Transcription
But I want to start back in 2012 when Xi Jinping came to power, and I, this is a premier that that you have watched and studied and know. Help us understand who he is and as a leader, what he wants. Okay.
So this can make me very unpopular. So Xi Jinping, and this goes back to what I was saying earlier. I want you to keep your minds open for a second and try to imagine this, and and some of you may know this. Um, what we are about to hear is an extraordinarily rare and in-depth analysis of Xi Jinping and China, delivered on April 28th, 2023, by a Westerner who has truly engaged with its top leadership and teaches at its premier university, John Thornton.
Thornton is the former president of Goldman Sachs. In the mid-1990s, as chairman of Goldman Sachs Asia, he was deeply involved in the market reforms of China's state-owned enterprises, working closely with leaders like then Premier Zhu Rongji. Today, he is a professor and director of the Global Leadership Program at Tsinghua University's School of Economics and Management. It is from this unique background that he will paint a picture of China that is starkly different from the mainstream Western narrative.
He will begin by delving into the traumatic personal history of China's top leader, Xi Jinping, who explained the core drivers of his governing philosophy. Next, he will reveal a little-known origin story behind the Belt and Road Initiative, a story that might just upend your perception of the program. And finally, he will offer a complete deconstruction of the term Chinese Communist Party, a label profoundly misunderstood in the West, and propose a stunning analogy in its place. This is an analysis from a synthetic insider, one that will challenge all our preconceptions about China's leadership, its motivations, and its system. Let's listen in.
So, Xi Jinping's father was the youngest vice premier in China in 1959 when he was 46 years old, and Xi Jinping was 6 years old. 1962, Xi Jinping's father was purged by Mao. So Xi Jinping, at between age 6 and nine, his father's right in the center of the power structure, and suddenly he's out altogether. Four years later, 1966, is the Cultural Revolution. Xi Jinping is 13 years old. The father and the mother sent to prison. Two years later, Ping at age 15 is sent to the countryside. Sent-down youth. So he lives in the countryside from age 15 to age 22. So for those seven years, those seven extremely formative years, he's living the dirt, dirt-poor existence of the Chinese farmer. With both parents in prison, older half-sister commits suicide. So there's Xi Jinping as in his teenage college years. By the way, of course, not being educated. There's no schooling. There's no university. And you know, where's his future? During that period, he applies 15 times to be in the Communist Party. He gets turned down 15 times.
Eventually, of course, Mao dies. Deng Xiaoping comes back into power. Deng Xiaoping brings the father out from prison. Xi Jinping is now free to go to university and start his life. The father, meanwhile, Deng Xiaoping makes him the governor of Guangdong province. Guangdong province is the province right across from Hong Kong. And Xi Jinping's father is the individual who goes to Deng Xiaoping and says, "We should make this a special economic zone and experiment with market economics." So his father is the individual who who goes to Deng. So that's the kind of the first spark of the reform and opening period. Uh, later on, when Deng Xiaoping essentially removes Hu Yaobang from power, then Tiananmen Square happens. Xi Jinping's father is the only one of that generation who tells Deng he's wrong, and he gets banished again.
So, I want you to think about the sort of the strength of character of somebody who goes through what I just described and comes out the other side of it pretty much intact, stays in the system, rises up to the position he's in. I have four children, the youngest of whom is a sophomore in university. This past semester, he had a course on the Cultural Revolution, and the final paper was, "Write a paper on what you think the impact was on the sent-down youth of the Cultural Revolution." And so my son interviewed six or seven sent-down youth, half of whom are living in this country and half of whom are living in China. And of course, in his paper, he basically says, "Look, you can't, you can't generalize for for 17 million people on the basis of talking to seven, but these are what these seven people told me." And then he says, "You know, it's interesting to speculate what was the impact of the on the sent-down youth of those sent-down youth who stayed in the system and got to the top of the system like Xi Jinping." And my son says the following things in his paper, which I agree with.
