Keyu Jin: China’s Political Economy and Why It Makes Sense | Endgame #239

I don't really think that US and China are as different as they tend to be or claim to be.

One of the misunderstandings is that somehow they are the opposite. So what is the clash? I think it is fundamentally rivalry competition. It is something that will be great for the rest of the world because we need competition. We don't want monopolies, especially all monopolies coming from one country.

Whatever the Fed decides to do, it's because it's based on what the US wants to do, not because of what the rest of the world wants to do. But by the way, whatever it decides to do, the rest of the world will have to go along with it. And if finance is one of the pillars of the economy, having a powerful global weapon to your own advantage is something that no other country has ever cultivated. So I don't know why the US administration pretends to be a victim of all this because the US has hugely benefited from the liberal order it has created. It's not about putting tariffs on the foreigners. It's about dealing with technology.

Hi friends. Today we're honored to be graced by Professor Ku Jin uh an economist at the London School of Economics who wrote a great book entitled The New China Playbook Beyond Socialism and Capitalism. Hi Ku, thank you so much for gracing our show. Hi Gita, great to be with you.

I I want to ask you about your upbringing. Uh you had the opportunity to go to the US uh you know for high school and I'm just curious as to what motivated you. Was it more internal as opposed to external? Would it have been the encouragement by your parents or by yourself?

Uh if we're talking about that long time ago, and it was a long time ago when I went to the US for high school, there were quite there were very very few Chinese students who decided to pack their suitcases and go to the US alone. It's now become very very popular. As you know, Chinese students make up a huge portion of US uh international student body. But when I was going to school when I was 14, I was the only one. I was the only international student uh at Horus man which was a very well-known uh high school in New York. I went there because I thought the education would suit me better. Uh I think I learned a lot from the Chinese education system but it was limiting in a sense. Uh although it did give me really good tools and I just dreamt of not the American dream but the American education system. And so I took on the first opportunity I I was landed with and went to the US alone. It was very interesting that back then the US was very welcoming towards having international students and they provided them with all kinds of um resources including scholarships because the US was intent on educating the generation of the future. And so I uh left uh China. And my parents were supportive, although they were a bit apprehensive, might I add, that a teenage girl would be going to the US doing who knows what in that kind of environment. And um but they knew that uh it was a really a real opportunity. And and back then I should say that people in China were still on somewhat of if not survival mode than certainly an accelerator mode. uh grasping every opportunity they can seize. And even for a 14-year-old, that was patently obvious.

You you had a teacher in high school that encouraged you to question authority. And I I'm just curious how your reaction would have been and how you sort of like allowed that to fit into your you know process of adjusting uh from China to the US.

I was a very good student in China. And part of being a good student in China meant that you listened to your teachers, that you almost obeyed them, and that you stayed quiet and you did well on the exams. And I fit that system pretty well. Little did I know that there was an urge underneath to kind of break away and to break free and to assert myself. I did not discover that until I reached US uh high school. Uh interestingly enough and uh the history teacher Mr. Devito really changed the way I I saw the world. Um when we learned history it was on textbooks and it was about dates and facts. When we learned history with Mr. Devidito it was about thinking. It was about analyzing. It was about having our own interpretation of historical facts. I mean that sounds absolutely wild because wasn't there just one right answer for all the exam questions as I learned in China and it became even more astonishing that one could actually question text question the teachers question authority uh one could read a history book and know that there's something called historioggraphy that there is bias and that there is no universal truth and that one uh can feel free to think on one's own terms those were not things that were taught in an educa in a Chinese education system and I remember that the first day I came into the classroom apart from the question questioning authority part um the history teacher said have an open mind even that was a very foreign concept to me right what did that mean what does it mean to be open-minded um those were never things that were discussed in the Chinese context. Now, I'm not trying to criticize the Chinese education system. I think there were huge advantages. So, very quickly, I was, you know, number one academically in my class and it was kind of a breeze even though the New York high school was uh supposed to be very difficult. So you see that the combination of the two I think uh really has its unique vantage points and merits but by and large um it just changed the way I saw the world and I'm sure that that was the case for many many of my peers who uh came to the US.

You you decided to study economics at Harvard. I want to take this back to you know your earlier upbringing. you you've mentioned that your parents were a Shakespearean scholar and concert pianist, right? How did that shape you to think about becoming an economist as opposed to, you know, whatever conventional wisdom might have been there before?

