Keyu Jin

"We are focused too much on a financial story of yesterday. Now the dollar is the . The U.S. financial crisis is an aftermath. The financial history or... story of today and tomorrow is going to be about... China's . ...[W]hat is new, and I'm not sure the world is... prepared for it, is... a few firsts of an emerging country. 1) It is the first time a country with only 25% of GDP of the U.S. is leading in many core areas of technology. 2) It is the first time ever that the second largest economy is a middle-income superpower. That has enormous consequences for the... global financial arena. As we encourage China to open up more, are we prepared for, potentially the greater volatility, exchange rate volatility, s... [W]hat... is lacking... even though we've heard so many positive aspects... and I'm completely in agreement, is that China still lacks the micro-foundations in the financial industry, with many more speculators than s, and in that kind of situation, when China opens up completely, is the world ready to absorb the kind of shocks and volatility that even a little tremor of China can send shock waves to... the global economy. So I would pose it as, China's ready for opening up, but is the rest of the world?"

"Lots of people talk about the One Road One Belt, but... we lack... communication with the world. This is the main reason behind the one road one belt initiative, for many reasons, including political pressure. Lots of countries need our support, so... from political perspectives there is a real need. ...[T]here is also economic need behind this initiative ...[T]his initiative is about a network [which] has an impact like the internet. If you have more participation in the network, you can have more effect. If you have infrastructure in Kenya but if cannot be connected to Kenya you cannot do more, and often lots of projects in small countries and similar countries which have not enough capacity to [build] their infrastructure... China, with this initiative tries to create a platform with the participation of all other countries... like when the United States helped Europe, the country tried to create a platform with the participation of other countries like... China [is doing now]."

"China... wants to embrace... trade integration... globalization and more trade and... the pressure is on for more reciprocal... trade protectionist pressures, but... China's also trying to shift its trade... production away from these lower end manufacturing sectors, excess capacity in solar, but that is not necessarily a good signal for the kind of trade tensions that might come about. Also because there's going to be a lot of domestic pressure coming from the Chinese businesses, and the Chinese people to pressure the government to react. So they [the Chinese government] will have to take a stance."

"China wants to shift its production structure, but imbalances in... trade is not just a commercial policy. It's... an imbalance between s and investment, and it's not just due to the currency or trade policies that will solve these imbalances."

"The conversation is missing some fundamental trends, the new paradigm. Larry talked about financial inclusion... about China. The New Paradigm is that it's the first time that a middle-income country is the second largest economy. We're asking it... from IMF, from international pressures for liberalization, exchange rate... flexibility. ...[W]e are not prepared for the volatility that China will bring to the world economy if it does open up. Micro-foundations of the financial infrastructure is very weak, ...dominated by speculators rather than s. So we need to think about this dilemma. We want it to open up. It has a massive amount of saving, connect with the rest of the world for investment, and yet it's going to introduce so much extra volatility typical of a developing country, and the world is not prepared for that yet... I think that is the number one challenge that we need to think about because that is the financial story written today. We also did not mention the dollar challenge, which is the confidence in the dollar. Now, we have s growing. There's a huge demand for dollars. That is rising, but on the other hand, what is backing the dollar or the liquidity is the . We just talked about the fiscal stimulus. ...The share of GDP of the US is going down. We have geopolitical issues, which is a very strong determinant to how much a country wants to hold US treasuries. All this push up to a... multipolar paradigm, and we're not discussing that either. The US maintains the status of the dollar predominantly because [of] a lack of present alternatives."

"Safety, liquidity, trade, denomination, financial services, I think that it's hard to match up with your words, but..."

"That requires global coordination and the role of the US."

"Unless we're making the argument of "Let's leave three quarters of the people in the world living in abject poverty." I do not see any legitimate rationale behind trying to limit China's growth or trying to oust China from the global supply chain."

"It's important to keep open the dialogue channels, to keep on talking. That's the first thing, and second is to see each other's perspective, and understand each other, for instance, people think about China as having a centralized state model, and that it's crowding out the private sector. That's not... the case. Thirty years ago, 70% of the wealth belonged to the state. Today, 70% of the wealth belongs to the private sector, which also provides 80% of the jobs, 70% of industrial output. ...That centralized approach is more poitical centralization and setting the strategic objective, but there's a huge amount of autonomy left at the local level... to the entrepreneurs... to the local Mayors, and they have an interactive dynamic relationship."