He says, "The first thing is, if you're Xi Jinping, when he says, 'Our single highest priority is to improve the lives of the ordinary people,' when he says that, this is a deeply felt personal emotional comment. This is not a conceptual comment. And this is not, you know, any of the US leaders in my lifetime, none of them lived that that life. And so when they talk about improving the lives of ordinary Americans, this is an intellectual concept they believe it to more or less extent. For Xi Jinping, this is a highly personal comment. That's number one. The second one is, if you live through the insanity of the Cultural Revolution, and you're a leader of China, priority one through five or one through 10 is social and political stability." So those two things to me are the most defining characteristics of this person.
The third one being Xi Jinping's desire for China as a country to reestablish itself, remembering that in 18 of the last 20 centuries, China was the world's most, was the world's largest economy. It's only in the last two centuries, 19th and 20th, where it wasn't. So, so in the Chinese mind, they're reestablishing the norm. They're not, they're not sort of, uh, in Graham Allison's or Graham, yeah, Graham Allison's phase, coming into a pre-existing system, upsetting it.
So one of the things then that I think it would be helpful for us to understand is what are the policies that he's implemented and why? And I, I, you mentioned the number of countries that have remained neutral with respect to the Russian invasion of Ukraine. Um, one can't but wonder how much the One Belt One Road initiative, which supported the trade both within Asia and China's connection to natural resources and the rest of the world economy through this initiative, have played a role in that outcome. Can you, can you talk about what you see as the importance of of what that initiative looks like?
Okay. One Belt, One Road is is a perfect example of something, and I didn't know this until I was told this by John Kerry. So John Kerry told me that in, I think it was 2013, he was the senior American at one of these international meetings that Obama could not attend for one reason or another. And so he was the person who took the meeting with Xi Jinping. And Xi Jinping in that meeting said to John Kerry, "By the way, let me tell you about something I'm thinking about." And he laid out the One Belt, One Road. And Kerry said to him, "That's very interesting. Why don't we do this together?" And Xi Jinping says, "That's a great idea. Let's do this together." And Kerry came back to Washington, and he said, "Before I got off the plane, the Treasury mandarins had cut his legs off, and there was no chance it was going to happen." So it never got to Obama's desk as kind of a strategic question.
But I tell you that story because if you were reading the, if you were reading today the characterization of One Belt, One Road, you would think this was some kind of malevolent tactic to get control of the world on the part of the Chinese, which it is not. It is, it is exactly what it's said, what they say it is, which is to, which is to, uh, extend a model of development into as many countries as it wanted, was desperately needed. And when I talked earlier about Chinese modernization, that I, that I attended last, this last Monday, so Chinese modernization, I won't go into all the details, but there basically are five central characteristics of it. One of which is a peaceful world. Second one of which is common prosperity. Third one of which is harmony between man and nature.
So the foreign minister went through this whole thing, and then there were five of us asked to comment on it. And I said, in my comments, I said, "Listen, those of us who have ever run anything know plans are one thing, execution is another. Execution is the whole thing. So my piece, my advice to you, the Chinese would be, if you're going to hold yourself out as believing in these things, I mean, who's against any of these things? Who's against world peace? Who's against harmony between man and nature? Who's against common prosperity? Nobody. 10 out of 10 people, there's nobody in this room is going to be against any of these things. So that's not the issue. The issue is, are you actually going to do what you say you do? And if you don't, you're going to suffer the same, uh, the same negative blowback that countries like the United States get when they are seen as being hypocritical." So that's point number one.
Point number two, which is extremely important, and a point I want to make to all of you, which I made to the Chinese, don't blow in the face, very unsuccessfully, which is when I first started spending a lot of time in China was in the, I was chairman of Goldman Sachs Asia in the mid-90s into 2000, at a point in time when, uh, the Chinese system was just starting to open up, and they were just starting to put state-owned enterprises into Western markets. And Zhu Rongji was premier or vice premier, then premier, and he was a very unusual person, and he really cared about getting this right. And I happened to be there, and I was very senior, so I was in exactly the right place at exactly the right time to give him advice in a way that'll probably never occur again because the Chinese were so needed with the advice. But one thing that struck me about them was the Chinese leadership on almost every topic, not every topic, but almost every topic was systematically open in the following sense. They started with the premise, "There's somebody in the world who knows this topic better than we do. Let's get that somebody to Beijing. Let's drain his brain. Let's study what he had to say, see if it applies to us, refine it and customize for our circumstance, and then execute." And they did this time after time after time. Which is why you, why you back in those days, you would have seen both John Zimmerman and Zhu Rongji routinely meeting with Western CEOs, Western superb academics, Nobel Prize winners, and so forth, Western heads of NGOs. They met with them routinely one-on-one because they knew they were getting very high-quality information coming in from people who didn't work for them, and good information was coming back the other way.