My father was and is still uh a Shakespearean scholar. I think he's writing books about Shakespeare still today in his spare time, of course. Uh and so early on the passion for something was really inculcated in my upbringing. Um but economics I loved because it's really a combination of so many things that I enjoyed at the same time. Of course, you need the tools like mathematics to be able to pursue these really interesting ideas that spans from history to social studies to understanding society and humans to psychology. The politics of course I do a lot of political economy and so the demands of the breadth one can say of knowledge is is quite large and then of course that was a learning opportunity but also the depth. I really admire economics for the tools that has developed to under to understand deeply and precisely uh issues uh about society and this can range from you know what's the wage of sumo wrestlers to the one child policy to really highbrow really important stuff like what's the optimal monetary policy in an open economy and how to deal with covid um but you know the the the discipline as a field has become um so broad and so interesting. Of course, it's also become narrower on each topic over time. That's just the the the aftermath of specialization, but still it's such a vast and interesting subject. And so, whilst my father enjoys literature and poetry and fiction, my library consists most of um mostly of non-fiction. Although I do appreciate um hugely the kind of the emotional span one can can can can attain from reading literature. I think all of these things are critically important and they are interlin. The knowledge in the end is interlin. So it didn't really matter what I studied but I wanted to study something deeply.

No uh I want to explore a little bit more deeply about open-mindedness. I'm I'm in a camp that truly believes that China has become as greatly as it is on the back it's on the back of it being so open-minded about combining the force of innovation with the force of preservation. preservation being characteristic and correlated with the rich history of China, but the ability to embrace the force of innovation would have been on a bank of this huge open-mindedness. Was was that open-mindedness something that was structurally there uh within the society or do you think it would have been encouraged uh by sort of like the government and the family and other units that that helped create the structural open-mindedness within China and amongst Chinese?

I think at the national level rather than open-mindedness, it is more adaptiveness and agility >> that the new nation was equipped with and especially after the 1970s when launched the opening up program. uh that did not come easily because you had to break down something that was in the making not only for decades but so strongly rooted the anti- capitalist uh communist socialist ideal ideology. Uh I I tell this story often because it was shocking to me. You know, my some friends of my parents said that when they learned that the country was going to focus, you know, a few decades ago on economics, they were shocked. They said, "What does that mean to focus on economics? I mean, isn't everything and anything just about politics?" So you see to to have convinced the whole country and politically to be have over overcome those barriers to implement economic reforms and opening up um was uh one of the most profound historical achievements ever. So after the initial period of reforms, the nation was fullon agile and uh adaptive and it's been adapting all along whether it's due to internal changes and evolution whether it's due to social changes political geopolitical it's become very flexible oddly enough in a what I would consider still quite a conservative society when it comes comes to values and traditions. I wouldn't call it really open-minded in the western liberal sense, but uh it's become also very pragmatic. So I'll give you an example to illustrate this paradox uh which is as you know China has a fertility problem. So very low fertility and uh within a very short period of time since the Chinese government decided to encourage uh having children having more children um they they have now vastly encouraged started to implement policy that encouraged single women to have children. Um and that as you can imagine wasn't really something that was widely socially encouraged or accepted in the past. Um but suddenly they are encouraging all the women uh to you know to take up these uh these benefits and to to seek help and um this is just an example of how you these things can coexist values and traditions and at the same time very open-mindedness uh because the society needs to change and adapt to new circumstances and similarly on things like geopolitics right same degree of flexib stability, agility uh so uh that has been really important for China. I think it's it's underappreciated how much change there has been uh uh in China and visa v the rest of the world.

I I want to go back to the one child policy a little bit later but I want to take you to the ongoing US China relations. What what do you think explains, you know, what's going on? I mean, you've you've aptly alluded to this as, you know, a situation that's filled with misunderstanding and misgivings. How how do we get out of this tension or seeming tension? And what do you think would have caused this tension between China and the US?

