There was a difference in focus. Before the late 70s, the main focus was to prepare for the next war or revolution, hence the production capacity did not produce much that can be measured by modern economic metrics. For example, to prepare for an invasion against the USSR, project "Third Front" was initiated in 1964, i.e. splitting research institutes and factories into multiple units and moving those units from major cities into the mountains and far reaching countryside. Another symbolic project was the R&D of nuclear weapons and its launching systems, i.e. ICBMs. Such enormous projects had contributed absolutely nothing to this so called GDP growth, but were carried out purely from a survival standpoint. What Deng Xiaoping did in the late 70s was to switch China from a war/revolution mode to an economic development mode, as he anticipated a rather peaceful global environment, i.e. no WW3 were to happen in the coming 30-40 years. The rest is history... This guy's view is pretty ridiculous, he has made it sounds like China was nothing, and bang! Everything showed up out of nowhere during the 80s, a textbook neoliberal narrative, which fits his resume quite well. A few very simple metrics that should be taken into context, 1) the live expectancy in China was about 40 years in 1949, and it went up to 65 in 1979; 2) the literacy rate in china in 1949 was around 20% and it went up to 70% in 1979. There are countless metrics like these, that have greatly contributed to the economical development of China in the past 40+ years, intentionally leaving them out is a great injustice to say the least.

I did not expect that there is a continuity from the Cultural Revolution through Deng Xiao Ping's reforms to today's economic structure and achievments. This is the best I have heard about the Chinese economic system for years. Thank you!

Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing. A mathematician, an accountant and an economist apply for the same job. The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly." Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four." Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"

As a foreigner who serves the Chinese, Singaporean and the Hong Kong consumers over the past decade, I can safely say those days where Chinese were found shitting by the streets are gone, where Hong Kongers stupidly belittled China for lack of culture are gone. Their resilience took them through the global culture shock, painstakingly endured the economic change, with more holistic and civic-conscious education. Their values of staying brave in the face of humiliation is something I don’t find in other nations.

This was absolutely great. But at the same time, it only feels like Part I.

Definitely needs a part 2. Awesome interview

Mr.Xu's explanations are well-articulated and being developped in a clear way. Look forward to the next part.

Amazing analysis. This is why I love this channel. This definitely needs a Part II.

This is dialectics in actions. Material analysis leads to theory, theory leads to practice, which leads to analysis of material conditions. Any society that loses this agility to self correct and experiment is doomed.

I love the way he randomly smiles in syncopation with his sentences

Fantastic summary of the economic reform in China.

Thank you professor and NET for sharing!

Very informative and amazing.

Wasn’t the private economy firstly recognized (legalized) in 1988 constitution amendment?

Love this channel, very interesting and informative. Thanks.

thanks for your recount in detail to make us something more clear

Great insights into China's system. We need more of this!

At the beginning he says, that China cannot be called a superpower because its per capita GDP is so much lower than the one of the US. So I would like to ask:can the US ever challange the current super power and world hegemon Luxembourg?

So good to get a very good explanation/account of China’s economic development that provides much insight rather than the usual journalistic account. This is really informative.

Should share this with everyone and their kids ( where applicable) who ruled India post independence.

A very articulate explanation Prof. “ in English!” Thank you for sharing a valuable insight.

also a bit more than 80% of labor forces work for private sectors, state enterprises only employ less than 20% of labor forces. "The combination of numbers 60/70/80/90 are frequently used to describe the private sector’s contribution to the Chinese economy: they contribute 60% of China’s GDP, and are responsible for 70% of innovation, 80% of urban employment and provide 90% of new jobs. Private wealth is also responsible for 70% of investment and 90% of exports.” Today, China’s private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group".

excellent presentation and explanation of recent chinese economic/cultural history. I wonder if the contamination and defilement of Chinese agricultural land and water was a product of the shift to privatization/management of the resource or if this had been going on for years before the shift ....

A lucid and concise explanation that hints at so many other things.

Very insightful I learn a lot from this very articulate gentleman

Begin by ensuring a strong agricultural industry, to feed the people domestically, and take the next steps by reforming overall economic policies.

I think the idea of competition between cities is a great idea.

Just some high school sociology/history class material, but now in English and everyone’s impressed. Everyone who didn’t grow up in China but know so much about China, that is.

