Transcription
What made the CCP fundamentally different from its ideological cousins? >> It has never stopped changing. We do have observable facts that elections in liberal societies have not been working for quite some time. They are unable to set long-term goals. >> Is there any individual freedom that uh in your opinion should never be subordinated to collective stability? If humans decide then humans are sovereign. We are God. So we can change things. >> What is the mandate of heaven? Who is China's most important ally?
The guest of today's podcast on China is Eric Lee, a successful venture capitalist and public intellectual from China. He was educated in America at Berkeley University as well as at Stanford, later graduating with a PhD in political science from Fudan University. He successfully invested billions of dollars in various sectors in China and was one of the founders of the Guancha Media. He is on the board of the Stamford Business School as well as of the China Institute at Fudon University. He is a very well-known public figure in discussions on China internationally, sometimes with controversial views. Eric Lee, thank you very much for doing the podcast on China. >> Thank you for having me.
Book >> the Chinese Communist Party. I want to talk about the Chinese Communist Party. >> Uh well, it is arguably the only communist party in history that can credibly claim to have delivered sustained prosperity, uh, technological advancement, and and probably the largest poverty reduction in human history. Most other communist parties, say in Eastern Europe, or in Latin America, or even in other parts of Asia, uh, have ultimately produced economic stagnation or conflict rather than dynamism. Uh, so in your opinion, what made the CCP fundamentally different from its ideological cousins? Uh, and at what point it stopped being a conventional communist party? Well, I don't know what a conventional communist party is. Uh, but first, let me say that I think it's more complex than that. Uh, it's not as simple. Um, you know, the Soviet Union was a miracle in modern history. Uh, if you read Soviet lit, uh, Russian literature, you read Dostoevsky, Tolstoy, Chekhov, you know what Russia was like in the 19th century. Very backward, serfdom, poor. Uh, and the Soviet, the communist party made the Soviet Union a superpower, completely modern with science and technology, uh, unparalleled, first to go to the moon in one generation. In one generation, they did what England did in three, 400 years, industrialization. Uh, I mean, this area of the world was influenced by that, of course, uh, of course, in the end, uh, the Soviet Union collapsed for many different reasons. Okay, not just economic stagnation. Um, many countries had economic stagnations as well. The US during the Great Depression must be worse than the Soviet Union of Brezhnev, right? Much worse. Um, so, um, I think it's, it's too early to make that determination whether, you know, communist party everywhere except China, uh, and what have you. Uh, I think the, the Soviet Union was a, a major success story for nearly a century. >> Mhm. >> Um, and the Chinese Communist Party, of course, it's the Chinese Communist Party. Um, and I think, you know, I'm of the view that whatever political party or ideology, uh, you need to be connected with the circumstances and conditions of the country in which you operate, in which you lead. Uh, and I think the most, uh, essential element, uh, characteristic of the CCP is that it has never stopped changing. [snorts] Has never stopped reforming, uh, with the circumstances. Um, and it's also deeply rooted in Chinese culture and Chinese tradition. Uh, so I think these are two things that are, are, you know, if you want to use the word unique, you can, but that's unique to the CCP as a communist party. One is, it's, it, it never stopped adapting, uh, so far to date. Okay. Uh, and it's deeply connected to Chinese culture. >> So, it's, it's, it's essentially quintessentially Chinese. >> Um, that's very interesting. Uh, one of the, uh, things that you often argue is that, uh, performance is a stronger source of legitimacy than, uh, political elections. Elections in, in the Western sense. Uh, but my question is to you, who ultimately decides, uh, whether the government is performing well? Is it the government itself, or the governed? Because without competitive elections, how can citizens, uh, decide if they're happy or not happy with their government? And how can they peacefully remove leaders that they might not like? >> Well, good question. Um, you know, I'm a student of political science, and political science is a discipline that you essentially apply the methodologies of natural sciences to social sciences. That's what social sciences do. Political science is a part of social sciences. Um, so, of course, the methodology of natural sciences is essentially taking empirical studies, taking observable facts, and you apply interpretations to it. And of course, interpretations change over time as you learn more observable facts. >> And theories get overturned when you discover new facts. That's how sciences work, and and we try to do that with social science, with with social issues, and not perfectly, okay, because it's not hard science, but we apply the same methodology. Um, so if you look at, uh, come back to your issue, elections or liberal elections in liberal societies. Um, I don't have a theory on, I have some instincts. I have some, some interpretations, but I think the theories are still being formed about why the CCP, the Chinese Communist Party, has been successful. Okay. Um, but we do have observable