First of all, I don't really think that US and China are as different as they tend to be or claim to be. Uh if you think about these two nations and the people, they are the most competitive. Uh they both love to win to people. Chinese people, Chinese state, American people, American state. Uh they are uh very family oriented. Uh they make the best business partners if that works. Uh they have meritocracy. They are about meritocracy. Uh huge social upward mobility and opportunity. Uh that's why the people are so competitive, right? And the values are actually in that way very similar. And if they work well together, just like the Chinese scientists and American scientists and acade academicians, they actually do the best job in the world. Um, so I think one of the misunderstandings is that somehow they are the opposite. Now I don't really like that characterization because I don't see it that way at all. I I go around the world. I live in Europe. I think they are actually more similar than China. China is with many other uh cultures and countries. Um, and so what is the clash? I think it is fundamentally rivalry competition. I I believe that uh the US is uncomfortable having a real all-around competitor so close at its uh on its doorstep and figuratively speaking in many ways especially technologically speaking and it's not used to it and China at the same time has done a a little bit of a queer job trying to communicate its intentions and ambitions and its position in world uh that has caused a lot of misunderstandings. You know, I always give the example where in China when I student it was a really great thing to be number one in the class. Um in the US that is the last thing you want to be talking about being the best student in class that is so not cool, right? But in China that is what makes you popular. So uh proclaiming to be number one or having ambition to be number one in everything it's just part of the culture. This it's almost innocuous. I know it's not completely innocuous but it's almost inocuous because everyone wants to be number one from the universities uh to the the coffee chain to the technologies of course to the right is every everybody has that what's considered to be a very noble goal. But when you announce that to the rest of the world that you're going to be number one in so many different leading edge technologies that cause fright that causes panic especially uh with the leader of the pack. So um that misunderstanding is also that the China doesn't want to displace the US as the key leader in the world. It understands that it cannot in so many for so many different reasons. Maybe economically in terms of economic size and GDP uh it can exceed the US just because it's a bigger country. But if you look at how many years it will take for Chinese per capita income to catch up to the US that is far far far out in the future given any plausible projections and predictions. uh so the gap is still there although the gap is very narrow in some domains like AI and like the leading edge technology which is also something that Chinese people are very proud of and as they should be because it is the first time in history that a developing country with only standard living of 25% of western advanced economies can do cutting edge technology that is an amazing feat and it's not just the state model it is partly that but it's also the hard work of the Chinese people, the engineering, the skills, the education system, uh the the persistence, the ingenuity and of course a very unique state hybrid model which I'm sure we'll talk about but it is something that they should be proud of and I think that in the end it is something that will be great for the rest of the world because we need competition right only competition brings down prices brings more benefit to the consumers we don't want monopolies uh especially all monopolies coming from one country as I always say innovation is not just about invention it's not just the it's not about just first time having that idea but production and diffusion is so widely important think about all the developing countries they don't need the most cutting edge technology they need the technologies that they can adopt that will be useful and I think in China in that way with a solution focused solutionbased costcutting innovation drive of cutting edge technology is particularly suitable for the developing world.

Do do you think the US on the back of this imposition of tariffs will be able to re-industrialize the way it aspires? And if if you don't think so, what what do you think China can do to help with the US for its aspiration, you know, to re-industrialize?

Every major economy throughout history has had its manufacturing industrial era and peak and decline. That is just a natural cycle. Happened with Germany, happened with Britain, happened with Japan, now happening with the US and it will happen to China uh one day. It is just part of the cycle because as you become richer, less of your economic resources are devoted to manufacturing, more to services, more to knowledge, innovation. Um and that is not something to be uh scared about but something that actually tells you that your nation is getting the higher value add it. Now that said, I do understand when it comes to national security related manufacturing that there is a sense of self-reliance that's important uh including things like vaccines and I understand that as we move away from this world of total globalization uh and hyper globalization and uh efficiency as the only priority to something much more fragmented, much more self-reliant, much more national security based, much more diversified that there will be some return of manufacturing uh to many countries. That is something that we understand um as not just economists but political economist and all that. Uh but also has to be on the back of something that actually makes sense, right? basic manufacturing returning to the US doesn't really make sense. Uh why why would one presume that the people would be willing to take on these kind of jobs in the first place? And second, uh technology is dominating in many of these evolutions and uh uh uh developments of manufacturing. It's not about putting tariffs on the foreigners. It's about dealing with technology. And by the way uh according to all the studies the majority of changes uh impact on society uh whether you look at income inequality or the skill back a skill gap is primarily through technology not globalization but of course you can point fingers at the other person other country and blame it on them but that is actually not uh the truth. Um now China has managed to garner a very specific advantage which is the intersection between first of all massive scale and um production capabilities uh combined with cutting edge technology all these things three things combined is not easy to replicate or find elsewhere in the world if we look at US look at Europe and of course if we look around the rest of the world. Having all three is not easy uh uh to find. If there is another maybe India would be the next one that is capable but that is still uh some time away. And that means that anything that has to do with production especially where it embeds technology China is going to keep that momentum and that advantage for some time to come. it is going to be very difficult to compete on that with China. Even if you are the US, look at how long it's been to bring back kind of TSMC uh uh production capabilities back to the US. You know, Tesla, Elon Musk had to go to China to ramp up its production of Tesla uh lest it will be bank it was going to be bankrupt. It was the Shanghai Gigafactory that saved it. it didn't happen in the US and if it were it would take a long time and the skills and knowledge accumulation is simply not there. Um I don't know why the US pretends to be or the US administration pretends to be a victim of all this because the US has hugely benefited from the liberal order it has created. First of all, if you look at service exports, US dominates, right, all around the world. And second, the US dollar is such a potent weapon and instrument and privilege in all ways, anchoring the global financial system to its own benefit. Whatever the Fed decides to do, it's because it's based on what the US wants to do, not because of what the rest of the world wants to do. But by the way, whatever it decides to do, the rest of the world will have to go along with it. And if finance is one of the pillars of the economy, having a powerful global weapon to your own advantage is something that no other country has ever cultivated, even Britain in the past. So I think this victimization is completely ludicrous. I think the US uh uh uh uh US's goal to bring back basic manufacturing is a self-inflicting wound. It will have to endure. And um so a lot of the current stats just simply just don't make sense.

to to what extent do you think this type of protectionism that we're witnessing in the US is also going to be able to defend um the US's hegeimmony? I mean, well, I mean, you know, we we've been talking about the hegeimmony hegemony of the US uh in the last few decades uh in in ways that would have been much more magnanimous and and we're seeing less of that magnanimity, right? And and I think it's affecting not just China, but I think uh many parts of the world. Do you think this is a sustainable phenomenon or do you foresee some sort of if not a meaningful degree of recalibration of policy postures for the US by way of realizing that this is probably not going to be healthy for them in the long run?