This perspective has deepened my appreciation of Chinese culture. I've always felt there is something in, call it the "Chinese System", that succeeds beyond any single philosophy that overlays it. There isn't any one thing that explains the dogged persistence of Chinese people to succeed in spite of all obstacles. And as a personal observation I am struck at the importance of Family Reputation in maintaining social connections. Yet, for many possibly most Chinese, life remain rather grim. Still there is a sense that China will endure all things.

It's really a good analysis of the Chineses economy.

China has an insanely calculated economy. great vid, very informative.

This guy, I love how he explains it. Really awesome and great listening. This helped explained so much. China is a very interesting country, that's for sure.

Townships, Provinces and then Regions competing for GDP instead of profit, such a simple concept but effective. Can you imagine in the US cities control their economy and compete for GDP and as to who improved whose people's lives? Can you imagine that? me too, I can't.

What was the incentive for the cities/provinces to rank higher? Were they the same for each level? And if it was a reward, how did the government repel unequal growth through unfair starts , i.e. where the winners' reward advantaged them for the next ranking season?

Excellent talk. Much appreciated.

Thank you very much publisher , this article is helpful ,hopefully there be more to come

This a brilliant insight into the Chinese economic miracle.

Anyone knows what these ranking system of the provinces economic progression rewards (or punish)?

Well said. Brings the situation into perspective. Thank you

That why extreme increase. But the disappointing from labors can not express. The confederate use the dictatorship system for agriculture productions in 7 colonies also the same.

1.25 playback speed is perfect!

Umm... did people who comment actually watched the video...?

The per Capita GDP is also interesting because of the distribution of the benefit.

Thank you!

Accurate narrative of recent economic developmental trends of China. 👍

Interesting insights. My daughter taught english in China many years ago.

This is so wild. Great content. I'm learning so much!

Vote time is 1.25 vs 0.75 playback speed which is better??

Clearly a key focus has been reducing poverty and raising standards of living and their regional competition system seems to have had success, although what happens to the losers? The rapid growth of the private sector suggests that, like the west, wealth and income inequality will become an increasing issue if it isn’t already. Also, how will China contribute to reducing climate change. Accepting that the early heavy lifting will have to be done by richer high consumption countries like the US, Uk, Germany etc., China already makes a high contribution to global greenhouse gas emissions and with the planned growth and large population this will only get worse. For me a wellbeing focused or “doughnut” economy would be a better option. All countries need to operate in the safe space between providing wellbeing for their people on the one hand and preventing further climate change and other environmental issues on the other. Richer nations need to reduce consumption to reduce their environmental and climate impacts and poorer nation may need to grow, but sustainably, to improve wellbeing. And, I’m not saying this will be easy, but I believe it is the right solution.

An honest voice is larger than a crowds.

Very interesting!!!

It’s nice to hear an educated mainland Chinese person speak without endless amounts of propaganda and skirting the topic.

9:54 local governments are ranked! Great!

The key here is that the fully objective regional competitions and rankings are what determines who rises to higher political office. So China had the most meritocratic governmental matriculation system in existence, having neither the personal infighting and purging of the Soviet system, nor the shallow popularity contest of the Democratic west. This was even reflected in a de facto term limit and orderly decadal generational handing over of power at the top most level. But this meritocratic system has been fatally compromised by Xi's total control and abolition of term limits, this threatens to re-Soviet the Chinese system in which loyalty and purging rather then merit determine leadership.

Yes. Yes. Thank you

Have you heard the expression "fake it 'till you make it" well...

administratively-planned but not centrally-planned economy

lol it's amazing how people can become experts at things they know very little about. As someone who lived through the late 70s and 80s in China I can tell you a much different and much simpler story. In the early to mid 80s right after the end of the culture revolution the gov. started let small measure of capitalism creep into the economy. It started with letting people run food stands , then they started letting people work their own land. The slogan was let a small number of us get rich first so they can pull the rest with them. As gov. allowed more and more private business the economy got better and better it's as simple as that. I do not dispute the regional competition model but that is hardly the real reason for economic growth.

so nice of you to clarify for us the issues :)

Thanks for the good video.

2,600 years ago, Sun Tzu said, "If you know the enemy and know yourself, you need not fear the result of a hundred battles." I believe recent China has been following his lesson. Knowing your state-level enemies thoroughly means you have to study them very hard for a long time while gaining useful knowledge from them and applying it to yourself.

