outsiders would assume and that there's a significant amount of competitive market dynamics that drive the
innovation and drive uh some companies to succeed and others to fail. Yeah, that's an extremely important uh point
you're making and observation you're making here about the internal competition between firms in China and
this has been outlined. You you can read Eva's book, recent book House of Huawei,
where she talks a bit about this. Uh Kyle Chan uh at Princeton also talks a
little bit about this. Um and yeah this also goes goes you know to the heart of this debate about you know is is China
fundamentally a socialist or capitalist society right because when we think about capitalism we think about
competition between firms and this is uh not just in EVs but across a range of
industries in the electronics industry we see that the state tries to get a lot of firms to compete internally with one
another not in a you know in some ways It's similar to what we see in in in
Silicon Valley in the United States. This whole venture capitalist the the
race between all these startups to become big and just a few succeed. Obviously, it's different because the
state controls this and the state drives this and overseas is probably to to a greater degree than um the state does in
in the United States. Um but yeah, you're you're you're absolutely Yeah.
Let me let me ask you though because this is a question I posed to to to many and it's empirical question is what do
we mean by state control in that sense and how does it how does it how does it
happen in China so how can we have you know competition among firms yet
there's state control that would seem that well how do you have you would assume in a market that you let it
happen naturally and organically right one is becomes better than the other and the other was vi like where is the state
control right I mean is Is it because I would assume that you can't really control competition. You can't really
plan it plan for it. Competition just happens. You can try to prevent it by
through regulation or you can prevent it by subsidizing one firm and not another.
So how how does China and or the Chinese state specifically mobilize its control?
Yeah, I think you I think we should start with um start with what is a is
there anything is there any such thing as a free market and I would say no there is no such thing as a free market
in all markets uh within capitalism that we've seen there is a degree of of of
state control you know even in the freest of markets you have states uh setting rules uh for you know what can
be exchanged in the market and not you need to set clearly defined property rights and so on. Um so so there is
really no such thing as as a free market state or states govern uh markets and
also and have always done that right but obviously there are degrees here. So in
China, what I would say is some of the key components of state control here is
um for example that the state controls the financial sector much more strongly
than they do in western economies and in many countries around the world control
who can lend money and what they need to do in order to get access to credit direction which sectors should be
prioritized in terms of the direction of credit. As you know, uh, the state-owned banks in China are the biggest and most
powerful banks in China. That's a huge component of state control in China. And
another, I think, is also state ownership in the private sector. Um,
sure, some companies are private and increasingly we're seeing companies um
many more big companies in in China being private, but that's not the case for or for all companies. many of these
started as uh where where the state had a stake in terms of ownership at the
beginning. So I think these are two very important ones. You can also talk about the role of the state in uh more
specifically in for example trade policy like tariffs and subsidies and um sort
of more tinkering type uh interventions that you see in many other economies.
But I definitely think the role of the state in in in in terms of controlling the financial system and where money
flows and goes is the key different one of the key differentiating factors here between China and many other capitalist
countries in the world. But I guess so going back to kind the the the first question about the limits to this,
right? So we've seen and and you mentioned Peter Evans and this sort of developmental authoritarianism and you
know there's examples like South Korea which um had a dictatorship for a while
but then often that's around catch-up development and is it incorrect to say
that much until recently in the Chinese context
um has been catchup development in that it's possible to have rapid
industrialization. Um to have incremental improvement that
is competitive on a global market, but at some point you run up to the the the barrier of innovation. And where is
China now, right? Because I think some would say that now Xi Jinping is coming in and exerting even more control and
that will stifle innovation and that a lot of the innovation that was happening in China and the catch-up development was because they liberalized because
they opened uh their markets and started competing on a on a global market.