There's always a shortterm uh impact that could be very different in the long run and there's also potentially a big difference between what was intended and what was a consequence and the projects that I've been working on uh recently looks at the arc of history and tells us that whatever the US is doing right now we've seen it already in history played over and again ending up not in more victory and more status for the aggressor or the hegeimon but actually ultimately leading to self-destruction. Even looking at Napoleon's continental system or the the British suppression of the the Germans and the Americans and and American suppression of Japan and so on and so forth. these lessons are there that they don't work in the long run, even if they're able to inflict some pain in the short term. So, whatever the US is doing, even if it leads to some short-term gains and some short-term leverage, this is not going to last because everyone will simply want to run away. Look at the dollar. uh despite the potent that we talked about right now, the alternative payment systems, uh the the the alternative currencies, uh the desire to circum circumvent the dollar and swift and American weaponization of finance is so urgent. There's a sense of urgency in that. It's not just with the US, even with China. China's export controls of rare earth is already spurring this massive incentive to um build alternatives to find substitutes that's always been played in history. There is something that we we miss which is that the more entangled we become, the more leverage one is used on another, the faster it starts to unravel because it ultimately especially nowadays there are a lot of substitutes uh and leverage doesn't last that long. So I think these are important historical lessons to to draw from and you can use these to predict the future. But America's hedgemony in the same sense won't last forever. There's no one country that has preserved even economically its leading status forever simply because there's always catchup and even more catchup nowadays because there's technological diffusion and the spread of information and knowledge is much faster and uh there are lots of things like AI that's not about physical capacity that you can build uh maybe not more easily but but certainly without the kind of physical accumulation that that was important important in the past. Um, no country has held a hegemony forever. So I I think it's ironic that America with all its experts don't tap into the expertise and especially looking at the historical instances and say this time is not different. Right? People always say, "Oh, this time is different." It's not different. It's as it was ever before. Just the cycles of uh of societies and and civilizations. So what America is doing certainly are are damaging uh the least to say uh it's alienating allies uh at a time when coordination is already very difficult because it's you know it leads to self harm. Um, it is uh losing credibility around the world. uh and uh the the peacemaker or the peacekeeper or the intended peacekeeper role of keeping sea lanes open and global trade flowing and prosperity uh you know kind of um a way to pedal up to prosperity for for others. That's exactly what the Trump administration is is is defying against. And so it has already lost credibility and and it's um you don't earn it back, right? You don't earn it back. And it's not as if there's another US president and suddenly everything's fine again. Europe Europe is sees America as a strong ally. It's it's path dependent. You're on a different path now. And so I think um a lot of the jungle rules or the gut feelings or the intuitions or whatever the American administration's using to uh uh uh as as diplomacy or uh geopolitical strategies. Again, look at history. The rule of the jungle did not serve humanity well. That's why we had the post-war liberal order, multinational, sorry, multilateralism, um, uh, global institutions, win-win, positive sum, uh, that's why we had that and now we're going just going back. And by the way, not everything should be seen through the lens of national security, which is by nature not win-win. It's a zero sum game. But uh to be honest and we're coming from the developing world uh we do see things as positive sun because one person's lives can become better and make another person's life be even better that is positive sun. So uh that very narrow perspective is highly highly dangerous in today's world.

This this I think uh takes me back at least to the earlier mention of misunderstanding or even lack of understanding uh about each other and and I would I think put a bit of the blame more on the US. I mean, if you take a look at the number of Chinese students at any given time all across campuses in the US, it's between 250 to 350,000. But if you take a look at the number of American students in the US, I mean, in China all across campuses from the last time I checked, it was only like 700. Do do you think that you can attribute the lack of understanding if not misunderstanding or misgiving to the fact that there is not a whole lot of effort by the Americans to try to understand culturally, you know, China, you know, in terms of how and why it's doing what it's doing? to to what extent do you think you can attribute some of these to this very fact that it's just totally skewed?