facts, clearly observable facts that elections in liberal societies have not been working for quite some time, decades. Okay. And certainly, to answer your question, uh, you know, we can't explain what works, but we do know what doesn't work. >> Elections don't work. >> They haven't worked for a long time. They did work under certain circumstances in Europe and the US, but I think it's, it's clear that the electorate, the governed in liberal societies, have been unable to use this particular methodology called elections >> to produce leadership that delivers for them. >> Mhm. I call it a perpetual cycle of elect and regret. >> And that's, you know, all the data, all the, I mean, it's hard to dispute that. >> Mhm. >> If you look at all the elections in liberal societies, from US to Europe to, you know, global south that adopted the system, um, they elect leaders, and they almost immediately regret >> their choice. Why? But don't you think that this was just like a very recent phenomenon in Europe? Decades. >> Decades. I think I, it seemed to me that, uh, the trend began maybe in the 80s and 90s, and it's gotten worse and worse. You look at these countries, they keep electing these horrible leaders, and one everyone is worse than the last. And the people know that. They tell their posters what they think of their leaders. The trust in their political institutions in virtually all major liberal societies has been declining nonstop for decades. >> But that's the system of government that they have. It's enshrined in the constitutions. >> That's right. So basically, if they were to change it to improve it using a different method, as you say, like, uh, how would it go about? Like, who would be the one to pick, like, a leader that works well? >> It's very difficult. It's very difficult. Um, in the United States, for instance, it's almost impossible to amend the constitution. >> Every political scientist will say that they used to be able to amend the constitution. So, so, so back to my first point, >> uh, I think the key to success in politics, of any political organization or any political system, is your ability to adapt >> to changing circumstances, uh, or we call it reform. If you, once you're unable to adapt, you're unable to change when circumstances change, then I think that political system goes stale, and eventually, it will fail to deliver. And if they fail for a long period of time, the system could be replaced. >> And you argue that, uh, one of the secrets of the CCP success is its continual change and and reform. >> That's right. >> Um, you also describe China's system as meritocratic. Uh, well, first of all, what is the meritocracy applied to the Chinese governance structure? How would you describe it? >> Well, I've described it, um, many times in my talks and my writings. Uh, it's a, it's hard to explain in a, a short podcast, but it suffices to say that it's a very elaborate. The CCP has developed, built, and developed over a long period of time, a very elaborate system of promoting common people, ordinary people, through the ranks, and they are, once they reach senior positions, they have proven abilities and proven track record of delivering on governance initiatives. >> Mhm. >> Um, so it's, it's, it's no different from a company, for instance. Okay. Uh, human resources in a company. Um, and the system has been working for a long time. Uh, I hope it will continue to work because I'm Chinese. [laughter] I'm a beneficiary. Um, but there's no guarantee, of course. But is that not open just to the Communist Party members? What happens if you're not a Communist Party member, and there are a lot of Chinese who are not party members? This system does not seem to be open for them. What do they do? >> I think the key question is, is the Communist Party itself open to everyone? >> And of course, the answer is yes. Mhm. >> Um, so, so anyone could try to join the party. >> Mhm. >> And it's not a, uh, you know, common people join the party. It's, it's, uh, it's not a, you know, oligarchy. Uh, they recruit in universities, they recruit in workplaces. Um, so, so, I mean, I think that would be a test of vitality of the party >> if it one day stops being open and have ordinary people with ordinary backgrounds. >> Mhm. >> Just through achievements, >> Mhm. >> through abilities, through character, could join the party and move up the ranks, then of course, that, you know, it, it would be in trouble. >> Mhm. Um, like many political systems, I mean, in liberal societies, I criticize this all the time. >> Um, it's become oligarchical. >> Mhm. >> If you, if you're elites, >> that you keep in the governing, governing class, you hand more power to your next generation. But the critiques of China is actually, uh, are raising the same, that it is oligarchic, and that it is a self-perpetuating thing because only amongst the Communist leadership, you can say qualify to, yeah, you know, become a mayor, following which you may go to run a province, and then ultimately, I don't know, go to the central >> right >> level. Yeah, because the party is the political system itself. >> Uh-huh. But the, like I said, the key question is whether the party is open >> to everybody. I mean, I, I do this exercise with, you know, other scholars and my students that, you know, if you look at the Central Committee, which is our highest ruling body of the party in the country, there are three, 400 members. Um, we examine these people, the vast, vast majority, 95% maybe more, are from completely ordinary backgrounds. >> Not from wealth, not from power, completely ordinary families, ordinary backgrounds. You compare that to the ruling