You know, how do we periodize if you like this timeline and where are we at in that that kind of limits and will the
increasing amount of control in China stifle Chinese development? I think there are there are limits to China's
model um that I hope we we we get to talk about. But on this particular
issue, I think the model model is very solid. On the issue of uh of innovation,
on the issue of rapid or long-term economic growth, on the issue of
climbing the ladder of technological development, China's model is still very very strong and going strong. um this
this literature you refer to on on developmental states talking especially about these other countries in East Asia
that develop rapidly. They were about catchup development. China I I I think is I know that many people say that
China is now dominating uh all global industries. China is
dominating many global industries but China is also still catching up in many ways. So if we look at say steel,
apparel, furniture, um some of these low say low to medium tech manufacturing
industries obviously that classification needs needs more more nuance, but let's
just keep it a bit simple for now. In low to medium tech manufacturing industries, China is uh dominant. And
then in high-tech industries, yes, they're advancing fast. in um in in EV
especially in renewables manufacturing they are already worldleading uh in AI
they're catching up fast aerospace still a bit behind but we need to also understand uh the value chains here so
if you look at say a company like Huawei compare it to a company like Apple is
still globally much more dominant than Huawei in the electronics industry in
the in the phone in the smartphone industry. Um there's a really brilliant article by uh really brilliant interview
by uh of Sean Stars, a researcher, a professor at King's College London in
Jacobin magazine where he talks about how US structural power has actually
increased due to integrating China into the world economy. And he talks about how US-based corporations have increased
their power by integrating Chinese firms into their supply chains. And this is important. And this is a very important
point for everyone interested in the changing nature of China's power in the
world. It's still the case that China is inputs into supply chains of US firm
more than the other way around. So you see more lead firms being Americanbased
in global industries in the really big industries rather than Chinese firm being lead firms. This may change and
this will probably change in a few industries. We are seeing for example that BYD
uh the electric vehicle maker the Chinese electric vehicle maker is now has now surpassed Tesla in sales and has
now surpassed sales of Tesla in Europe which is pretty surprising uh to happen
already at this point. So so there's there's nuance here. China's catching up in many ways. GDP per capita in China is
still what 16 of that of the US. um China is dominant in some ways in other
ways China isn't dominant and we need to have a a clear viewed picture of this.
So I want to ask moving away from the more structural issues around
economic growth. The question I've always wondered about is creativity
um with regard to innovation that often and we see innovation happening in
places that are tend to be more free societies where there's just a bit more ability for people and entrepreneurship
to to happen for ideas to kind of flourish. How does that operate in the Chinese context and and
it's are there limits to the innovation because the society is constrained in
terms of what people can say um what they can think out loud if you like um
particular social norms um and I'm just thinking you know again
this is not a kind of east versus west I mean I'm thinking of South Korea for example I mean South Korea and I've said
this many times on the podcast it's fascinating that K-pop and Kdrama have taken over the world, right? So, so
South Korea has is is exporting cultural products and I think the export of
cultural products, you know, happens at a at a higher level and is, you know,
requires a certain level of a free society to create that that kind of creativity and that spark. How does that
and that's not to say and I just want to clarify I'm not saying that you know Chinese people or or China itself under
the CCP does not have significant amounts of creativity um and innovation but I want to understand how that
operates in a context where people are constrained in what they can say and what they can do um whether it's
explicit constraint or informal um constraint through norms and the possibility let's say of stepping
outside of of of stepping outside of what is what is socially
acceptable or politically acceptable. I want to first touch upon your uh your point about K-pop becoming
sort of a popular cultural export of Korea. This, you know, maybe being
associated with Korea being a freer society. I know you're going to say there was an industrial strategy behind
it. I wasn't going to talk about that at all. Wasn't going to talk about that at all. Okay. Um,
I was I was more going to say we need to also be sensitive to the geography here.
Um, in in the United States, for example, I think uh it would be more
common to see more Korean cultural exports because of the closer relationship that the United States has
had with Korea for a long time. Yes, you'd probably see more Chinese cultural exports in societies that had a closer
cultural connection to China for a longer time time. Um,
obviously there's a big difference here with with exporting
uh exporting pop music and exporting steel or iPhones, right?