Um, some of my most international American friends have told me repeatedly, the United States is the best country in the world and we Americans are the luckiest people on earth. And that represents, I think, broadly speaking, how the majority of Americans feel. And so, why are there not as many passports as there should be? Why are there not as many foreign language spoken, the Native American uh people, as there should be? It's a confidence potentially. Um, it's uh the lack of desire to look beyond perhaps, but I'd also say that um you know the narrative is monopolized by the American media. And I think there are lots of really more balanced and reasonable narratives around the world that wants to speak about the truth, but it doesn't make an impact. it doesn't make a global impact because the narrative is dominated by the American press. So American media is very powerful for all sorts of reasons both in in internally and internationally but I think certainly the exchange of people and I always say this it's not about the state-to-state it's about the people-to-people connections right at the micro level that really can make a huge impact and I still believe that the American system um for all of its faults and merits and whatever the the American business people can make an impact on US politics uh and so the people-to-people connection, the knowledge connection, the things that happen, the flows, the students um that that has shaped a lot of the the US China relations and even for students like me who were sent to the US to study uh our perspectives totally changed as we talked about earlier and no matter what we do, we bring back to China an element of that, right? Something is brought back. It might be embedded, it might be implicit, might be indirect. But you bring something back. You bring perspective. You bring open-mindedness. You bring an aspiration that there should be change because you saw uh the gap and the differences you learned. And I think that in the same way there are lots of things to be learned from China. uh very interestingly uh uh very interestingly uh companies are moving to Europe in particular uh for global expansion Chinese companies and they say when they train their European staff they bring them to China they see how the Chinese work and you know there's a lot of inspiration from that right uh they are often excited and uh they they change and so clearly you have two very successful countries and economies. There's a lot to learn from each other. But what you said is important and this is not just the US. It's also China partly to blame, right? Uh for not being more attractive to students and uh research fellows and talent to uh come to China. The visa issues I think that has to change as well. uh ch US had a had a pull factor that brought that knowledge and and uh and and talent in and China should do that as well. Um, so I'm still hopeful about the people-to-people connection. I've rarely met if anyone an American who has been to China and still only has negative views about China. I've never met such a person. uh and so um that I think will resolve some of the differences although I do believe at the national level the trunculence uh the competition is real and very very hard to overcome simply because it is ultimately about competition but I always say you need to manage the relationship right it can be managed uh and one can look for common grounds and one can start from small victories uh and even things on public goods, environmental protection, even fentanyl, um uh uh you know, kind of uh uh transparency on data, uh the green economy, green transition, and by the way, the next time a global financial crisis comes around the corner, and by the way, it's not that far away, do you really think the two central banks are not going to talk to each other? Right? I mean in 2009, China despite being a much smaller economy and having a lot less financial heft played a huge role in filling the developing nation gap of providing emergency liquidity. Is China not going to be really involved and work with the US on fighting a global pandemic or global financial crisis or whatever it is? They obviously have to work together. So um being realistic but really to your point understanding each other. For instance, another example is respect, right? The Chinese people, Chinese government needs to see respect. Even if it's more formality than substance, that is really important. If the American administration understood that better, respect is paid better, they're going to be getting a much better deal. But even that is not really heated.

Yeah. I mean, I I I love the fact that you've mentioned there needs to be equivalence, reciprocity, and realism when one is dealing with another. and that that seems to be a little bit absent you know within this deal between the US and China. I I want to, you know, take you to your earlier reference to, you know, fast, uh, short and there's three letters there, whatever. You've you've, yeah, short, fast, and flat, right? you've you've embraced that sort of a mindset for a long time where China has embraced that for a long time but but you're at a point where you're likely to attain some sort of technological supremacy right where you with respect to certain sectors certainly EV and a few other things how quickly do you think you're going to be able to be resolute in focusing on zero to one as opposed to taking one to the next digit and and I want to put this in the context of how China intersects with not only the US but with Southeast Asia because Southeast Asians I think increasingly at least I am increasingly thinking of China as a technological capital allocator because it's cheap and it's good right you know I'd rather buy an OPPO as opposed to an iPhone and they both take great pictures even an OPPO takes better pictures than an iPhone um and most of Southeast Asia They earn less than $2,000. Indonesia earns $5,000 except for Singapore that earns $91,000. How quickly do you think China is going to be able to do massively 0ero to one? You know,