That, that's that started to stop a few years ago. That's that's another topic. But my point is, systematically open, except I, I said to them, "Listen, one thing, one topic you missed, which is the English language dominates the world's communication channels, and you recognize that you literally don't participate in them at all. So the Chinese story, as it were, is told by people who are not Chinese. And guess what? They don't know the story as well. They don't tell it as well. And so it's entirely absent. And until you start to get into those channels, you're going to be at a big, big disadvantage." So when you talk about Chinese modernization, coming back to that, if you believe it, number one, you've got to deliver on it. Number two, you've got to communicate it in such a way that the, the external world, particularly the English language world, takes it in and believes it. And right now, you're failing miserably on that count. And until that gets corrected, it's, it's never going to solve that problem.
So, one of the things I think most Americans were taught when they learned about China was that it is a communist, originally Marxist, um, form of government and society. Uh, but one of the things that we, we many of us have missed is how not just embracing of markets China has been, but how dominant China has become at capitalism in its own flavor of capitalism, in terms of state-owned enterprises and allowing for other kinds of free market operations. And the, the One Belt, One Road initiative is in many ways an expression of that. Um, the, the incredible trade integration and market integration with the US is another expression of that. Can you talk about how that transformation has happened, and how we missed it, and what it means for for China in particular?
Well, let me say a couple of things. First of all, I just want to read you one quick thing. This, by the way, another one of my pet peeves is that, um, last November, I was having breakfast in New York with a very senior Chinese official, just one-on-one with a notetaker. And in the first five minutes, the official said to me, "It's so frustrating to us that senior Americans never read anything that we put out. Instead, what they do is they, they listen to so-called experts, Western experts, who interpret our documents for these, let's say, the senior people in this country." And he gave a specific example. He said, "For example, Kevin Rudd, who, this is him talking, Kevin Rudd, who I know very well. He's a good guy. He knows Xi Jinping quite well. Again, Kevin Rudd's got a whole theory about what we're doing now, and a lot of people listen to him. He said, 'The problem is Kevin Rudd's wrong, and I don't know how to correct that.'" And, and when he said that, I said, "I, I recognize exactly what you're saying. It relates to what I was just saying a minute ago."
But in addition to which, here I've got a book, for example, written by a senior Chinese comparing the Waring States period in China with ancient Greece. So a frustration of mine is, as much as I know or don't know about China, and I know that, uh, you know, an outsider to a culture can never be an insider. It's the most you can ever hope to be is kind of a synthetic insider by building relationships with people. Um, but one thing I know after all these years is that as much as I think I know in something, if I don't test it with a close Chinese friend, I'm going to be off. Sometimes a little bit, and sometimes a lot. And so I try as much as I can to read things that the Chinese themselves actually write. And by the way, this is an aside with respect to the Chinese government, when they say they're going to do something, chances are very high they're going to do it. And in contrast, for example, to the, you know, our State of the Union, which is basically a speech about about the future and about hope, the Chinese have a thing they call the, it's called the, the, the equivalent in China is the Chinese Work Report, which tells you exactly what they actually did for real, and what they're going to do for real. It's a completely different document. Right?
Now I just want to read you one thing here, though, that I sort of captures, I think, a very good sentiment. Bear with me here one second. Ah, okay, here we are. "The power configuration in the current world should not be defined as competition between China and the United States for hegemony. Rather, we witness a shift from the situation in which a single civilization dominated the globe to common prosperity of diverse civilizations. What China has inaugurated is not a Chinese century, but a century of diverse civilizations, a new era in which there will no longer be a single civilizational hegemon." And that's exactly the way the Chinese see it. As opposed to, you know, Joe Biden says this is the, this is the century of democracies versus autocracies. Some of the, some of the funnier, more clever Chinese will say, "No, no, it's the plutocracy versus the meritocracy."