And I'd argue that for long-term innovation, uh, they have different
outcomes. So, that was my first one. Let's let's talk but let's talk a little bit about how innovation happens. uh do
you need uh this room for creativity and free
speech um that western democracies have? Let me be clear. There are certain things that
I think any society should strive for regardless of its effect on you know
economic growth and productivity growth and so on. things like free speech is something that I think any society
should strive for and I'm very happy that that's still going strong in the United States now it's it you know we're
seeing a challenge but the fact that you actually have media that can talk about what's happening under Trump is
extremely important otherwise this would have much more rapidly gone down the route of fascism I think in the United
States um so there are things we should strive for in a society regardless of its
effect on these economic indicators that pertain to to to democratic values and
and free speech and so on. Let's get back to to innovation. I I think in in some ways China is challenging that you
need this extremely strong capitalist private sector without ties to the
state. China's challenging that because we are seeing innovation happening rapidly even in with a with respect to
the development of chips uh semiconductors now we're seeing China
rapidly advancing um innovation in all segments of the supply chain of advanced AI chips just
two one to two years ago most people thought China was way behind on on chips
now there are many factors at play here one is of there's unintended consequence of trade policy from the US, China
itself realizing that because the the United States, this extremely important
nation also in this industry is trying to prevent us from getting chips, we need to more rapidly innovate. So in
some ways it seems like like trade policy in the US has backfired and and
made China innovate faster. But even in the United States, I think we to some
degree because I I mentioned the United States because this is a country that I feel in some ways has fed into this
narrative that you need a a private capitalist sector
disattached or unattached from the state, right? To innovate, we need to dispel to some degree the myth that
innovation in these strong capitalist economies has happened without the
state. I think the book The entrepreneurial state by Mariana Matsucato is a great example and in that
book she shows how all most of this technology in an iPhone can be traced
back to military funded research in DARPA in the United States. Yes. But that's different from commercialization
putting it into a consumer context. Go on. in that you can a lot of innovation can happen
via military spending but the outcome is less pre-planned than assumed in the
sense that um the US military says um we want to
put a nuclear power plant on a submarine make it happen we don't care how much does it cost just go and do that and
then you know space program um uh or from missiles we made a global
positioning system and the technology around that make it happen. Now the
outcomes of that have been all these spillover effects in terms of how those have been commercialized and integrated
into consumer products and other kind of non-military use technologies but those
I would say not a priori kind of planned outcomes those have been unintended
consequences and so although you can uh and I don't think it's anyone would
seriously dispute that that military spending and that public funding of of science research and development didn't
have positive effects but it's that degree of how you can then do it uh a
second time and a third time and a fourth time and that you can do it in multiple contexts and I think that's
where the idea of the entrepreneurial sp state I think I I become uncomfortable
with because what Silicon Valley and the United States of America can do in terms
of throwing a bunch of money at a problem has massive scale U massive markets. It's it's one thing
to and and I I I include China in that as well. You big huge country, lots of
resources, lots of labor can do something very big. that's very different um uh kind of entrepreneurial state that
then you can say come to to Scotland and say well you know Scotland with its five
or six million people and this big geography as long as you just have the state direct more it will lead to better
outcomes and be more entrepreneurial and often it's I think it's difficult to recreate particular models in different
places and that's why I become kind of uncomfortable with some of these ideas around state direction and state
intervention ionism is just that well just because it worked in one place doesn't mean you can replicate it other
places and secondly it's difficult to identify the causal pathway that led to
particular outcomes because a lot of times the outcomes were by accident or they were spillover effects and you
don't know what those spillover effects are from the beginning they kind of happen because someone realizes that oh
this global positioning system oh we can put this on the telephone and that leads to Uber and that's you know your garment
app that you know you can uh use it for navigation right all these things kind of these subsidiary effects but those
weren't that wasn't the plan at the beginning the beginning was we want to put a man on the moon and we want to protect ourselves from Soviet Union
right and that was it was a discreet project and how you kind of then scale that to a nationwide industrial policy I
think becomes quite difficult and that's why going back to my earlier question about how China operationalizes its
industrial policy where it's the direction And the control I think is
less than many people think. Yes, it has different level levers and as you rightly say other countries have
industrial policies and they use different tools but what China does is allows for a lot of market competition
and allows companies both state and private to fail um and because there's
also competition among the different provinces in China. So I think it's that degree where it's
there is a lot of let's say liberal market capitalism happening even in the Chinese context. I know there's a long
kind of way around that but but I think it's being sensitive. Yes, states can do things but how do you rep replicate it