bodies of liberal societies today. Just now, look at the US Senate. How many people come from privileged backgrounds? You look at other countries in Europe, all the liberal society, and liberal societies, the countries that have adopted liberal constitutions in the developing world. >> But wasn't there an expression, uh, I don't know if I remember it well. It was called princelings. >> Princelings. Yes. >> Princelings that applied to a certain group of Communist Party >> leaders. There are a few, but very rare. >> Mhm. >> A few. >> The vast majority are not. >> Of course, vast majority >> are not. >> Yes. So, uh, staying on the competence argument. So much of the argument, uh, about competence was that, uh, you show basically, and not once, but many times, that you are capable of producing certain results as you're rising up, uh, the ladder. Uh, but what would happen if China were to, uh, experience a prolonged economic slowdown, uh, under a single strong dominant leader, and it did happen in history. You had, uh, the Cultural Revolution that had arguably devastating results. Uh, so imagine another economic slowdown happening for whatever reason. It could be global developments, domestic developments, or whatnot. U, so, uh, how would then the change for the better take place if a single dominant leader, that is not subject to a political election, keeps, you know, returning suboptimal results? What would the ch, what would be the solution inside the Chinese system for such a situation? >> Well, come back to our first point. The solution based on observable empirical data is not election. >> Because elections all over the world are not replacing bad leaders. They keep producing worse leaders, okay, in liberal societies. All right, so let's take that off the table for now. It could come back when circumstances change, okay? Um, so obviously, I think you're, you know, performance is a, is a concept in totality. It's not just economic performance. Okay. There, it depends on the circumstances you're in. >> Are you facing security threats? >> Are you facing a changing world? Uh, you know, uh, the famous American President Franklin Delano Roosevelt became president during the Great Depression and was unable to fix it for 10 years, more than 10 years, they remained in the Great Depression. World War II brought them out of the Great Depression. Okay. Um, but he kept, he kept his leadership and and was recognized as one of the great leaders in American history. >> Mhm. Um, so, of course, because during that period in America, in the United States, it was not just GDP, but also there were many, many problems like equality, welfare, domestic stability, and he was delivering on these many other things. Uh, of course, then there was the war. Um, so, so in China, um, for a period of maybe two, three decades, economic development was the singular measurement of success, which I think was correct in that period of time. >> Mhm. >> But like I said, you got to adapt. Things have changed. Circumstances have changed. There are many, many other things that are as important, if not more important, than pure GDP. >> Mhm. Ecology, for instance, the environment. Um, we were paying a heavy price in environmental degradation >> for your industrial growth, expedited index growth. >> That's right. Okay. So, so, of course, you need to balance that with economic development. Uh, corruption was another one. Um, political corruption needs to be fixed, and that you balance that with economic development. >> Mhm. >> Now security, because we're entering a very uncertain period in world politics. >> Mhm. >> Where it's getting dangerous. >> Sure. >> Uh, so, so you have to pay attention to that. So, so how you judge a leader or leadership, how you judge performance, I think has become, in China at least, a multifaceted and complex equation compared with 20 years ago or 30 years ago. >> Uh, many scholars, uh, that I, that I'm friends with, and many scholars that are very prominent, uh, in the world on the world stage, like Jiang Wei Yi, for instance, describe China as a civilization state rather than a nation state. Um, if China's political model is rooted in these unique civilizational circumstances, to do with continuity of millennia, and so on, and so forth, particular philosophy, Confucian thought, and so on. Um, well, nobody else has this in the world. Nobody else has this millennia of uninterrupted >> statehood in civilization. Uh, well, at the same time, most of those scholars argue that, uh, China's model, uh, is something that, uh, should be, you know, looked up and, and possibly adopted elsewhere. But then again, if it is based on these unique civilizational precepts, how is it exportable? Do you think that the China's model, obviously very successful model for China, do you think it is exportable around the world? >> Well, there are models. There are models. Okay. [laughter] Um, so at the abstract level, uh, I think models are very difficult to export. Um, the, I think most effective models are models that, like I said, are consistent with the circumstances and cultural tradition and cultural heritage and political tradition of a people, of a place. Uh, and and I think the, the, the mistakes that both the Soviet Union, Soviet communism made, and liberal society, or liberalism is making now. I think liberal war is the next Soviet Union. Okay. Or, or they think a set of abstract principles could apply everywhere. Uh, and that was the predominant mistake in the 20th century made by Soviet communism, and it's being repeated by Western liberalism >> in the 21st century. Um, so, so in that sense, exporting a model is probably a