Which gets to the Chinese Communist Party. The Chinese Communist Party, the best way to think about that is the Chinese Communist Party is essentially the meritocratic elite, in the same way that if you look back through Chinese history, there was an emperor and then there was the kind of the Mandarin class running the country. That's essentially what you have at the moment. And you don't get into the Chinese Communist Party if you're not very able. You don't get to Tsinghua University if you're not very able. You know, 10 million kids a year take the, take the national examinations to go to university. The top 3,000 of those go to Tsinghua University. 3,000 get admitted, and 3,000 go. And so, and, and Tsinghua University accounts for 50% of the leadership of the country. So, so the examination-based culture, which has existed for 2,000 years, still exists. And essentially, that's what drives the, the input into all these institutions. And so to put it in, in, in the vernacular, if you get to the top of the Chinese system, there's no chance you're not very smart and very able.
And the only institution in this country, which is to me, is at all like it, and when I tell them this, it drives them crazy. The only institution in this country that's at all like the Chinese Communist Party is the US military. Which is to say that if you and I were 18 years old and we went to West Point together, we went in the military and we stayed in the military. One day we're four-star generals. We've known each other for, you know, whatever it is, 40 years. And we're sitting around the same table. That's the Chinese system. And so they know each other intimately. They've had real jobs. They failed or they succeeded. If they succeeded, they went ahead. If they failed, they failed. And like all big organizations, there of course is plenty of rough justice and infighting and all the rest of it that goes on in every corporation in the United States and anywhere else. But that's basically the system.
So I think the word communist kind of gets into the, gets into the mental way of Americans understanding what you're dealing with. Um, it's not a communist system, period. Which doesn't mean they don't have, when they talk about common prosperity, for example, you might say that's the equivalent of trying to fix income inequality that we would talk about. But the other day, another Chinese was saying to me, "The capitalist system is essentially a divide and conquer system. The Chinese modernization is a unifying system." And there, so Xi Jinping, to go back to him, he is determined, although they haven't figured out how to do this yet, that common prosperity is for real. They're proud of the fact they've lifted 800 million people out of poverty. That's the most ever in history by a long, long way. They're proud of that. And they think those people ought to continue to advance. And that this, you know, these big, big differences between the wealthy and the poor is just, is too much. Mhm. Mhm. And that's why you see him sort of cracking down now on some of that.
John Thornton's analysis is so powerful because it completely bypasses the tired clichés of the Western media, using undeniable personal experience and an insider's perspective. He offers no empty moral judgments. Instead, by recounting Xi Jinping's personal history of suffering, he allows us a glimpse into the deep emotional foundations behind his governing principles of improving people's lives and maintaining stability. His most subversive argument is undoubtedly his redefinition of the Chinese Communist Party. He contends that as long as Westerners remain fixated on the word "communist," they will never understand the essence of China. He argues instead that the key to understanding the CCP is to see it as the modern-day continuation of China's millennial-old meritocratic elite, whose members have risen through an incredibly rigorous system of elite selection.
This profound analysis leaves us with several questions to reflect on. First, when trying to understand a foreign leader, do we rely too heavily on ideological labels and neglect to explore their personal history and formative experiences? Second, does Thornton's framework of CCP equals meritocratic elite offer a more helpful way to understand China's decision-making and behavior than the traditional communist dictatorship frame? And finally, when a top Western business leader and academic tells us that the common perception of China is deeply flawed, does it mean we need a new framework, one that transcends ideology to understand the country? In Thornton's analysis, which part was the most subversive to your own understanding? Was it the story of Xi Jinping's personal history or his stunning analogy for the CCP system? We welcome you to share your thoughts in the comments below. If you believe this analysis from an insider has provided you with a valuable perspective, please like this video and subscribe to our channel. Thank you for watching.