I don't know what you call deepseek. Um, it certainly is not a first time thing, but it certainly involved a huge amount of of innovation. uh I think Jeff Bezos said uh recently that uh the process innovation process cost reduction is innovation itself as well right coming up with the new idea to drastically reduce cost. So whilst these might not be breakthroughs and by the way we don't have that many breakthroughs throughout human history right the ones that really make it to general purpose technology the ones like electricity and now AI they're not that many and I think it's less important who comes up with it first uh rather how much of that technology can be diffused throughout the economy to the benefit of the economy and to the benefit of the people and humanity and society. I think that actually is more important and in the process of doing that it really requires a huge amount of of innovation and we're not talking about just another app right that's not the kind of one to end I'm talking about it is really using new solutions to tackle the most fundamentally difficult challenges and I think here China does have an advantage uh maybe it has to do with education system problem solving right uh they're very good at doing that they're very good a reverse engineering. They're very good at coming up with very creative ways uh to to find alternatives and so that is already happening. Deepseek is only the beginning. this massive production scalebased innovation uh sorry uh cost cutting innovations will be everywhere throughout the sectors uh whether it's in chips or AI or eventually you know obviously the the the the green technologies but also in energy and quantum they're all coming and I say that with a bit of confidence because I do go around the country talking to people who invest in these things and here we're not talking about just venture funds and you you know, famous investors. We're talking about central government funds, local government funds, funds devoted to investing in in semiconductors, funds devoted to the the digital economy. Uh what they have seen is nothing short of remarkable. And this is happening despite the fact the economy is slow and weak, despite the fact that private investment has fallen, despite the fact that there's been geopolitical shocks and despite the fact that US technological restrictions uh have uh aimed to uh uh to cut China off. The nation is totally geared up from the national level from the government level to the company level to the local governments to the central government to the uh universities different kind of organizations to pursue pursue technology. It's the first time and that's thanks to uh let's say Trump's 2018 export controls and bans that the whole nation has put science and technology as front first and foremost priority for the country. That has never been the case before. And again, harking back to history, it's always when you push a country into a corner that they start to uh pursue what's called crisis innovation. And Deep Seek, I think, is a reflection of that. But again, there are many many other companies like that uh emerging in China. So, I think the dichconomy is very interesting. You have a very weak economy. At the same time, you have a very entrepreneurial dynamic technological sector.

Do do you have any concern with respect to how technological bifurcation between China and the west would be or could be inflationary to the rest of the world particularly the global south

inflation is almost for sure going to come because uh to the opposite 20 years ago when China joined the WTO and started to export goods and then over time it started to export a lot of intermediate goods around the world uh exported deflation to the world. Now you're basically choking that uh where it goes and flows through the US. Uh that will be inflationary. And it's not just the US and China that will feel it and bear the brunt. it is going to be everybody because ultimately we are in a supply chain and intermediate goods move throughout uh the world and so tariffs added onto one segment of it will affect others and China dominates right China accounts for 30% of manufacturing goods and a huge proportion of intermediate goods so even if you do all this rrooting which is by itself costly uh you cannot really avoid Chinese intermediate goods. If you look at the recent data, even the direct imports of Chinese goods from the US has fallen. All of the exports to the US that have been made up by countries like Mexico and Canada and European Union, all these goods embody Chinese intermediate goods. But you actually cannot avoid the fact because uh China takes up so much of that production. And this is not to mention the other secondary impact uh that terrorists can create. the uncertainty, the commodity prices, um uh the you know the the potential of of uh uh uh weakening of the US economy, the global economy and of course inflation is much more uh developing countries are much more susceptible to inflation and the pass through of inflation onto uh pass through of tariffs into inflation for developing countries is much is much higher than countries like China and the US. So actually if you calculate all the indirect burdens of tariffs it is pretty massive especially for developing countries. Um, so it's not just US and China who cares about US China trade war. Every country cares about the US China trade.

Your book came out recently uh and it's entitled The New China Playbook: Beyond Socialism and Capitalism. What What do you think the book could offer to help resolve or remedy the ongoing tension between the US and China?

Well, first it's an inside perspective about China. uh delineating both the merits but the real challenges uh that China faces uh the real vulnerabilities that China has just like any other country America is not the only one that is being victimized here there there is weakness all around and including in such a robust and resilient country but second I really want to break that notion that somehow there's only one model that works, one economic political e economy model that works. That's the only model that's been taught to me in the west. That's the only model that prevailing economic thoughts approve. And that's not what we see around the world, right? You try to impose the same model around the world, it doesn't always work. Instead, there are also alternatives. I remember, you know, going back to my studies, there's very, very little room for state capacity in any of these economic models that I've studied. The government steps in when there's market failure. The government steps in when there is a need for macroeconomic policies. And that's pretty much it. Um but from China's experience, state capacity, whether it's state mobilization, state coordination, state allocation, state direction has played a really major role. Now, of course, there's a good and bad side of it. There's nothing that has only benefits of no and no cost, right? It's all about what the net effect is. And uh I think by and large the state capacity has been fundamental to China's development process. entrepreneurial state. Um, so my book uh tells us, you know, how that model has worked, why that model is so different from what we know around the world, why it's so hard to copy even though there are certain elements and certain uh uh dimensions of wisdom that can be extracted and also why it's not infallible. uh and I think a lot of it can be used to understand today and tomorrow because the model hasn't changed you know I I use the mayor economy to describe how reforms happened and how this GDP growth competition has led to really fast growth and investment but you can use the same model to understand about today's technological drive the successes of Chinese companies the unicorns that are being uh nurtured uh in the local under the local government's wings. You can also understand the challenges, the mounting debt, the over capacity, uh the the you know the the underconception all these challenges and merits can be understand understood in the same framework but it's certainly not the framework that we studied uh in western economic thought and um I think my role my goal to do that is to basically showcase that China it does work a bit differently in China Let's try to understand it. Let's try to not just point fingers at each other and also for the wider rest of the world. Uh there are certain things that we don't want to just copy the west, right? There's certain prescriptions that the west has given us that seems to be really beneficial for the economy but has produced very very different maybe even worse outcomes. Let's not take that for granted. But look where things could be assimilated where things actually make sense and there's a lot to learn.

