My biggest takeaway is that treat China as a peer that can be steered at the margins, not the Soviet Union 2.0 that can be collapsed, nor an unstoppable juggernaut.
Another doubt I have is that a government that can’t keep wage growth above 4-5 % for long will eventually face political blow-back, even in an authoritarian system. So this supply side focus is not cost-free for the CCP I wonder what the calculus looks like here?
Thanks Dwarkesh, really enjoy your interviews. This one seems an overly US centric view. The U.S. is now facing the consequences of decades of elite-led disinvestment in its own real economy. China’s rise is really about strategic coherence—enabled by the very financial and policy choices made by U.S. actors. The global system is being reshaped not by ideology, but by shifts in industrial capability, access to resources, debt burden, and resilience. The claim that the USA has always been about global democracy is not really supported by the amount of military intervention it has conducted to secure oil and US dollars for the world. Add in the squeeze of climate change and energy run-down we now all face is likely to favour adaptability and resilience.
Haven't had a chance to listen to the whole discussion yet, but would like to question the assumption that the Chinese economy is unlikely to run into a major crisis in the coming years.
My argument here is essentially Hayekian: that without privately-owned banks responding to market signals in the search for profitable opportunities to lend, it is impossible to bring about a rational allocation of capital.
Instead, what we have in China is a state-owned banking system that is making loans on a very large scale to unprofitable enterprises for political purposes, including the need to maintain a full state of employment.
In the process, it can be argued that the CCP is squandering the life savings of Chinese working people, on which they are counting for support in old age. I'll let you imagine what happens when hundreds of millions of retirees go to start drawng down their accounts from the state-owned banks in which they have been forced to deposit their savings at ridiculously low interest rates. No matter how the CCP responds, it won't be pretty.
Longer term, I wouldn't rule out the possibility of genuine democratic reforms in China (including the establishment of an independent judiciary, the rule of law, and a free press) starting with the 170 million member Chinese Communist Party itself. It needn't be bloody and might take place gradually over a period of decades if not generations, as happened in the West.
Really excellent episode, and another great part of the larger China series. I hope you'll keep doing these, they are very high signal-to-noise and make me update my priors in various directions each time. 💚 🥃
My biggest takeaway is that treat China as a peer that can be steered at the margins, not the Soviet Union 2.0 that can be collapsed, nor an unstoppable juggernaut.
Another doubt I have is that a government that can’t keep wage growth above 4-5 % for long will eventually face political blow-back, even in an authoritarian system. So this supply side focus is not cost-free for the CCP I wonder what the calculus looks like here?
Thanks Dwarkesh, really enjoy your interviews. This one seems an overly US centric view. The U.S. is now facing the consequences of decades of elite-led disinvestment in its own real economy. China’s rise is really about strategic coherence—enabled by the very financial and policy choices made by U.S. actors. The global system is being reshaped not by ideology, but by shifts in industrial capability, access to resources, debt burden, and resilience. The claim that the USA has always been about global democracy is not really supported by the amount of military intervention it has conducted to secure oil and US dollars for the world. Add in the squeeze of climate change and energy run-down we now all face is likely to favour adaptability and resilience.
Haven't had a chance to listen to the whole discussion yet, but would like to question the assumption that the Chinese economy is unlikely to run into a major crisis in the coming years.
My argument here is essentially Hayekian: that without privately-owned banks responding to market signals in the search for profitable opportunities to lend, it is impossible to bring about a rational allocation of capital.
Instead, what we have in China is a state-owned banking system that is making loans on a very large scale to unprofitable enterprises for political purposes, including the need to maintain a full state of employment.
In the process, it can be argued that the CCP is squandering the life savings of Chinese working people, on which they are counting for support in old age. I'll let you imagine what happens when hundreds of millions of retirees go to start drawng down their accounts from the state-owned banks in which they have been forced to deposit their savings at ridiculously low interest rates. No matter how the CCP responds, it won't be pretty.
Longer term, I wouldn't rule out the possibility of genuine democratic reforms in China (including the establishment of an independent judiciary, the rule of law, and a free press) starting with the 170 million member Chinese Communist Party itself. It needn't be bloody and might take place gradually over a period of decades if not generations, as happened in the West.
You need to have Pettis on next to round out your china series.
Really excellent episode, and another great part of the larger China series. I hope you'll keep doing these, they are very high signal-to-noise and make me update my priors in various directions each time. 💚 🥃