elsewhere and how do you replicate that over time? I I want to say a few things about that and then I want to ask you a
question. Okay, because you're raising a very important point here about can you replicate a country's success and I
think it's very important that we say that not everyone can be China, right? And to some degree or to a large degree
all development experience experiences are unique. They're contingent upon upon history
um the his the historical trajectories of that country, geopolitics so on. For example, in Korea, the role of the
United States in the cold war was extremely important, right? So, we need to remember these things that um we
can't simply say, oh, because China has done this, all developing other developing countries today can emulate
China. At the same time, there's one gen there's one general point I I often make about especially the use of industrial
policy saying that and I I would say that all development experiences show
the usefulness of industrial policy. The degree of course can be debated but we
see that the use of industrial policy has to some degree been important in all cases of rapid technological
development. So state intervention. Um so the point being that where we've seen
lots of failed cases of of state intervention throughout the history of capitalism but without state any state
intervention failure is a certainty. So when we look at countries that have liberalized uh rapidly or dismantled the
state in for example Africa or South America in the 70s 80s and 90s we saw
really bad results uh in terms of economic growth. So that gives us gives
me a basis for saying that you need some kind of state intervention. And there are some general lessons I think that
are useful from China especially for other countries that are trying to catch up with higher income countries. one is
I think state ownership in the economy for some degree of autonomy from
multinational capital uh controlling the commanding heights of the economy directing things right we've seen
examples of many developing countries being sort of prayed upon by multinational corporations and
multinational capital and that not having a great ending that story not having a great ending so you know the
role of stateowned enterprises is important in catch-up development Um, China has also done something really
clever in terms of its joint ventures with foreign firms that were very very important in the '9s and early 2000s and
even the 2010s. Um, and we also saw that in uh Korea, in
uh Taiwan. So there are some general industrial policy lessons that I would
say other countries need to think about, but China is definitely unique. I want to get back my here's my question to
you. I want to get back to innovation. Yeah. So what what are your thoughts about the
say we compare China now with the United States to get a comparison here of a
country that has a different economic and political system more oriented towards free market capitalism. Do you
think that China the the system in China has more constraints in terms of where
it's heading uh where its innovation trajectory is heading more so than free
market capitalist systems? So, I've got two responses. One is, uh, as you
rightly noted, um, and as much as people talk about the US being this, you know,
neoliberal free market economy, it's actually quite neo mercantalist and state capitalist in many ways, right?
So, I think, you know, spend time with any, you know, libertarians and classical liberals in the US and they
will tell you how how much that there's way too much state, right, in the United States. So I think my response to that
is to say it's not accurate to say that that the United States is this pure kind
of free market capitalist economy and innovation just happens in this free space. Um and I think that then has
implications for how we understand the US versus versus China. Um and that you
can say well both have a degree of industrial policy. The US has always had industrial policy mainly driven by um
defense spending in the department of defense. Um but there's also you know massive public universities and as we've
seen recently um with what Trump has uh been doing with Harvard even the private institutions are massive recipients of
government um money and laress um and all of that is part of this broader US-based ecosystem of of
innovation. um in that not to say that the United States is quote unquote Chinese, but to
say that, you know, there's yes, there's a lot less state ownership in the United States, but this idea that the state is
kind of free of of innovation and it's just, you know, these smart guys in a room in Silicon Valley and these
startups that are just, you know, innovating, I think that's that's inaccurate. Um that's why I would always
be happy to push back against those you know of the which I sort of shares and sympathize with those kind of classical
liberals and libertarians that that emphasize the the constraints and limitations of state intervention. I
would say well empirically you actually look over time and it's it's not as free as we like to think. But again going back to the example I had around well
it's it's the unintended consequences of this. zones, you can kind of agree that defense spending has led to particular
um innovations um and we should recognize that but at the
same time I think it's important to the not overstate the significance of state
direction. Now the second way I would answer the question is
by not answering it and saying that
um not not to ignore it but to say that in the world today when it comes to innovation I'm not concerned about the
United States nor am I concerned about China. I think the United States will continue to be an innovation powerhouse.
I think there's there's it's just so ingrained in and and embedded in the
American DA DNA of get out there and and try things. And I also think it's it's a
priority of of the state to be at the forefront of innovation. Um and I still
think that there's massive innovations coming out for China. I think they will continue on this path of being
successful innovators. Um maybe there's some constraints, but I don't want to speculate on that. I mean, and a lot of
people push point out that there's, you know, massive real estate bubble and debt and the like, but then you look
across, you know, the advanced economies and there's everyone's loaded up on debt. So, that doesn't change the story.