That's it. you know the uh it's quite paradoxical that you know as you aptly pointed out the political system in China being centralized but the economic activities are highly decentralized many many democracies around the world particularly those in Southeast Asia politically they're decentralized but economically they're a lot more centralized and and I think there is one or two things that we can learn from China particularly with respect to the decentralization of economic activities. My question is this mayor economy to what extent do you think you can attribute that to some of the lessons you might have been able to pick up from the Singapore example in Southeast Asia?

I'm sure there are similarities there, but I do have to say that one major difference is that the local governments are especially incentivized because there's competition, right? And in Singapore, there's less competition because it's a small nation state. Uh, and so if you're a a company, a good company that is being expropriated in a particular city, what do you do? Well, you're going to move to the next city, right? and you're going to contribute to the other cities GDP and investment and the mayor's glory. And so that ability to move, the ability to compete uh and that having that tournament system politically speaking was very instrumental in in fostering that these incentives and entrepreneurship. And the competition has become so intense that you know this weekend I was in Beijing. I was talking to the Beijing government. And guess what? There's enormous local competition even within Beijing. It's not about Beijing versus Shanghai. It's about the Choyang district versus the Shiny district versus the Haiden district. And these districts are saying, "Look, no, this company should move to my district and this is what I have to offer, you know, and they're competing like a beauty contest for the best companies and they're all within the same city." So, it just reinforces my view uh especially today when it comes to technology and pursuing that that technological dream that it's actually intensified, not weakened. and the the degree of um a care and devotion they give to these promising even startups promising young companies has been quite remarkable and the amount of expertise you know despite the fact that we always say oh well they won't be able to pick winners because they wouldn't know better than the financial investors that have experience well their expertise is pretty astonishing Um, and I've been sitting in these meetings and the degree of technical knowledge has been nothing short of impressive. Maybe because also by the way the Shanghai mayor was the uh university president of Chinua um a pure technologist right uh and the degree of permeation of technology knowledge throughout the government has been the latest drive and these people are really really well educated. They're civil servants and so they don't make these decisions on their own. They still lean on private sector expertise and of course they lean on completely on the private enterprises. But again, it goes to show that this mayor economy mayor model maybe I should say district governor model um is um is is you know up and working very very well.

I I want to seek your wisdom and advice on you know what to do with democracies that are politically decentralized. I mean I think China has been blessed by

way of the center, you know, making the encouragement to all the mayors to be competitive with each other. But at the rate that some, if not many, democracies around the world, they're so decentralized politically, you know, it the onus is really on each one of the municipalities, right? Uh, and and if they're not taking instructions from anybody, uh, how would you advise these guys that are politically decentralized to get more competitive the way China has seen in the last few decades?

Well, first of all, what you're you're saying implicitly supports the view that some degree of state capacity is right. Again, if we just take the western model for granted, the government should need to do very little and everything will be determined by the markets. And I think China has shown, especially to the developing world, even to America and to Europe. Look at all these industrial policies, the state mobilization, maybe it's uh trying to copy the China model. Ironically, um, that goes to show that some degree of state capacity used well can be very effective. Um, this is a very hard question to answer because I never grew up in a democracy with decentralized governments and so I don't have a natural instinct.

>> Well, you did grow up in New York. New York is a completely different thing of its own, uh, as you as you know well. But um, I think that accountability really matters, right? Accountability, responsibility for your people, no matter what system you are in. And some mechanism that rewards districts, localities that foster better growth and develop, develop more prosperity to its people should be prized, right? And by the way, in China, uh, back in the days when one reform worked, it was copied all around China. Think about the glory and the the accomplishment, uh, that the leader felt in having done something really successful. It didn't even necessarily mean promotion. It just meant recognition. And so infusing leaders at the local level with that degree of responsibility and and ambition and reward for success, um, that is publicly recognized, could be a smart, could be a start, right? Even though there are political barriers of all sorts. But I have never come to terms with how to get democracies, especially very decentralized ones, to really jumpstart growth. And in all of the data that you see, the fastest growing economies, a lot of the fastest growing economies did not happen in democracies. They, they later eventually turned to democracies, but the fastest growth did not happen in periods of democracies, uh, so these political challenges are have to be overcome. And and by the way, if we look at western economies, are always debating, they're all, you know, not a lot is done, right? We've been talking about tech regulation, tech regulation for for so long in the US and actually China is the one first one to to go and do it, right? And but they are also in a different level of stage of development, right? Things are moving slower, but they are richer. So, um, I think accountability and recognition really matters.