When mentioning GDP from the USA, one has to consider the vast amount of economic bubbles there. For example, a small operation costs only few hundreds dollars in China, while it could cost 20 times or even higher in the states. Let alone meaningless lawsuits, lobbys.... All of these contribute to the GDP of the USA, but not to improving people's living standard. In comparison, China's GDP is solid, made up of "real" changes that indeed improve people's living standard! For example, the Shanghai has a GDP per Capita that is still way far away from the poorest counties in the USA. But if you compare the living standards (education, life expectancy, financial saving, personal properties) between Shanghai and any an US city, Shanghai can even beat New York city in many ways.

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great info!

30 years of unparalleled economic growth in China was also chronicled by an average 20+ percent growth y.o.y. of manufactured goods exports in the same period. Most of these goods were exported to the US in the first decade and the world followed suite. China was able to organise production in this way because of central direction administered locally. Decentralisation is normally viewed as a bottom up not top down approach. This challenges the decentralisation semantic here. Regional cooperation is also better than regional competition especially when it comes to sharing resources. In terms of services perhaps competition brings out the best in people. Also Chinese still import food. So their food system perhaps needs to be reworked? Depends on what the priorities are.

India followed a centrally planned economic model till 1991. The economy later embraced capitalism to follow rapid growth for 3 decades. Still, long long way to go

Excellent, but maybe also point out that the main goal of the local government in the competition is to grow within the party

Part 2 please

No mention of investment credit creation.

Watch at 1,5x speed, thank me later

Really enjoyed this video. Earned a subscriber :)

Great explanation of China's economic reform with concise examples.

regional competition sounds much more robust than profit maximization. Now you can just replace profit with sustainable growth and the machine will churn out the new equilibrium whereas the capitalist system has to deconstruct itself to the core and reevaluate all its categorical imperatives... ccp algo ftw

Thanks for the unbiased explanation

very good

Wheres part 2

He is wrong in saying the private sector wasn't "legal" until 2002/04. Not fully institutionalized, maybe. Not explicitly politically endorsed, maybe. But definitely LEGAL.

Professor Xu recalls the facts correctly but his overall analysis is lacking. There are 2 important flaws with the picture he is trying to present. Now that he has explained what the world misunderstands, let me explain what he misunderstands. 1) The simple comparisons Professor Xu keeps making between the US and China aren't very meaningful. The context of those comparison aren't given and other comparisons that could help to make things more clear aren't made. China did start at 5% of the US level of per capita GDP in 1950 and growth did not begin to close the gap until much later in the 1980s. The context of this is that China actually grew pretty fast during the 1950s and 1960s but because the US also grew very fast back then there was less catching up done. The prospects of catching up so quickly didn't really materialize until US growth started to slow dramatically post Vietnam war. Also the nature of US growth post Vietnam war became extremely poor because it was largely fueled by asset bubbles and speculative mania. This leads to China actually catching up faster than the figures state during this period. The true extent of which will become more apparent once those US asset bubbles pop. Also during the period of low catch up China was still in tumultuous times. The great leap forward was a set of very large natural disasters compounded by a very poorly designed administrative system exposing the flaw of outright copying soviets systems. The Cultural revolution was a soft civil war of sorts to settle the power vacuum left by the decline of Mao. Together with this there were many other challenges such as the Korean War, the Sino Soviet Split, the reclaiming of Tibet and Xinjiang. It was not until the late 1970s when power was recentralized by Deng and peace was made with the existing superpowers did a long period of peace and tranquility hit China. This combine with slowing US growth and the US search for sources of external labor to solve its stagflation problem gave rise to the fastest relative catch up the world has ever seen. Unlike what the professor says the very low starting point of the Chinese economy was only one factor of many and not the main factor. One can see this easily by comparing China to other developing countries such as India, Brazil, Africa and etc... India had just as low a starting point but it went from roughly the same level as china to being less than 1/5 the level of China today. Most of South America and many parts of Africa basically experienced no catching up at all regardless of where they started in their development level (South America fairly high, Africa fairly low) with only some exceptions due to booms in commodity markets. 2) The Professor's description of the Chinese system while descriptively accurate to a degree misses the actually systemic features of the system which are very important to be able to understand this system relative to other systems. "Regionally Decentralized Totalitarian" is not a very good name to apply to anything given that the term is an oxymoron to begin with. This terms tells me that whoever is using this more for political identification than as a natural description. The Chinese system is not a Totalitarian or Regionally Decentralized system. It has aspects of totalitarianism and aspects of regional decentralization but highlighting these aspects alone is misleading about the total picture of the system. Without needing to invent new terms the Chinese system is just another mix market system. Economically, it is a mixture of central planning and self governed markets. Politically it is a mixture of top down and bottom up administration. The main difference of the Chinese system to other mixed systems is that the mixture is rather deliberate and not just the legacy of a series of historical accidents. The Chinese are central planners that have learned to use decentralized systems to achieve centralized goals. Whenever it picks up a difficult problem to solve it will search for solutions among both centrally planned solutions, decentralized autonomous solutions and a mixture of the two. You can see this clearly when you see how they go about making solutions through trial and error. When you look through this system you will see many innovative applications of decentralized automation in combination with central planning. The delegation of management entities by regions with separated scorecards and universal rankings is one such innovation that this system came up with. (If only this system worked as well in the US school system where it is known as standardized testing.) Finding one of its best most well known innovations and slapping that together with the must have "totalitarian" label is a pretty lazy and misleading way to give a name to a system. The true Chinese system is far more complicated than that. While the Chinese economy looks like all the growth is from the private sector and the public sector only grows through leaching the private sector, this picture is actually deeply flawed. The only way to see things this way is to ignore all the externalities that there are between the public and private sectors. Upon deeper inspection you will see that the two sectors are deeply entwined and mostly symbiotic. Without the externalities that the public sector generates there will be much less growth from the private sector. This is the lesson that the Chinese have learned and why they are unwilling to shrink the public sector further today. When you see Chinese administrators leaving what looks like unprofitable and inefficient public entities standing, you should ask yourself. Are they doing this because of corruption and graft? Or are they doing this because of some externality I don't see? Nine times out of Ten it will be because of the later and not the former. In case you don't realize this, the public sector in China is the implicitly provided social safety net. The Chinse are resisting going from this to an explicit public social safety net because the incentives for people work much better with an implicit rather than an explicit social safety net.