The place that I'm more concerned about is Europe and the UK. And um and
notwithstanding that there are places within Europe and pockets of you know very successful innovation and growth
and productivity. But suffice it to say I'm not too concerned about the trajectories of both the United States
or China. Um I am concerned about Europe and in that I include the UK both places
that have I mean you you live in Cambridge or you're in Cambridge so you you see this innovation around you but
there's a lot of you know concern I have with with Europe being left behind um
and it's left behind either on in China by the Chinese or the Americans. Um, and
that's not to say that there's other parts of the world that we should be ignoring as well, but I'm much more concerned about Europe than I would say
about the Chinese or or the Americans for that matter. On on that note, just a
short point about I think it's important to understand or for people who listen to to think about what is the purpose of
productivity, growth, and innovation ultimately, right? And I think no doubt that generally the US economy is more
innovative than most European economies. They have the high-tech firms, high-tech industries, much more so. There's no
doubt about that. But ultimately, what kind of societies do we want to create? Um because this is kind of in some ways
a means to an end about you creating good societies for everyone. And there I think European countries still score
pretty well in terms of um for now they do. Yeah. access to
healthcare, public transport, uh access to green spaces in cities,
etc. So, I I I talked to many of my European friends who live in the United
States who say that they prefer life in European countries because of all these
things that simply make life better. That being said, uh for example, if we think about the, you know, defense in in
in Europe, uh obviously innovation, technological development and defense
are intertwined. And now you're seeing Europe having to ramp up defense spending massively because they fear
that the United States will not put in as much money into military aid to Europe. And that's what Americans and
this is not exclusive to Trump would have said well for for for decades have heard it. I mean I remember when I was
uh growing up in the 80s and 90s the narrative would be well you know the American prov Americans provide defense
um for for Europe so that Europe can have really generous welfare states.
And so this is where for the question of what I said about for now I mean the quality of life is for now good in
Europe but without productivity without that kind of growth how do you have what are you able to redistribute
and I mean I would say living in the UK I don't have access to healthare I've
called the GP wanting to get an appointment they said go private I mean that's I think the degree now of of
course if I walk down the street and get hit by a car then you know an ambulance will pick me up and you know hopefully I
die or anything like that, but I'll get seen. But I would say, you know, in the the in the UK, the NHS is is not able to
provide um uh uh access to health care basic. Um and I I will grant there's
there's issues in the United States as well, but I do think Europe needs to be
more concerned about its capacity to pay for the generous welfare states that we have. And they've become less generous
over time. And if anything, European states often are gerantocracies um that
are eating the young by uh charging them for education, housing is too expensive and so on and so forth. I mean, we can
talk about this for a long time, but I think even said I'm concerned that Europe would not be
able to keep up um or places within and those places could, you know, uh that
aren't part of this. You know, we can see even more deprivation than we see um uh elsewhere. Now I want to shift
because I know we can go down that route for a long time around around that but that I think that kind of takes the our
conversation in a slightly different direction but I think our conversation has shown just what we've had in the
last 40 minutes that it's possible to have a dispassionate conversation about
China that isn't hysterical that doesn't paint the Chinese as this
you know this force to be reckoned with and to be you know uh destroyed if you
like but you know there is and it's growing a chorus in the west that's
framed China as an ex existential threat to the global order now in your view how
much of this is grounded in reality and how much is it let's say geopolitical
paranoia um or projection and are we in danger of mythologizing China's power and
ambitions in ways that distort the real picture like what is true what is false,
right? What is what do we need to kind of cool tensions so that we can find ways of sharing the planet with China
because we still do? Oh, there are many many strands to pick up from that question.
Um, well, let's let's start with to what degree is it important to push back
against alarmist rhetoric, right? I the way I see the bait the debate in
many English-speaking countries especially the UK and the US uh and I
engage mostly in debates in those countries is that we need to worry about China's rise and that's that's the view
that I see especially in mainstream media mainstream discourse uh polit political discourse as well and to some
degree then you can respond to that by providing a nuanced view, but I also
think it's important again to push back against that narrative if the evidence says otherwise. So to sometimes it's
sometimes well all the time it's important to base arguments in facts and
what's happening in the world. But it's also important to push the needle into a direction that one feels it's important
to push the needle. Personally, I think it's really important to push the needle in the direction of of the stories and
the evidence behind why China's rise is actually good for the world. And that's something I've been doing a lot in the
last year and pointing out to evidence that shows why China's rise is good for
the world. And I overall think it is good for the world. It's benefited consumers
um and corporations to some degree. unfortunately in in wealthy nations
um it has a a mixed track record in other countries in the global south but
if you look at I've I've looked at many uh recent surveys as to how popular
China is across the world and you see very clear evidence that in Africa positive use of China outweigh negative
use this is the case for most countries in the global south the country where China perceives perceived most
negatively is the United States, a few countries in Europe, then you also have
some negative views in India. But overall, if you go outside the bubble of the west and go more broadly to the
global south, people view China in a highly positive light because China is
more of a partner on equal terms with many of these countries. I'd say there's of course nuance to that. hit in the in
the past two decades have put a lot of money into financing infrastructure projects, investment in manufacturing
capabilities and so on. So so in short, I do think that China's view is a China's rise is a net
benefit for for the world economy. I just want to say that you've you've just channeled Adam Smith because he has a
part in the the Wealth of Nations and he's specifically talking about, you know, the UK versus France and the
tensions between those two countries back in the the 18th century, but he has a quote and or a part where he he says
that, you know, we shouldn't begrudge the development of our neighbors in
other countries. in his view, our neighbors development and um prosperity
uh that our neighbors are able to produce and and have are a good thing and we should welcome that at a human
level but as al also as a as a national level right like this is a good thing and I think that's with the case of
China there's been as I would agree with you there's been a lot of good things and those good things we should welcome
and we should also welcome that you know millions of Chinese aren't living in poverty anymore right I mean that is a
good thing for humanity and we should not begrudge them for doing that. Um we
should welcome that and we should praise them for that and their contributions for I mean what they've done in terms of
reducing the cost of solar panels and wind turbines and you know pushing better electric vehicles if we're
thinking about you know um uh uh climate change and and decarbonization. China's lead in green tech is a good thing for
the planet, right? Let's welcome that. But I want to put a butt in there, right? Uh just to to be play devil's
advocate. Um even though, you know, China does tend
to play the card of the win-win, right? Um,
but I'm more concerned about how can we have a conversation where we can accept
the good things that's happened in Chinese development and the cont contribution that China is making to
global development. Um, likewise, we should be able to
separate out the Chinese state and the Chinese Communist Party from the Chinese people.