bad idea. >> Okay. >> But there, there are practical levels of a model. For instance, if you want to develop, build a road. That's a common saying in China. >> That's universal. How the hell are you going to develop without building some roads? You can't ship your goods out. >> Okay. >> Um, build clusters. So, if you want development industry, build clusters. You want to have different supply chains, you know, you want to have your upstream and downstream and in close together. >> So, you have an ecosystem. Mhm. >> That's, I think, universal. Everywhere you go, you need to think about these things. So there are techniques, no matter what abstract model and what your circumstances are, there are techniques you could apply. >> Mhm. >> Like accounting. >> Yeah. >> Okay. >> Yeah. [snorts] >> Um, so, so I think that basically, I think abstract models to export, abstract models are very risky. You can learn from ideas, >> but you need to digest it, and you need to >> to apply it within a certain framework that is both, uh, contextual, historical, cultural, and so on. >> Exactly. And you got to change with the times when circumstances change. >> You got to keep performing, and you got to keep changing it. >> Exactly. And but there are techniques that, you know, I think the development zone ideas, techniques are extraordinary. >> Mhm. This is kind of the Chinese invented this. It was a major political invention. Um, the Chinese did in the last, you know, four decades, four or five decades, is to say it's called trial by error. >> Okay. So they have a, the idea about a new policy. They don't know if it's going to work. >> So they test it. >> They say, okay, we, we're going to do this >> experimental zone, and we'll try it. >> Mhm. And if it doesn't work, forget it. If it works, they have kinks. You work through the kinks. >> Mhm. >> And once it's working, then you push it. You, you let other regions copy it. >> Mhm. >> Um, so that, I think these techniques could be exported. >> Mhm. >> Uh, when appropriate. When appropriate. So, uh, China's model has obviously produced great results for China, at least since their reform and opening up started a few decades ago. But again, huge country, very unique history, unique civilization. Um, if you compare it to a much smaller country, say Singapore, um, arguably also very successful model in development. Of course, we're not talking about hundreds of millions of people being brought up from poverty. Um, much fewer people in Singapore, right? But again, uh, a very well-functioning model. Uh, can you compare it to the Chinese model? And, uh, is it, uh, is it very different, or, or actually similar, but for a smaller place? >> Of course, there are vast differences. I mean, one is a city-state >> with a few million people. One is an enormous nation-state, or civilization, or state, whatever you call us, at 1.4 billion. Um, but, you know, I go to Singapore often. I, I see a couple of things that they share in common. >> One is competency. >> Two is a model that could allow long-term strategic planning and delivery. >> Yeah. I mean, that is probably the biggest flaw in liberal societies today, because they are unable to set long-term goals, set long-term strategies, and allow the time and efforts and accumulation of executions to deliver. >> Mhm. >> You know, they have, they have to worry about these elections all the time. >> It's almost, you're constantly running elections. Mhm. >> Once you're elected, you go to work for six months, and you have to worry about the next election. >> So, it's too short of an electoral cycle. >> Yeah. >> In order to be able to to produce. That's one thing you should consider reform. The liberal societies, I'm not saying should consider reforming >> their political system. >> Maybe they need to allow for a longer duration >> of terms >> of political terms >> of some kind of decision. Let's say a nation as a whole makes a decision to pursue a set of policies or something, some goals, you have to stick to it. >> And there may be short-term pain. >> Mhm. >> But if you experience short-term pain, you change leadership right away and change plan right away. >> Then you keep experiencing short-term pain all the time. >> Exactly. That short-term pain turns into long-term pain. >> Into long-term pain. Got it. [snorts] >> That's right. Right. So, um, again, being, um, philosophical about, uh, freedom >> and stability, as, uh, as two values, let's say, uh, so I think that one can say that Western, uh, societies, uh, tolerate, uh, disorder, a certain degree of disorder in exchange for, uh, the protection of the notion of liberties, uh, and China's model appears willing to constrain certain liberties in order to, uh, assure this long-term stability that comes with positive externalities that we just discussed. So, uh, where does one draw the line, in a way? Uh, is there any individual freedom that, uh, in your opinion, should never be subordinated to collective stability? >> I think that's a religious statement. When you say never, it's religious. Never say never. Right? In human societies, if you're secular, everything could change. Everything's subject to human discourse >> and human negotiations and changing circumstances. Um, in liberal societies, there's this doctrine of unalienable rights, which is fundamentally religious because they're God-given rights. It's enshrined in all these liberal con, you know, constitutions or documents like the Declaration of Independence in America. It's, it's endowed by the Creator. >> Mhm. So unless you invoke a higher power that is higher than men, then you cannot scientifically or empirically and factually