Thanks

The camera view change every few seconds is very distracting, had to just listen to the audio

Mao: "Tomorrow we will overtake Britain, next week we will overtake America" 30 years later: 1% down, 94% to go

China change the game. They show to the world how to build a country without dollar,world bank & imf.

How interesting.

Super informative ! Thank you !

“Regional, Decentralized totalitarian system” 🍿👀

By that logic about superpowers, Luxembourg would be the world's greatest superpower.

Good stuff.

Fantastic

It's good to see that China thought outside the box. I wished the US would think of think of something better besides in fighting and printing money for dumb stuff

China is a closed system with an open mind. The US is an open system with a closed mind.

when people say super power, they dont only mean economically. there are countries with higher gdp per capita.. but they arent considered as superpowers bc they dont have enough population to be a military superpower

An interesting way to govern and I can see the benefits. However, most of the people would not understand. For a long time, the soviets believed that the Chinese would show them how the “true” shared and state own economy should be implemented. I believe that today we live those days.

Latin America is like , nah corruption insecurity and poverty is the best way ! Look at us we're doing so good ! Not ..

The early focus in the talk about relative GDP levels hides some important differences; western economies have largely become financialsed service sector economies and run large trade deficits. The GDP versus real incomes show that in the west money (wealth) is being transferred to the top deciles, while in China manufacturing is producing more and better jobs. The lesson is that neoliberal economic theory is fatally and deliberately flawed to allow for imperialism and plunder capitalism.

So what camp will he be sent to when he returns to work in China?

It should also be kept in mind that for 100s of years China was the wealthiest and self-sufficient economy possibly in history! Once China was forced to interact with Western Europe it quickly fell from being rich and able to poor and helpless. The same is s true for most of the world to varying degrees. China is leading the way out of the illness of Western domination which is why it's cast as a threat and a villain.

Great per. Also important people realise China has done very well but still has room to improve how and what it does. Everyone dislikes the normal propoganda and bs attitude expressed too often. As an Australian i look forward to China restoring trust and joining the merit based economy politically.

1/20 to 1/4 change in personal wealth compared to the USA is a beneficial economic measure of success. However, both countries are running economies that consume too much carbon. Do economists bother to consider the limits of economic growth that climate change is imposing on humanity? The rising rates of carbon emissions say otherwise. The USA and other nations have to reduce their consumption and China/India have to reduce their consumption and population. Economists need to start teaching sustainable environmentalism in economic classes.

but doesn't regional competition eventually just leads to market economy? Isn't this just market economy with extra steps?

Makes one wonder what the relationship of the 1:1/4 per capital GDP relationship. If the yuan is 1/6th of the dollar, does that mean that the average Chinese can purchase 1/4*6 = 1.5 the goods (in China)? Would like some help interpreting what the numerical relationship of 1:1/4 PCGDP really means.