Keyu Jin (2023) The New China Playbook: Beyond Socialism and Capitalism. Viking
Shradha Arjyal Joshi
Keyu Jin’s The New China Playbook: Beyond Socialism and Capitalism is written by a professor of Economics at the London School of Economics and Political Science. Having both a Western education and roots from China, Jin generates an inside-outside perspective on state and market interplay with a focus on China’s policy landscape. Her firsthand knowledge of both Western neoliberal institutions and a state-regulated China offers her deepen analysis on the latter’s economic transformation from a socialist economy to a mixed model of local entrepreneurship and greater state involvement in ten chapters.
In this extensively researched book, the author Jin Keyu presents a rich array of information on correcting Western stereotypes and providing insight into the Chinese political, economic, and financial systems. While reading it provides food for thought about China, having a unique economic model that no longer belongs to a conventional socialist nor has it fully transformed into a conventional capitalist system. A “Mayor Economy” is one that sets itself apart. The book makes an effort to answer how China’s unique system of political economy, backed by its culture and values, favored its rapid and unprecedented growth.
Since Confucian intervention is deeply rooted in paternalism in China, she analyses the factor that, when given a choice, the majority of the Chinese population would value security over freedom. Jin sheds light on China’s model of economic growth that has chosen a path towards domestic consumption and innovation. She has well clarified the very essence of the responsible state towards making this transition. The dual players, as the state-owned enterprises and private firms, have well accepted their responsibilities and have accelerated the Chinese economy. She has elucidated the public-private dichotomy, stating that China has a fusion of state-owned enterprises, the private sector, government planning and market incentives, communalism, and individualism. This strongly contrasts with the Western economic model that is largely balanced on utility and profit maximization, equilibrium, and minimal government intervention.
‘China’s Economic Miracle’ reflects the shift in its economy from scarcity to abundance, with historical instances and the various factors that contributed to its economic metamorphosis. Public institution has been much discussed, which relied on merit-based centralized bureaucracy. Jin gives equal credit to the Confucian doctrine of social order, which embraces norms, culture, and values besides, frugality, hard work and communalism, for the astounding success of China. China’s growth comprises a blend of political centralization and economic decentralization, whereby the local mayors have a huge role in reforms, innovation, and growth making and can be dubbed as a unique phenomenon, something that's absolutely unique in the world. Initially, it allowed them for gradual experimentation, albeit it was risky and ideologically problematic, the transition from central planning to a market-based economy was jerky, but policy changes were enormously important to China.
The author understands that when the market is imperfect and formal institutions are weak, the Chinese blend of the state with the private sector has been effective. The state-owned enterprise has become the backbone of the economy, but equally, these enterprises have the incentive to become reckless with access to cheap credit and bailouts by the state, as they undergo market discipline with competition from the private sector (pp. 86,95). This state-owned enterprise and private sector mix protected the issue of transfer of assets to elite oligarchs and mass layoffs, as it had happened with rapid privatization in the former socialist economies. (p.96). The absence of private firms in China, which orchestrated socialist reform in 1952-1956, nonetheless, in today’s time, facilitates competition through economic decentralization and political centralization.
Jin traits attributes on China’s economic growth to what she calls the “Mayor Economy.’ “While western countries have complained that the inefficiency, meddling and rigidity of the state stifles the private business creating a drag on the economy, she counters by clarifying that the state in China gives tremendous economic authority and autonomy to local government (p.116). Metaphorically, she states claims that ‘Adam Smith’s concept of invisible hands working behind the scenes is, in the case of China is, replaced by the thousands of arm Buddha’s extended and very visible hands’ (p.117). She presents that China’s developmental paradigm can be best described as “political economy” where the state and the economy are deeply intertwined.
A strong government coupled with weak formal institutions distinguishes it from other economies (p. 126). Differing from the American style of federalism, Chinese local officials directly control vast resources, from land, energy and raw materials to local banks (p. 122). While Jin finds it ironic that, despite being a politically centralized regime, the success of China’s economic lies in its ability to embrace change, innovation, and risk (p. 127). She criticizes that, in either way by breadth or depth, the country’s financial system is underdeveloped and is overly dependent on banks. The domestic financial landscape holds a crisis of various financial players like investment funds, insurance companies, rating agencies and international investment banks (p. 149). The most alarming aspect of the Chinese financial system is pervasive debt. She further suggests that the remedy for China’s financial weakness can be done by introducing competition from private domestic players and foreign players who can challenge the status quo with its cumbersome state entities (p. 189).
Halfway through, Jin challenged the Western perception of Chinese development by pulling apart the public-private dichotomy whereby she presents that efficiency can be gained by combining the two essentials. She has traced from history in explaining political and economic reform from the year in 1978 when Deng Xiaoping forever changed the fate of the Chinese people as he announced that China was going to “reform and open up.” Forty years later, China had reinvented itself as a global power. The author also praises China’s covid regulation, which she claims was widely embraced by the population despite clear evidence of demonstrations against the system’s handling.
As a matter of contemporary issue, somewhere Jin’s book has questioned whether China is ready to take on the mantle of international leadership and what it would mean for the rest of the world if China embarks on a leadership role?
As per Jin, development of an entirely new paradigm is needed to comprehend China’s remarkable rise. She asserts that the Chinese system is based on the legacy of Confucianism, its uniqueness to use power of the government and state control of finances. She declares the system to be “beyond socialism and capitalism.” This entails to be a revolutionary idea, assuming that she does not mean communism here as defined by Karl Marx as beyond socialism and capitalism. She attempts to strike a balance between her optimism of China and upcoming challenges, albeit the main focus of her work is criticizing Western understanding. In this context, she claims that “catch-up growth” differs from “innovation- based growth” and that China has not yet addressed the issues of automation and inequality (pp.15-20).
Jin clarifies that the China model has not yet presented its value by gaining innovation- based growth and tackling the issues of automation and economic inequality. The crux of her work states that in order to learn from the positive and negative of the Chinese state socialism, the Western fixation with free market capitalism must be moistened. The author, however, warns that there is no universal growth model and that the developing nations will have to implement policies based on their own history, culture and state of development in order to emulate them (pp 45,46).
Jin’s book is well-written with loaded, insights and is full of consciously selected tales and incidents. On the contrary, it also seems like a landscape full of secret rabbit holes, where we happily amble around before abruptly finding ourselves in a deserted location.
Shradha Arjyal Joshi is pursuing her MPhil/Phd in International Relations and Diplomacy at Tribhuvan University, Kathmandu, Nepal.