claim certain things can never be changed >> because humans, we can decide to change things. Mhm. >> So there are no fundamental, uh, freedoms >> without God. >> Without God. So short of >> Without short, short of the divine context, there are no >> fundamental freedoms. >> If, if humans decide, then humans are sovereign. >> We are God. >> Mhm. >> So we can change things. Right. The, let's say, the people is the sovereign. >> Mhm. >> Then the constitution is not forever. People can change the constitution. >> Mhm. >> And define rights and what's right and what's not, and what's inalienable and not, at this particular moment. >> That's right. You can't, it's impossible to say that it will never change because it's drafted by human beings, and human beings could change. They can amend the constitution, like I said, or change the constitution. But one thing that, uh, uh, since we're now getting to a discussion that is about God and divinity, >> uh, and China's quite secular society, and it has been secular for not just during the CCP period in power, but but for a much longer period. There's this one thing, uh, that I come across, uh, when reading about China and analyzing China, and that is the Mandate of Heaven. >> Yes. >> What is the Mandate of Heaven? >> Uh, it's a complex concept. Uh, it takes many scholars, many hours to explain, uh, to people, and I'm certainly not qualified to give a, uh, an accurate, uh, less knowledgeable. I'm less, less knowledgeable than you are. Trust me. Um, I think the Mandate of Heaven means that the Chinese civilization and the people and history and our heritage together, many, many elements together, that give legitimacy of a leadership, whether it's the emperor or party or a system. Okay. It's very complex. But, you know, the Mandate of Heaven, I think, works well for us because mandates, political mandates are complex. The reason why liberal societies are in trouble now is because they rely on these elections. They think elections deliver legitimacy, but it's too simple of an explanation. It's too simplistic. You know, these people, all these people show up on a particular day, whether it's raining or sunny, whether they're having a good day or a bad day, whether they watch TV the day before or didn't watch TV the day before. >> Mhm. >> And they check the boxes on these people they've never met. >> Mhm. >> That leads to a mandate. >> Yeah. As opposed to heaven. >> Heaven doesn't mean heaven. Heaven. It's, it's a, it's a, it's a symbolic, >> it's a symbolic, uh, word. Yeah. >> Okay. So, so, so mandate, I think mandates that work are derived with complexity in mind. >> With complexity. Um, if you're too simplistic, uh, mandates lose their legitimacy. Mhm. So, in, in Chinese history, you did have change. >> Yes. >> Change of, >> change of dynasties, >> dynasties, and so on. >> Of rules. >> Of rules. Exactly. >> Yeah. >> So, but, uh, what is, for you, as a, not, not as a philosopher or political scientist, as an ordinary citizen, how would you be able to tell that a mandate from heaven is lost? What would need to happen in your life in order to say, "Oh, I, I, I can see trouble when it comes to the Mandate of Heaven." Would that be prolonged economic stagnation? Would it be corruption in the society? I mean, what would it be? >> Was the Cultural Revolution a symbolism of a loss of the mandate from heaven? >> If the Cultural Revolution lasts another 10 years, yes. But it didn't. >> It didn't. >> They course-corrected. >> Mhm. They kept the mandate of heaven. >> Yes. And the reform and opening up strengthened the mandate, if you will. >> Yes. But, but if rampant market capitalism, rampant greed >> Mhm. >> continued, environmental degradation continued, >> corruption continued, which were byproducts of market reforms. If those things were not course-corrected, they may lose the mandate of heaven. But they course-corrected again. Got it.
Let's talk now about something more practical. You are not just a political scientist. You are a very successful tech entrepreneur. Uh, let's try and, uh, comparatively, look comparatively at, um, the Chinese tech scene, very vibrant, very quickly developing, and the American one, the Silicon Valley, let's say. Uh, one, uh, what are the major differences, if you will, between the Chinese tech ecosystem and the American one? >> Um, I think there are many, many similarities. Uh, both are driven by incredibly talented and and and and entrepreneurs. Um, both are driven by very scalable markets. Um, and both countries invest heavily in R&D. >> Uh, Chinese are doing investing more. Um, and and there are differences. I think China's market is even bigger. Um, and and China trains more engineers, many, many more, much, much more than the US. Um, so there are differences, but, but I think they share much in common. The one big difference I'll tell you is this. Um, tech in the US, I think, I say this humbly, is at risk of becoming a political oligarchy. >> Okay. The big techs have such enormous influence and even control over American way of life >> and American politics. >> Mhm. >> That they are able to direct the development and the course of the United States to their own benefits. >> Mhm. They have risen above political authorities and risen above national interests. >> And I think there's a danger, there's a danger there. I'm not saying that, you know, I'm just pointing out that there's a danger to that in China. Um, I think that particular problem is, at the moment, reasonably contained. Mhm. >> Mhm. >> You know, our entrepreneurial class, our technology, uh, investors and and and capitalists and and and executives, they develop technology, they