"The Chinese dream for me is still about getting the 600 million people who have not reached middle income by international standards... (a monthly income of... $300)... to become middle income, and getting China's average $10,000 GDP per capita to $30,000 or $50,000... That's first and foremost a priority for everyone. We still have a huge swath of the population that can't meet the needs of... dignified life and... secure a good future for their children. ...[T]he China dream ...is that you ...can be in a country with economic opportunities. When you educate, you have better opportunities, when you invest you have a good return, and people live happy and secure lives in a relatively healthy and safe environment. ...China also evolves along with its economy."

"China has a host of very proficient engineers and... STEM students, so the mastery of is something I'm cautiously optimistic about... One of the key issues apart from China's still very centralized state innovation system, the whole-of-nation system, is the impatience of the nation. ...A country with a people that have seen really remarkable growth, that... want to do things... quickly and... see fast results. ...[T]hat kind of spirit, the short, fast, flat attitude ...originally ...a winning volleyball strategy ...then used to describe winning investment strategies. ...[C]reative breakthroughs ...basic research ...people need to be intrinsically motivated by intellectual passion. That's what is needed to have that long-term knowledge economy. ...[T]he reason that China's business models are so successful is that they're very fast and these companies become successful in a very short period of time."

"[T]he backward homeland of my childhood has become the world’s second-largest economy... massive new cities... astonishing technological wonders. Yet... the world is... asking the same questions... comparing China to former Communist... autocratic... repressive regimes."

"The rule of law, sound corporate governance, and intellectual property protection... have been weak... Yet... China... succeeded."

"[F]or those who think that China’s all-powerful political party and numerous s (SOEs) point to a state-dominated economy, consider... [T]he ... accounts for... 60 percent of national output, 70 percent of the nation’s wealth, and 80 percent of urban employment. Thirty years ago, it was the other way around."

"Only by fully grasping the new China model... can we... appreciate how different it is from pure capitalism or socialism."

"Deng Xiaoping... once remarked that it does not matter whether a cat is black or white, so long as it catches mice. He... put an end to the... debate about the superiority of socialism and capitalism..."

"[T]hat a could be compatible... with capitalism... [and] socialism was a breakthrough..."

"[I]ts model... embodies a... blend of the state and... market economy, striking a balance between state and industry, coordination and market incentives, communalism and individualism."

"The [West's] market economy... consumers and enterprises connected through a financial system... the state plays a minor role."

"In China, the confluence of consumers, enterprises, and... state (which exerts significant power...) ...[is] a hybrid... of... market and "mayor" economies... [T]he Chinese state... has... more tools and instruments... mandates and objectives to mobilize collective action in service of... goals. ...[I]t can ...impose mandates and ...punishment."

"China’s political centralization is paired with economic decentralization. ...The "mayors" are... equity stakeholders of their jurisdiction. ...[M]arriage of local Officials and ...entrepreneurs is how China reformed, industrialized, urbanized, and ...innovates."

"China has strong state capacity and weak institutions... advanced countries... have strong formal institutions but state capacity is... eroding."

"[[Capitalism|[C]apitalism]]’s... virtue... property rights protection and competition... are... weak in socialist systems..."

"[I]n China, innovation and have been defining features... despite socialist characteristics... It has found a way to combine private and state forces..."

"Western economies... “nudging” s to do the ly optimal thing... have difficulty succeeding. In China... changes can be enacted quickly, with little political opposition."

"Chinese households... make decisions on a collective... basis... a rich network of intergenerational relationships and duties... often... above... ."

"Entrepreneurs... balance... relationships with local officials... national policy directives, and... regulations..."

"Chinese state... power... [and unparalleled] instruments... can... steer, manage, and push the economy... any direction. ...Policy directives, rules, and regulations can be set with little political obstruction. The state can scrap old rules and make new ones overnight... granting or denying... approvals and licenses, or leveraging the to serve a... goal. ...Internal controls and competition curb corruption. ...[C]ivic society holds ...government ...accountable ...Social media ...embodies a two-way monitoring platform ..."

"China’s investment in ... 40 percent... of GDP... for a country... halfway through... urbanization... may not be high...."

"93 percent of Chinese... value security over freedom, as compared to... 28 percent of Americans."

"In China, an interventionist state is rooted in , a hallmark... since Confucian times... intervention by a senior... is justified if it benefits a junior... This helps explain the... government... [urge] to steer the economy rather than just... markets... [a]nd... provides a rationale... to liberalize slowly... avoiding... risks, in contrast to... former Soviet bloc economies."

"[T]he Chinese... try to balance obligation and deference with free will."

