The New China Playbook

This is Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.

You know, every day we get a bunch of headlines out of China, and the most recent or at least over night, China's economic recovery losing some momentum after we saw an initial burst and consumer and business activity early in the year. So it's been prompting some calls from

Yeah, I mean, I also think the next chapter, investors are hungry for more information on China, right. Investors here, I think would like to know as much as possible and would like to get more insight on and understanding on how China works.

Right, And I think we thought we had the playbook, and there's actually our next guest has written a book that's called The New China Playbook. Beyond Socialism and Capitalism. Kayu Jin is the author. She's also professor of economics at the London School of Economics. She joins Matt and me here in studio. Kay, you really good to have you here with us. We only have six minutes. I wish we had like twenty because I love this subject. But our Adam Minta wrote a story about what the

Well, first of all, that there's only one model that can work, Western style capitalism, where China.

Has that we believe that that's the only thing that's the work.

And that China has a centralized approach domined by an almighty state. It's not at all like that. It's the decentralized economic mechanisms, the Mayor economy which I wrote about, that has galvanized creativity, innovation, pushing for reforms, and even protecting the environment.

So how I mean, aside from reading your book, which I'm sure is a great step, right, how can investors better understand the Chinese economy how it works when we're constantly looking at headlines that are rife with miss in I don't know if misinformation is too strong, but definitely they're biased.

Right, It's really important to separate hype from reality and the macro versus micro And even if the great leaders of any country, US and China say a lot of things, you might want not to read too much into the message and see what's actually going on on the ground. People who visit China will have a better view. People who look at data, which my book does and systematic

But getting on the ground is kind of what I was where I was going. Do you tell your students go to China? I mean, you can read my book right, and you can study the country all you like, but if you don't go there, you're never going to really understand how this society works.

If people can go there, they'll form a much more positive impression than if they won't. But it's also important to suspend this historical lens and this bias that we inherently have and look at China in a different perspectives, see it for its own, see through a different lens.

Well, all right, slow down for a second, because what I mean, many would say you know, what is it in terms of China about human rights and restrictions. That's true right in terms of what's at on social media, But are you saying and that folks in China they're kind of comfortable with that and that protectionism that their leaders are giving them.

There's an implicit contract historically since history between the people and the government that there's some level of deference, although not blind submission, in exchange for security, government accountability, responsibility, and economic delivery. That still holds today. They should talk to people on the ground and Chinese people think, ask them what they feel about these politicals.

Everybody, though, help me out here with a younger generation, Like there's differently stories about you know, unemployment rate in China surging to a record of twenty percent. Tell me that there aren't younger Chinese individuals Like this isn't working for me.

The new generation is super important for China's future. It's going to shape it, and it's meaning a relationship with the world. They're a positive force because look, they like to spend and borrow, not to save as much, and they're quite open minded and their values converge with the West. But today the pressing problem is that education has raised ahead of the economy, and many of the highly educated are not productively deployed.

We do see an opaqueness though, right when jack Ma disappears or when a Bloomberg journalist is arrested and not heard from for a year, that's difficult for us to wrap our heads around. Is that something that Chinese people grow up understanding? Is that something that Chinese people accept and what are we.

Getting wrong about that? Because that's happening.

Yeah, that spooks people, That spooks investors and confidence, which is what is missing the Chinese economy today. But look, you know the old playbook, it was about building factories, industrialization. You didn't need that much in.

Go back to missing journalists or missing Jackma.

Jackma is called back now he's.

A year later. But it was really odd, right, and here's a very prominent, you know, technology global figure and someone that China was proud of in terms of what he had built. So how do what did we get wrong about that? Or how do you in.

The in the US capital it can arguably arguably rises above politics in China, that can never be the case. This is why China is not a capitalist society. Jackma uh without going to his exceptional case is now needed very much entrepreneurs like him because the economy is needed and so important thing to know is that policy can swift radically, change dramatically. Never read anything as permanent.

But are you saying that it's okay for a government to just disappear people that makes investors? Does that not make you uncomfortable even as a citizen. That would worry me as a person.

It's not It's not okay at all. And the government is learning the painful lesson of by by seeing that the economy hasn't rebound as quickly, that investors are not rushed back to look into China, that private entrepreneurs might be holding back. It's all happening today. That's a lesson, ky.

You what is the global value chain going forward? In China's role in that because it's been the manufacturer to the world and we were all we all benefited by it, right, goods cost very little, But what is you know, their value chain going forward?

China's aspiration is not really to compete become like a US. It wants to be a bigger, smarter Germany. That means, bolstered by the triangle of AI communications and data. They want to think themselves as a technical industrial power, not a knowledge financialized economy like the UTH.

But can they get there with the concerns and kind of nervousness that many other worlds feel right now?

Now you see it comes to China. Is why it's so hard to lead China, right, It's so hard to if you step from mouse how you're thinking, Oh, this environment can never foster innovation. I don't. I don't agree necessarily with that because on the ground, the domestic innovation

Ran out of time.

Come back, I need more time.

I'd love to. I wish we had great I wish we had more time. So come back and let's continue this. I would love it. Ku Jin Professor Economics at LC the London School of Economics. Her book is called The New China Playbook, Beyond Socialism and Capitalism. It is out now this is Bloomberg,