develop successful businesses, they can make money, but they are not in the position to unduly influence politics. >> Um, I think that's the big difference. Between the two countries right now. >> And if we go one step further and just like look at AI, >> yeah, >> very powerful and transformational technology. Uh, how do you compare the the Chinese AI, uh, forefront efforts to the ones of the American entrepreneurial or oligarchic, if you will, community that you mentioned? >> Um, I think Chinese AI, US AI, at the moment, seems to me 50/50. >> Um, some are better in in some things, and some others are better in other. Okay. >> Uh, but I will say that, that the, the key difference is Chinese AI is open source. >> Mhm. >> American AI is closed source. >> Mhm. >> Uh, so, and as a result, Chinese AI is much, much, much more affordable. >> Mhm. >> It's probably 1/15th, 1/20th of the price. >> Mhm. >> Okay. So I think the big difference in impact is on the global south. Mhm. >> On the rest of the world. Uh, I believe without Chinese AI, if we only have Silicon Valley AI, AI and the global south will never meet. >> Okay. The global south would just be paying rents. >> I see. >> To Silicon Valley, like they did in the last 30 years in in the internet. Mhm. Mhm. >> You know, the entire world outside the Western sphere or outside the US paid rents to the US from foundational technologies >> Mhm. >> to hardware, from Microsoft to chips to Google to all of them. We pay them rents. >> Mhm. >> Okay. But this time, the Chinese are involved in AI. >> Mhm. That any company in the developing world could probably, if you know, many, many companies in the developing world can probably afford to use AI. >> Mhm. >> To improve their productivity, because the Chinese have this open-source offering >> that are much, much more affordable. That is that is truly interesting because I, I come from one such country, the, uh, a small country, but, um, if you are a small country in, uh, in the global south, for instance, and you look at this choice and you say, well, Chinese AI is cheaper, open source, it's probably a better deal than to go for something much more expensive. But then geopolitics kicks in, and as we are experiencing this, um, increased fragmentation and frictions between, uh, poles in the multipolar world, and and China being one pole, and the US being another pole. Uh, there can be a situation in which, um, you are coerced by one of the poles, let's say the United States, and, and they tell you like, well, you can't use Huawei anymore, or, or tomorrow it could be, oh, well, you cannot use the Chinese AI, otherwise you're going to be troubled in so many ways. Yeah. >> So, uh, if you're a small country in the global south, which happens to be far away from China, how do you, how do you hedge against such a situation? It's difficult. I think we're in a period in history where, uh, there's a lot of uncertainty, and there are forces that are coercing countries to somehow pick sides, not to do certain things, and it's very difficult for smaller nations to resist. >> Mhm. Uh, even difficult for middle powers to resist, >> let alone really small countries. Um, so I don't have a good answer to that. I, I think >> I will say that the middle powers and the smaller powers, those who are able to figure out how to finesse this, how to do what is in their best interest instead of submitting to some kind of coercion. Mhm. >> Against their interests. >> Those will survive >> and prosper >> in the next period of the world, of world development. [snorts] >> But it's, let's stay with geopolitics, because that's obviously the most, uh, dynamically and dramatically shifting ground. Uh, President Xi, uh, in his discussions with President Trump earlier this year, uh, he explicitly mentioned the, uh, Thucydides trap as a concept of, you know, arising power catching up with the incumbent power, in that, uh, that situation causing conflict, and how US and China should avoid falling into the Thucydides trap. Do you agree with this, uh, worldview that, uh, we are heading towards this, uh, trap? That, uh, in the future, there can be, uh, a far fiercer rivalry, if not worse, between the United States and China? Certainly, there's competition, and certainly, there is the Thucydides trap, which is, you know, on enough intellectual documents, that, at least intellectually and historically, such a trap could exist, but it's not destiny. Mhm. >> It's still up to us to determine whether or not we fall into that trap, or we could avoid it. >> Mhm. >> Um, and I think it's certainly, I think both Presidents Xi and Trump are right that they want to have a constructive and stable relationship. I think they call it constructive stability, or something, a constructive strategic stability, >> which to me means an effort, a strategic effort, a coordinated strategic effort to avoid the Thucydides trap, that they can have competition, but that competition should not lead to conflicts, direct, hard conflicts. >> But, uh, the critiques of, uh, the Thucydides trap framework, or actually applicability of the idea to US-China relations, say that, uh, it's not really that the US is in decline. I mean, China is rising for sure, but that the US is actually maintaining its level, uh, of, you know, the share of the global GDP, and the like, still a very strong military, and so on, the US dollar as the reserve currency. It is actually the allies of the United States that are in a dramatic fall. So perhaps the West overall is in a fall, and China is on the rise. But when you look at just the United States of America, America is not in decline. America's very