"... indicates... 95 percent of Chinese... had... confidence in... government, compared to 33 percent in the US and 45 percent... in the rest of the world. As of 2022... 91 percent, compared to 39 percent in the US. ...[S]atisfaction levels tend to be lower for s."

"Chinese citizens expect... government to take... large roles... and do not see interventions as infringements on liberty."

"China’s economic story... serves as a cautionary tale. [I]n 1978... it began... major reforms... people were mired in poverty. In... ensuing decades, hundreds of millions... were lifted out of poverty. ...But ...[at] a high price ...below-market wages... low... return on... savings... cheaply built housing... environmental degradation and wasted resources... based on a high-cost, high-growth model. A poor nation with ambitions... taking shortcuts. ...Rules and regulations ...bent ...to foster GDP growth. Unfair competition... between... insiders... and the... people... countenanced so long as capital flew in, investment grew, businesses boomed, and GDP surged."

"The same approach applied to... acquire technology. In its rush to modernize... substandard products, copying and counterfeiting, and investments... with little... efficiency and consequence."

"COVID-19... in early 2020 China chose to save lives and forsake economic output... the West... swinging the other direction."

"China’s economy faces major challenges... Catch-up growth is... different from innovation-based growth."

"The apparatus... effective in mobilizing... technology like electric vehicles and clean energy has... produced excess... steel and s... to flood... markets..."

"A wise state needs to know when to recede... loosen its control and let the economy ride its... ebbs and flows. It needs to guide with a lighter hand... and greater skill, especially in this... era of knowledge and information."

"Its rising middle-income group and new generation of s place... demands on civil society and standards of living... a burgeoning emphasis on improving the softer metrics... a cleaner environment... ... . Its new model... slower... saner... growth—more orderly, regulated, and monitored."

"There is a growing consciousness... what is economically efficient may not be socially desirable... economic success does not... guarantee a nation’s... ... China will strive to move beyond socialism['s] shortages and capitalism['s] inequality."

"[[Youth|[Y]oung people]] are big spenders, prodigious borrowers... the potential to unleash trillions... into the global economy... [t]hey are... more open-minded and socially conscious... However, ...less suited to Western-style democracy ...[D]eeply layered in the national psyche ...steeped in their ...culture ...traditions, and rooted in their ...communities ...ushering in an era of economic... without political liberalization..."

"But... the next generation of leaders... more educated and fluent with diverse cultures, are... equipped to bridge the gap between... worldviews. ... US education has opened their eyes to... virtues of an open... if not a wholly free society. Their desire to question... challenge... pursue the truth, and to push back against injustice will have important implications..."

"Extended skirmishes, export bans of semiconductors, and s are reinforcing China’s... course... to attain self-reliance."

"[[w:Self-sustainability|[S]elf-sufficiency]] without... global engagement is... dangerous... in a world where prosperity and technological proficiency are... network based and interdependent. When economic interlinkages snap, everyone loses, especially the vulnerable."

"[W]e can... do our best to rise above... sensationalism, stereotypes, and es. Only then can we engage with China in a measured... effective way, critique... and ask good questions. Until we do... we will... get China wrong... when... common purpose has become crucial to addressing... existential threats..."

"[Some] Latin American countries... and Asian economies... experienced rapid growth, but... [never] graduated into... high-income countries. ...[I]t could have been due to corruption, political instability, poor , or inadequate investment in ...This ...is ..."the middle-income trap." Since 1960, only 13 out of 101 middle-income economies... escape[d] it. ...China ...may follow... Japan['s]... lost decade of no growth in the 1990s. If, however, China can keep growing at 5 percent on average, and... the US continues... at... 1.5 percent... the Chinese... will overtake the US... by... 2030. China would not be as rich... for several more decades, but... more than a billion Chinese would enjoy the same living standards... However, ...China will need a new model of growth. ...5 percent ...seems overly optimistic ...275 percent ...debt to GDP ...as of 2022 points to ...painful ... ...And threats of make an export-oriented economy ...fragile."

"[T]here are still... 870 million people with a monthly income below RMB 2000 (...US$300) ...yet to join the four hundred million in the middle-income group ...by Chinese standards ...RMB 2000—5000—far below the advanced-economy average. ...[A]n enlarged middle-income group ...is the only way to truly bolster China’s consumption engine."

"There is... room for convergence. China’s productivity level is... only a fraction of the US... China’s share of labor force with a college degree is... smaller than... in South Africa and Brazil, and way below rich countries."