The New China Playbook by Keyu Jin 

Join Heliox for a fascinating deep dive into the mind of Keyu Jin, one of the most insightful voices on China's economic transformation. In this episode, we explore Jin's unique perspective as both an academic heavyweight and seasoned financial advisor, examining how she bridges Eastern and Western viewpoints to decode China's remarkable economic journey. 

Learn about the innovative "mayor economy" concept that helped drive China's unprecedented growth, and discover how cultural values shape economic decisions in unexpected ways. We unpack Jin's analysis of China's technological leap from manufacturing hub to digital innovator, and explore the fascinating "six wallets" phenomenon in Chinese society.

The episode also delves into China's evolving role in the global financial system, examining the future of the RMB and digital currency innovations. Through Jin's lens, we gain a nuanced understanding of China's economic challenges and opportunities, moving beyond simplistic narratives to grasp the complex interplay of state intervention, cultural values, and generational shifts shaping the world's second-largest economy.

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Transcript

0:24

All right. So you want to understand what Keyu Jen is saying about the Chinese economy, right? Well, we've got a ton of stuff here, articles, talks, even her Wikipedia page. We're going to dissect it all. So by the end of this deep dive, you'll know who she is, but also why her perspective on China's economy matters, especially if you want to understand where the global economy might be going. What I find so interesting about Keyu Jen is she brings such a unique mix of experiences to the table, right? She's not just an academic, but she's also been right in the thick of global finance. Okay. Yeah. Unpack that a bit, because I saw LSE professor and World Economic Forum, young global leader, and I was like, "All right, impressive." But then you add in, she's advised the World Bank, the IMF, even worked at places like Goldman Sachs. She speaks the language of theory and the language of real world finance. Exactly. It's like she can translate between the two. And even before we get to that, she's the daughter of the AIIB founding president, which gives her this really insightful view of China's ambitions globally. I mean, she's also a columnist, an advisor on all sorts of boards, even wrote a book. So clearly she's someone who doesn't just want to watch from the sidelines. She wants to be in the game. Yeah. Yeah. So not just an academic, she's a public intellectual, engaged. But before we get too deep into her ideas, let's just get a sense of her journey, right? Her Wikipedia is a good place to start. Born in Beijing, elite education, moves to the Bronx at 14 to attend Horace Mann. Oh, wow. I mean, that says something about global ambition right there. Yeah. And it's that cross-cultural thing, right? That really shows in her work, she gets both the Western and the Eastern perspective, which is huge when you're trying to analyze something as complex as the Chinese economy, right? It's not just the numbers. It's the whole context, the culture, the history, all that feeds into it. So Horace Mann, then on to Harvard for both a bachelor's and a PhD in economics. Okay, this one I'm feeling a little inadequate, but let's keep going. What I find really interesting is she didn't just stay in academia. She went on to advise major institutions like the World Bank, the IMF, places that actually have a huge impact on global economic policy. Yeah. And that real world experience is what makes her so insightful, right? She's not just up in some ivory tower. She's down in the trenches with these issues. And this brings us to one of her big ideas, something she calls decentralized dynamism, or sometimes called the mayor economy. Now, that sounds intriguing, but also kind of intimidating. Can you break that down for us? So imagine a system where local officials are basically competing all the time, like it's a tournament. Okay. And how they're judged is mostly on economic growth. So that creates this really powerful incentive for them to attract businesses, encourage investment, and just do whatever it takes to make their local economies boom. So if my city's mayor was suddenly judged only on how much our economy grew, you're saying they'd be all about making sure businesses are thriving? Totally. Like suddenly cutting red tape and making things super pro-business be their top priority. Exactly. And Qi Yujin argues that this mayor economy has been a major reason why China industrialized and urbanized so fast. She gives a great example in one of her talks. It's about how solar panel patents just exploded across China after the government nudged these local officials to support the industry. It was like this chain reaction of innovation all sparked by this decentralized competition. Okay. I can see that, but it also seems like a system where you could easily end up with short-term gains that mess things up in the long run. Oh yeah, for sure. Like what if a mayor approves a bunch of factories that pollute like crazy just to juice their numbers? Is there anything to stop that kind of thing? That's a great point. And it highlights one of the potential downsides of this model. It's been great for growth, no doubt, but it also has the potential to create huge regional differences, environmental problems, even make China too reliant on unsustainable stuff like real estate. It's a trade-off that