dynamically, uh, growing economy, and the tech ecosystem is, you know, quite dynamic. Do you think that America is in decline? >> Um, depending on who, I, I wonder about that, and I go ask people around, depending on what kind of Americans you're talking to. >> Uh, I think America's problem is mostly internal. Mhm. >> Uh, there is a internal rupture within American society, >> that's comprehensive, from economic >> sharing of the economic pie to values to identity. Mhm. >> Um, and so I would say, you know, if you look at hard power distribution, >> of course, the United States is very strong and powerful. >> Mhm. >> Uh, but internally, it has these nearly irreconcilable conflicts. If they can resolve these conflicts, >> Mhm. >> and reclaim a degree of cohesion, I think the United States will remain a very powerful country for a long, long time. >> Uh, but they're unable to resolve these conflicts internally. >> Mhm. >> Um, they could be headed for trouble. >> Mhm. >> That's my personal opinion. >> Okay. But this podcast is not on America. >> Yeah. On China. >> It is on China. The China, I think, of course, we've been developing rapidly, okay? Um, luckily, we don't have these kinds of internal ruptures. So we now have a cohesive, relatively cohesive, of course, there are contradictions, [snorts] but by and large, a relatively cohesive society, a relatively cohesive political institution and political system that can plan and execute on a long-term basis. Mhm. >> And a system that could produce at different levels, competent people to govern the country. >> Okay. So, we have these things, hopefully, they'll last. >> Okay. Um, and I think that's, you know, what, what we have going for us. And of course, we're Chinese companies and Chinese economies globalizing very rapidly >> in the global south. Of course, you know, we have Chinese businesses here in Serbia. >> Um, and and I think continuous Chinese growth and globalization is probably a very positive force in the global south. And why do you think then that the, um, there seem to be, um, efforts by by the central government in China to constrain the outflows of, uh, funds and finances out of China? Recently, there were like, um, closing of bank accounts in Hong Kong and so on and so forth. It seems like that there are some constraints. Of course. So if you're saying that, you know, China's internationalization of Chinese businesses, and especially in the global south, is is a very important thing and a good thing for everybody, then why do you think that the government is constraining it? >> Well, monetary policy, that's a technical, very technical management, um, uh, uh, uh, discipline. >> Um, I expect these policies to swing as different data and this under different circumstances. >> Uh, at the moment, I, I'm not privy to the decision-making process, and I >> I don't know what calculation there is. >> Uh, I don't know how the capital is flowing. I don't have the numbers, but at the current moment, >> it seems that the authorities have decided that they need to stem capital outflow. Um, and I think it's a highly technical decision. >> Mhm. It's not an abstract decision, you know, what should happen, what should not happen. It's a technical >> decision, and and and it could change in the future, but that doesn't >> I don't think that contradicts with the overall long-term trend >> of Chinese businesses globalizing. >> It's happening as it's a major force around the world. >> [snorts] >> Uh, is still happening despite of these technical management issues. >> And same conversation, same question, but, uh, talking about the yuan >> yes >> as the currency. We still live in an era of the US dollar being the reserve currency, and questions now about the future of finance, about the future of money. Uh, China's now the second largest, we're the largest, you know, economy in the world, depending on >> how you count, >> the way you measure, the way you count. >> And it's, uh, poised to continue growing, and in particular, growing relative to the rest of the world, leave America for a, uh, on aside for a second. Uh, what is the future of money in your opinion? And if we still have the US dollar as king, uh, of the financial markets, do you see in the future the yuan, or something else, uh, taking over, or at least sharing >> with the US dollar, the the status of the world currency? I think the US dollar will remain the dominant currency in terms of reserve currency and transactions for quite some time. That's just my own view. Okay. For various reasons, historic reasons, institutional reasons, and what have you. But the sharing you talk about is definitely unmistakably happening already. >> Mhm. Uh, if you look at the trade transactions and investment transactions, um, the RMB share is steadily but certainly moving up. >> Mhm. >> Okay. Although it's still relatively small, but the trend is clear. >> There's only one way to go. It's up. >> Okay. But it will take, I think it will take some time. >> Mhm. >> Uh, because we do have a controlled capital account. >> Mhm. Uh, for various reasons. If they open the capital account, I think, I mean, but there's a cost to that. >> Yep. >> Okay. Um, so, so I think they're managing it well. Um, and and then also, of course, there's the reserve currency situation, and there's, of course, payment. >> Mhm. >> I think payment is going to get diversified in the foreseeable future. >> Yeah. I, I think there's so many problems with SWIFT. Mhm. >> Economic and political and geopolitical. >> Sure. >> That that everybody will be looking for alternatives. >> And that's an irreversible trend. >> Mhm. >> Um, and we're already