um because they're not all the same, let's say. But how can we have that conversation with recognizes the
benefits of China, not simply to its own development, but to global development, while also being able to identify those
red lines, to identify those concerns, whether it's human rights abuses or whether it's um you know, the threat of
China invading Taiwan. Um, and I don't want to open up too much of a Pandora's box here and talk about
what's going to happen with Taiwan, but how can we have a conversation that in a as we do in the west when in ter in
terms of our criticism of our own governments and our open media, how can we have that conversation because
sometimes I feel that even on the global stage, China says you can't don't criticize us. This is not allowed. This
is, you know, this is not okay because it's it's how they would operate domestically. But we should be able to
critique and criticize um because that's I think in my view my values an
important part of a plural open and tolerant society. My view is a bit different here. Okay. I uh I well let me
first say that I think it's important to have this these kinds of conversation. Whatever subject uh whatever subject we
discuss it's important to have a critical uh a critical conversation.
The way I see it or the way I perceive it is I see many conversations being had
in in mainstream media and politics in especially wealthy nations such as the
UK, such as the US, many other European countries where it's become accepted to
uncritically criticize China. That is the conversation that needs to be more critical I think to say hang on there
are a lot of good things about China. I recently saw and I was shocked to see this. I saw a conversation between John
Stewart and Patrick McGee on the Daily Show uh about Patrick McGee's new book Apple
in China. And both of them uncritically bashed China. That was my impression.
And this was shocking to me coming from a relatively progressive show like The
Daily Show and a person who is normally very critical like John Stewart. And then when you have people like myself
for example who tries to highlight some of the positive things about China, I'm always asked to provide the so-called
caveats all the things that are wrong with China. There are things that are wrong with China. You know, I've highlighted many times the lack of
consumption in China as a problem that China is eroding some manufacturing capabilities in other places. I've even
written a paper on forced labor in in in certain regions in China. But that's
kind of beside the point sometimes. It's like, you know, saying we talk about the
United States as this huge innovation powerhouse, but then you're asked to caveat that by talking about the growing
prison population in the United States, which has very little to do with that point. And that's not saying we shouldn't be be be critical of China. We
should be critical of China. We should be critical of all superpowers. Um but right now there's so much critical
narratives, overly critical narratives of China, uncritical critical narratives, right? Uncritical negative
stereotypes about China that it's important to get the positive stories um stories out there. I mean, yeah. No, I
wouldn't I wouldn't disagree. I think um and I and I would say my point wasn't
that we must have uh a caveat if you say
something's good. Um, and I say this just as in my own personal experience being an American that's lived in in
Europe nearly 25 years is I've depending on where I am and what's happening in the world, there's always been this sort
ofism, right? is that oh America's this people are dying on the street and you have to say no no no no and it's
what's always bothered me is then I you know in my own would have to sort of if
I said something good about America I'd have to sort of caveat it by people saying yes but there's all these bad
things and that was the example that you just gave and so I would agree with you in the Chinese case and is yeah we
should have that but I guess the point is is that how do we have and I'm not necessarily
expecting an answer from you per se. Is is how do we then have that that dispassionate conversation? Well, we can
talk about both sides. Is it does that say something about
the eroding kind of debate culture and free speech in the west and the implicit
censorship and selfcensorship that we're seeing that people are afraid because I I think it's rampant the level of
censorship and self-censorship that we're having um in the west. I think it's it's much more of a problem than
than people um see across a range of topics. It's become difficult to have
conversations without you know you know if if you say something positive about China well you must be a China apologist
Ystein oh how how do you do that how is it that you know um and how do we get
back to being open and critical and um without being so hysterical. Well, we're
having that conversation right now. I feel a a a pretty open, honest discussion, critical discussion where
we're not afraid to touch upon sensitive subjects um and view and talk about
those subjects in a in a critical manner. I do I do think the
you know the the fact that China I I often say that if say India had
developed like China has done uh we'd see similar accusations coming from the
west accusations of technology theft and industrial overcapacity any I I do think
part of it part of the hysteria is because China is rising very fast it's a huge country and now they are quote