China's really wrestling with right now. So not a perfect system, but it's been super effective at pushing China forward. And I'm already starting to see how Qi Jin's thinking is challenging some of the traditional ideas about how economies develop. Absolutely. And we're just getting started. Right. And one of the most important things she emphasizes is that you can't get the Chinese economy if you don't get Chinese society. She says Westerners often misunderstand that whole relationship between the Chinese people and their government. Okay. Now that's interesting. What does she mean by that? Well, she points to data from the World Value Survey and it shows this really stark contrast. So 95% of Chinese people, they prioritize security over freedom, while only 27% of Americans feel the same way. Whoa. Yes. That's a huge gap. Yeah. That's a big difference. So how does that actually play out in China's economic model? Does that affect how businesses work or how people make financial decisions? It affects everything from economic policy to how people spend their money. What Jin describes is this deep paternalistic relationship between the state and the people. It's like a system where people expect the government to take care of them, provide stability, security. And in return, they're generally okay with a bit more control and direction from the government. So it's not just about economic freedom. It's a different idea of what the social contract even is. That's a really important distinction. And it makes me wonder how those values might be shifting as China keeps developing, as it gets more integrated with the global economy. Yeah. That's exactly what Kiyu Jin tackles next. And that's where it gets really fascinating. All right. I'm hooked. But I think we need to take a quick break, let folks process all this. Yeah. We'll be back with more from Kiyu Jin and her insights on the Chinese economic miracle. Sounds good. Thank you for being curious and subscribing, following, liking, rating and reviewing our podcast episodes. Your support really helps build a vibrant Heliox community. Back to Heliox, where evidence meets empathy. Okay. So we've talked about how Kiyu Jin brings this super interesting perspective, right? Like she's got the academic background, the real world experience, and she really understands Chinese culture. Right. Where do we go from here? What else does she point out about China's economy? Well, one thing that really pops out from her work is how much she emphasizes the scale and speed of China's economic transformation. In one of her talks, I think it was at the Wheeler Institute for Business and Development. She reminds us that for a good chunk of time, China had the fastest growing economy in human history. Wow. And we're talking about a country with over a billion people achieving that kind of sustained growth. It's pretty much unheard of. That is mind boggling when you actually stop and think about it. I mean, we all know China's economy has grown a lot. Yeah. But to say it was the fastest growing in human history. Yeah. That really puts things in perspective. Right. And it really challenges like the assumptions we often have about how economies are supposed to develop. Kiyu Jin really hammers this point home. Like China didn't follow the typical Western path to success, the one you read about in like economics textbooks. They charted their own course. And that's why it's so important to understand their model on its own terms. Okay. So we can't just take like the old Western frameworks and try to force them onto the Chinese experience. Exactly. Makes sense. But what about innovation? I remember when "Made in China" meant like cheap knockoffs, not cutting edge tech. Yeah. That's a common misconception. And it's one Kiyu Jin addresses directly. You know, she points out how quickly China has become a leader in tech, especially in the digital world. I mean, did you know, like four out of the five most downloaded apps in the U.S. are actually Chinese? Wow. No, I had no idea it was that significant. So it's not just about manufacturing anymore. It's about like creating the platforms, the tech that's shaping the whole digital landscape. Exactly. Yeah. And Kiyu Jin argues that a lot of this is because of like a strategic partnership between the state and the private sector. It's not just about letting the market run wild. It's about the government actively pushing certain industries, certain technologies that they think are like super important. Can you give us an example of that? Sure. She talks a lot about China's electric vehicle industry, you know. EVs. Yeah. EVs. Within a decade, they went from like barely being on the map to being the global leader in EV production and consumption. Wow. And she says this wouldn't have happened without the government stepping in. So it's not just about like tax breaks or making regulations easier. Right. It's about actually shaping the whole playing field, like even picking winners and losers sometimes. That's definitely different from what we see in a lot of Western countries. Absolutely. And it shows that there are like many paths to economic success. There's no like one size fits all model. Right. China has shown that a state led approach can work really well, especially in certain areas. Yeah. But doesn't that approach come with risks? Yeah. Yeah. I mean, too much government control can stifle innovation. For sure. And lead to like a lot of inefficiency. Right. It's a valid concern. And Kiyu Jin doesn't ignore that. Like she admits