seeing in the global financial landscape, uh, different alternatives emerge, and then, and the digital currency is, uh, happening fast. Mhm. >> Um, so all of these forces, I think, would would diversify the world's payment systems in the foreseeable future. You know, five, 10 years, I think we'll be able to. >> Right now, we're in a situation where the, the US, I believe, >> is exercising political control and geopolitical control over the the global financial system to its own benefits, >> to achieve its own political agenda. >> Um, they've decided to do that. >> Mhm. >> For their own reasons. Uh, but of course, the downside of that to them is people are saying, hey, >> we're going to, we're going to hedge. We're going to public good, >> public good, but it's actually, you're using it >> a tool as a tool of coercion. >> Yeah, exactly, a tool of coercion. So, you know, we got to look for some other ways, and of course, there's no other way in the next 24 hours, but >> next 24 months, next 5 years, next 10 years >> could be >> different ways. No, it not could be. It will be. >> It will be. >> Because that's not >> I get it. >> Yeah. >> Uh, speaking about the future of the world order, and, uh, China as, uh, one of the leading, uh, global powers diplomatically as well. Uh, what is the future of the global order, in China's view? Uh, how should it be different from the current global order that we have? I mean, China is a stakeholder in the current global order. It's a permanent member of the Security Council of the United Nations, but, but, uh, in the future, as we go ahead, the world is multipolar, and it is becoming increasingly obvious that it will stay multipolar. We can talk about how many poles and so on, but, but China's surely going to be a pole. What is the future of the global order in your view, or how would China like to shape it? It seems to me, I think all the discourses are a bit off right now, and it's, I can't predict what the world order is going to be like in, in 2050. Okay. But it seems to me, at least currently, uh, the Chinese are trying to have been trying to play the role of a restorer of the global order, a defender of the post-World War II order, which was centered around the United Nations. >> Mhm. >> A multilateral system with the United Nations at its core. Okay. After the US and the West won the Cold War, the last 40 years was a period of revengeism. >> Okay. So, so the US, the Western Alliance, I believe, usurped >> the post-W [clears throat] World War II order. >> Mhm. >> And made the UN less and less relevant. And they call the shots without international legitimacy. Mhm. >> You were one of the first victims >> in 1999 >> when they bombed you. Was it under UN authorization? >> No. >> No. Okay. So, I think, I think the Chinese have been playing a much more modest role than what the newspapers or TVs are trying to tell you. You know, China is trying to change the world. No, China is trying to defend the post-W World War II multilateral order that the Western Alliance reassessed. >> Mhm. Mhm. Mhm. >> After, you know, the 1990s. >> Mhm. And it became, they, they, I believe, it seems to me that they used their victory in the Cold War to take the world away from the rules-based, UN-centric, rules-based multipolar order to a so-called unipolar order, which is really rules of the jungle. Go. Power makes right. >> Mhm. >> Might makes right. A might makes right world. Post-Cold War. China wants to restore. I think at the moment, from my observation. >> Mhm. >> China is not trying to create a total war. They, they want to say, "Hey, let's go back to a rules-based, UN-centric, multilateral world system." Is that the Global Governance Initiative? I >> Yes. I, I think, well, at least part of it. Yes. >> Yeah. >> Yes. So, so, so, so you, you know, the the propaganda that you read and watch every day, had it reversed. >> Yeah. >> Somehow that China is the disruptor. No, China is definitely >> China is a defender and >> China is definitely these days, uh, like a, a, a, adult at the table, an adult in the room, trying to restore the stability of the world order. Well, well, more than that, China has been a, a, a attempting to restore a multilateral, multipolar, UN-centric world order that was what meant to be post-World War II, but it was uprooted by the Western Alliance because they were so powerful, and they decided might makes right works better for them. So this was the moment of the so-called end of history. So >> might work, might makes right works better for them. >> Uh, who is the, who is China's most important ally in the world? >> I want to say Serbia. [laughter] >> We're, I'm humbled, but we're a very small country. We're definitely China's best friend in Europe. I think China wants to stay away from the concept of alliance, and I think that's wise. >> Um, alliance means that some are in, some are out, and usually most are out, of course, right. Um, and and then you get into a situation forcing people to choose, and then you get into a situation that you think, you know, you're above the, the international system, might makes right. >> Mhm. >> Okay. And China has these ideas of partnerships instead of alliances. So, alliance means we lock into a position beforehand. >> I see. And China wants a world in which large or small or middle can make decisions based on their circumstances at the time, and we, we have a more flexible and fluid system of partnerships based on changing circumstances. Um, I think that's a more durable and probably a peaceful, uh, uh, uh, uh, worldview. Eric Lee, thank you very much for being on China Podcast. >> Great. Thank you so much. >> Thank you.