unquote taking over although I don't I think they're taking over in all ways, right? But maybe there is a sense of
China is so different and they represent something so different that we see this hysteria in the west. Um I wonder and
here I'm just, you know, thinking out loud. I wonder if the the the socialist
and the well the communist past and also obviously the continued
uh self-proclaimed socialism and and and communism in China. if that just
represents something so radically different from what for example the United States wants to be right or from
what the the West wants to be that it's hard to view this as anything else but
uh hysteria but I do think we also need to talk about global economic
hedgeimonyy because China is challenging that order in many ways and that is I
think what's causing some alarmism in the west we've sort of and this is how I
started a previous podcast convers ation about China and I was asked why are we
seeing so much anti-China sentiment right now and I think part of it especially in the
wealthy part of the world is because we become very accustomed to thinking that economically and politically the west is
what we should strive for. they should be on top in many ways and that when we are not we're not accustomed to
psychologically accept the fact that a country in a different part of the world people of even different skin and color
cuz I do think race and racism plays a part here we're not accustomed to accepting that they're at our level
and I think that fuels some of the some of the uh some of the alarmism I think is it also just the
it's the I don't want to say death but it's the realization that liberal internationalism
is untenable. And by that I mean I I take your point about American
hegemony or western hegemony in the world. Part of liberal internationalism was the sense of that is it national
hegemony or is it that we just expect everyone to kind of come into the fold and become democratic and liberal in in
our kind of the way we we do that which I think is slightly different than saying it's like we must be on top. I
think I don't disagree with you per se on that. But at the same time, I think the other part is that well actually liberal internationalism was like no, we
just all need to come together as this, you know, all countries need to come together and violate the same rules and have the same values. Um, and that's
untenable. Now, I will channel Adam Smith again. You channel Adam Smith earlier. Um, but you know, in part
because I run Panmir House and that's Adam Smith's last home and so by default I have to I have to channel Adam Smith.
But Adam Smith in his liberalism was not cosmopolitan in the sense that he
expected other nations other cultures cultures with different histories to
follow the same path of development or become the same. He in his work and that
of his colleagues or contemporaries they recognize that you know China is this
thousand or 5,000y old civilization that has a particular history and they would not ex expect it to then become like um
uh their culture or their society. They presumed that the world would be a
global mosaic that is shaped by history and geography and you know difference
right they weren't expecting that we'd all come together in this sort of liberal kind of values around markets
and so on and so forth now I think in their own context they would say actually we we can see that market exchange and these things provide
prosperity I think you know Adam Smith talks about how China was effectively uh in a steady state um not growing not
doing anything for a very long time and that was you know a function of its of its history and I think you'd be surprised to see wow China's really
changed but suffice it to say my point is is that this you know in liberalism or classical liberalism there is it's
different than let's say liberal internationalism that accepts that there's difference in the world and that's okay and we can work together um
and we should still be able to trade and and you know I mean that's easier said than done because there are power
relations and different interests and the like and you have to govern these things. But, you know, point being is
that even Adam Smith, the quote unquote father of economics, he recognized that different countries have different, you
know, histories and values and that's just how it is. That's very fascinating. I did not know that about Adam Smith
that he would have have not felt at home in this whole club of the globalists and
the uh the liberal the idea of the liberal international order. Yeah, that's very fascinating. Yeah, I um I
think it's important to when we talk about the liberal international order. Sure. On you know on the surface the
idea was this create this world it was all going to be kumbaya and globalization was going to benefit
everyone um and everyone were going to become liberal democracies. I think that's the
narrative on the surface. But below the surface, you also saw this idea of
certain states creating an order that benefited themselves more than others. So if you look at the creation of Breton
Woods institutions, the creation of the World Trade Organization, the system of global governance, certain nation states
had and still have a lot more power in shaping those those rules. Um now I work
a lot on the World Trade Organization and it's very very clear and it's been well documented by now that rules within
the World Trade Organization benefited uh have benefited transnational