there can be downsides, you know. Yeah. It can lead to a lack of transparency, corruption, even resources being used the wrong way. But she also says we got to see the big picture. Like the Chinese government has played a huge role in their economic rise and they're constantly adapting and refining their approach. They're not stuck in some rigid ideology. So it's about finding the right balance, recognizing both the good and bad of a state led model. It sounds like Kiyu Jin is pushing us to look beyond these simple ideas like state versus market and really get into the nuances of how different systems actually work. Exactly. And she's always reminding us that culture plays a huge role in shaping China's economic model. Yeah. You know, she talks about the importance of family ties, the emphasis on social harmony, and that willingness to put security ahead of individual freedom. These values really impact how the Chinese economy functions. I'm starting to see how those cultural values connect with that paternalistic relationship between the state and the people that we talked about earlier. You know, there's a sense of collective responsibility. People are willing to trust the government to guide the economy in a way that benefits everyone. Exactly. And one of the most striking cultural phenomena Kiyu Jin discusses is this idea of six wallets. Six wallets. Okay. She explains that in China, young people can often afford to buy really expensive homes because they're not just getting financial help from their parents, but also from their grandparents. Oh, that's a huge difference from what a lot of young people in Western countries experience. You know, like here, we really emphasize financial independence. Yeah. It shows you how strong that intergenerational support is in China. But it also makes you wonder if that system can last in the long run. Exactly. And this leads into Kiyu Jin's observations about how things are changing within Chinese society. She says the younger generation, like the post 80s group, they're driving a shift in how people consume things. Oh, interesting. So you have these like really deep rooted cultural values. Right. But then this new generation coming up with different expectations, different aspirations. What does that mean for China's economic future? This younger generation, they're more willing to spend. They're more interested in experiences and lifestyle. And they're also more socially conscious than the older generations. They've grown up during this period of crazy economic growth and tech advancement. Right. And their values are shaping a whole new economic landscape in China. So it's this mix of like state intervention, cultural values and these generational shifts all happening against this backdrop of rapid growth and tech innovation. Yeah. How does Kiyu Jin see the challenges that come with all of that? Oh, she doesn't shy away from the challenges at all. She talks openly about the economic slowdown, the potential for things to get unstable and the pressure of an aging population. And we can't forget about those headlines we've all seen about China's ghost cities, those massive developments just sitting empty. Does she address that? Yeah, she does. And she brings a more nuanced perspective to that whole narrative. She explains that a lot of those places were built with the idea that people would eventually move in. And in a lot of cases they have. It's a good reminder that things are rarely as black and white as the headlines make them seem. So it's not just a story of like reckless overbuilding. Yeah. It's more like a calculated bet on future urbanization and how the population is going to shift. Yeah. Does Kiyu Jin think that bet's going to pay off? That's where she really gets into the nitty gritty of how China's economy is changing right now. OK. They're trying to go from this model that's all about investment fueled by infrastructure and real estate to one that's driven more by innovation and consumption. That sounds like a massive change. It is. What are some of the roadblocks they're facing in making that transition? It's a really tricky balancing act. And Kiyu Jin points to a bunch of potential obstacles. One of the big ones is local government debt. Yeah. Which has been growing really fast lately. She says that to deal with this debt, they'll need to be fiscally prudent, make structural reforms and maybe even make some tough, painful adjustments. It's a reminder that even the most dynamic economies have limits. And then there's the whole question of whether China's political system can adapt to these economic changes. Right. I mean, they've been incredibly successful with this centralized, top down approach. Yeah. But can that same approach create the kind of creativity and entrepreneurial spirit that you need for innovation? That's a key question that Kiyu Jin wrestles with, and it leads us right into the last part of our deep dive where we'll look at China's global ambitions and what role the RMB might play on the world stage. All right. I am definitely hooked. Let's take a deep breath and dive right into that last part. Hey there, listeners. If you're enjoying today's episode, check out our previous episodes where we dive deep into fascinating topics in scientific research and more. Don't forget to tell your friends and family about Heliox. Back to Heliox, where evidence meets empathy. I'm ready to hear Kiyu Jin's take on how China sees itself in the global economic landscape. All right. So we talked about the mayor economy, the cultural