corporations based in the west a lot more than corporations elsewhere. So um
you know say we talk about free trade being free and equal and benefiting everyone. Well you know in in many ways
free trade wasn't even free if we look at the system of intellectual property protection. was about protecting the intellectual property rights of
corporations based in wealthy countries. So that's some you know one thing I wanted to say about the liberal
international order. I also want to say something about liberal democracy and I I think and this is I an extremely
important topic in light of our conversation today. Every country should strive for democratic accountability for
for a government that takes the needs of its people into account. A government that represents its people. Now, is the
path to that? Is that what we have in nor in Europe? Is that what we have in
North America? Not necessarily. We have parliamentary elections every so and so
years to try to ensure that happens. In China, they don't have that system. And China is routinely accused of being
authoritarian and it is in many ways an authoritarian regime. I looked recently
and I shared this on Twitter uh and people reacted a lot a lot to this in
many ways positive too. I share this insight from a report by an organization
called the the Alliance of uh Democracies, a Danish-based think tank
that makes it carries out these surveys about, you know, perceptions of democracy worldwide.
And there was this really fascinating chart in this report that showed that in
China, perceptions of democracy and perceptions of a state that represents
its people are much higher than in many many countries in the global north such
as France, the UK, and the US. How can this be, right? How can this be when we're to told that China is so
authoritarian? China of course doesn't have parliamentary elections but they have certain internal democratic
processes. They certainly have a government that takes the needs of its people seriously. Um I urge everyone
who's interested in this topic to go to Kaiser Kua's Substack Cynica. He runs a
podcast called the Cynica podcast. He's written a brilliant piece about how state legitimacy has been formed in
China. Right? And I'm not saying here that we should unapologetically celebrate China's system because there
isn't freedom of speech in China the same way that there is in the United States. And I'm a fan of freedom of
speech. But we also need to push back against this narrative that China is this hugely undemocratic country because
in many ways people are happy with it. Many people in China are happy with the way that the state represents its
people. And on the flip side, you're also seeing democracy in many ways falling apart in many countries in the
west that to an increasing degree corporations, rich people decide uh or
make up decide the direction of government policy decisions and now even make up the government that billionaires
become presidents and billionaires become part of cabinets. I mean, think about the the the election in the United
States where there was an opportunity to have a competitive primary, but then the quote unquote donors and the elites of
the Democratic party decided, well, we're going to put Kla Harris forward. Or when you think of Vanderlean
um and the European Union talking about European values of democracy, yet the European Parliament is effectively
um very weak in terms of shaping European policy. or if we look at the UK for that matter where the ruling party
only won what was it 33% of the vote right yet they control the government
right so we we it's easy for us to talk about you know democratic legitimacy and I'm a fervent believer in democracy and
democratic accountability and I would um feel very uncomfortable in a Chinese context and I believe in free speech and
debate and the like but at the same time I think it is important and I agree with you to recognize and question who's in
control and you know who's dictating what it is that policy is and are these in the interest of the people and have the people been spoken to? Now, I have
one final question. We've gone over time and it's a speculative one. Um, and you
only have 30 seconds to 60 seconds to answer it. What's going to happen in the next 5 years in China? In China, with
respect to the things we've talked about, yes, I think China is going to keep developing fast. China's going to
keep innovating. China is going to break into more high-tech sector. We're going to see China dominate more industries
um in AI, robotics, and so on. Again, this is not to say there aren't problems in China. It'll be interesting to see
how they solve this issue of of consumption uh in China. To what degree will production in China in the future
be export-led versus uh driven by domestic demand? I think domestic demand
is going to be more important in China in the future, but there's no reason uh
there are no signs that China is going to slow down its uh its innovation drive
and its manufacturing drive in the next 5 to 10 years. Yanha, thanks for being on the new enlightenment. Thank you very
much, Adam. Thanks for a great conversation. You have been listening to the New Enlightenment podcast from Adam Smith's Panmir House. If you found this
interesting, please consider subscribing and sharing. If you would like to learn more about Panmir House, please go to
our website, panmirhouse.org. Thanks for listening and until next time.