side of things, how different generations are changing things up. But something tells me this is where things get really interesting. What's Kiyu Jin's take on China's role on the world stage? This is where we see those global ambitions like front and center. Kiyu Jin points out how strategic China's been about getting people to use their currency, the RMB, you know, more globally. Right. They want to have a bigger say in international finance and they're making moves to get there. So is this like the beginning of the end for the U.S. dollar as the big top dog currency? Is the RMB going to take over? Kiyu Jin says not so fast. The RMB's gained some ground, sure. But there's some big obstacles, you know, hurdles to clear. Like what what's stopping the RMB from like knocking the dollar off its throne? One of the biggest things is that China's financial markets aren't as deep or as liquid as like the U.S. market. For the RMB to be a truly global currency, international investors got to feel confident that they can easily buy and sell Chinese assets. Right. And that confidence isn't quite there yet. So it's not just about like wanting it bad enough or having a strong economy. The whole financial structure needs to be solid enough to like support a global currency. Exactly. And then there's convertibility. The RMB isn't totally convertible on international markets, which, you know, creates uncertainty and makes it less attractive as a global currency. Imagine you're trying to do business internationally, but you can't easily trade the currency you're using for other currencies. It just adds a whole layer of complication. Yeah, exactly. And most businesses, investors, they'd rather avoid that. Makes sense. So it sounds like China's trying to play in the big leagues before they've got all the basics down pat. Yeah. But they're obviously not just sitting around. What are they doing to tackle these challenges? Oh, they're playing the long game for sure. Very strategic about laying the groundwork for the RMB to rise globally. They've set up these offshore RMB trading centers like in Hong Kong, and they're pushing hard to use the RMB in more international trade deals. So it's like a slow and steady approach, not a sudden takeover. Any other interesting stuff happening in this whole currency game? One thing Kiyojin finds super interesting is how China is experimenting with digital currencies. Their central bank digital currency, the ECNY, is already being used in some pilot programs. OK. And it could really shake things up in how international transactions are done. Definitely something to watch. So big picture, is the U.S. dollar going to be kicked off its pedestal anytime soon? Kiyojin doesn't give a straight yes or no, but she gives us a way to understand what's going on. You know, it's not this simple either where one currency wins and the other loses. The global financial system, it's constantly changing and it's becoming more multipolar, meaning like there are multiple centers of power. So maybe it's less like a fight and more like a dance with different partners all trying to lead. That's a great way to put it. And China's becoming a more and more influential partner in that dance, that's for sure. Man, we have covered so much ground in this deep dive. I know, right? We went from Kiyojin's own story to like the guts of the Chinese economy and its place in the world. Quite a journey. It really has been. And we've just barely scratched the surface of what she's written about. She's got a lot to say about trade imbalances globally, capital flows, the whole China-West relationship. So much to explore. What I really like about Kiyojin is how she takes these super complex ideas and makes them like understandable. Yeah, totally. She doesn't oversimplify, but she knows how to tell a story, a story that grabs you. She's great at that. She blends like economic data, historical context, even personal stories to create this narrative that's both informative and interesting to listen to. And she always leaves you with something to think about. That analogy she uses in her book, where she compares China's development model to like a whole nation going for Olympic gold medals. That's a powerful analogy, right? It captures that ambition, that focus, the way they're winning to put everything they've got into achieving their goals. But it also makes you think, what's the cost of all this? How does it affect the people in China? How does it affect their relationship with the rest of the world? Those are really good questions. And they show why Kiyojin's work is so important. She doesn't give you easy answers, but she gives you the knowledge and the critical thinking tools to like navigate a world that's getting more complex and interconnected all the time. And that's what makes this deep dive so interesting. It's not just about getting China. It's about expanding our own perspectives and questioning what we think we know about how economies work and how the world is changing. So as we wrap this up, I'm left wondering, what does it mean for everyone if China keeps going down this path? What happens when a country that's been so focused on catching up suddenly finds itself in a leadership role? Those are the questions we're all going to be dealing with in the coming years. And understanding Kiyojin's perspective is a great way to start thinking about them. Thanks for joining us for this deep dive into the mind of Kiyojin and the Chinese economy. We'll be back soon to explore more of the forces shaping our world.