>> Yeah, well, accountability, competence, and integrity, I think matter.

>> You know, at the risk of quoting or paraphrasing Lean U, and what's what's also par-

>> Yeah, what's what's also paradoxical is that as as much as you claim that China is an autocracy, China has been resolute in democratizing talent a lot better by way of recruiting talent on the basis of meritocracy, as opposed to many countries that profess to be democracies, but they've not been as good in democratizing talent. They've been recruiting talent a lot more based on patronage and or loyalty. That, that I think is a paradox that needs to be recognized by by many.

>> Yeah, there are lots of elements of greater democratic values and uh, uh, signs, you know, happening in China that doesn't get recognized. And, um, people misunderstand China as if, you know, it's a country that suppresses the people. I mean, nothing can be further from the truth. Coming from somebody who lives in the UK and goes to the US a lot. Actually, the government is much more, uh, uh, accountable and responsible for its people than in many other governments. And actually, I think it's gone a little bit the other way. Too much care for the people. I, I know that that might sound paradoxical, but you know, you also don't want to be too populist, right? You want to make the right decisions. But now, the Chinese government cares by far the most about social stability. Uh, are the people complaining? If they're complaining, they want to know what they're complaining about and they want to go and fix it. Uh, are the people happy? Are the evil companies, you know, kind of, uh, uh, um, taking advantage of them and misusing and abusing their data? That's what they care about now. And that's a real improvement because people's rights, people's, um, dignity, dignity matter more than they ever have. And that's a massive improvement that I think again, doesn't get recognized enough outside. But then, uh, you know, when you come to the economy and doing the right thing, uh, sometimes you need to be a little bit, you know, make hard decisions. And it's become more difficult to make these hard decisions where there's a group of people who have to be the losers. The Chinese government is more reluctant to have losers, whereas we always know that there are always losers. Uh, so it's, it's a very big contrast to to what and how the decision making was before, even 10, 15 years ago. Uh, and again, you know, if you're an ordinary citizen, you feel safe, you feel secure, you feel looked after. You expect, uh, um, you expect the government to take care of you. And in return, you offer some degree of deference. That's kind of how it works. And it's all also, uh, evolving constantly. But I always say, China is not at the point where they can forget about the pragmatic day-to-day thing, like, you know, am I going to get my kid into a good school? Is my son going to be able to be able to purchase, uh, a a property so he can, you know, get a bride and have children? You know, these are the things that are overwhelmingly, uh, the concern of of the Chinese people, rather than when is China going to become a democracy.

>> Absolutely. No, I, I, I'm, I've been somewhat critical of the fact that, you know, people get bogged down with defining democracy as the mere wherewithal to distribute power. Uh, I think it needs to be manifested in the sheer ability to distribute public goods, inclusive of intellect, education, healthcare, welfare, social value, and moral value. Ironically, a lot of those good stuff, uh, you know, are in China, you know, uh, irrespective of what the labels are. Uh, I know you've talked about this, you know, we don't care about labels. We, we, we talk about putting food on the table. Uh, that, that I think is is, uh, you know, very important. I, I want to take you to Southeast Asia. Uh, if we take a look at the last 30 years, the GDP per capita of China has grown by a factor of 10 times, whereas that of Southeast Asia only 2.7 times. And this would have been on the back of underinvestment in Southeast Asia with respect to education, infrastructure. And then the third attribute is lack of governance. And the fourth is the lack of competitiveness. Uh, the, the lack of competitiveness is manifested empirically in our inability to issue business licenses. You know, we, we on average could only issue one business license on a per 10,000 adult people basis, whereas China can do 10 on a per 10,000 adult people basis. And then the last bit is what you know, you alluded to earlier, the, the mayor economy. Now, I mean, as a Southeast Asian, I want Southeast Asians to do a lot better in the next 30 years than how we have done in the last 30 years. What, what do you think we ought to do? And and I want to just elaborate this a little bit further. As as I said earlier, I increasingly see China as a technological capital allocator, whereas I see the West potentially as more of an economic capital allocator, because technology coming from China is just so much cheaper, whether it's zero to one or one to the next digit. Whereas that liquidity in the West is not coming here because of our inability to perhaps enforce rules and regulations the way we need to, the way we must. And secondarily, we don't have a great wherewithal to translate uncertainties into risks. Uncertainties are unknown unknowns, and risks are known unknowns. Stuff that can be quantified, measured, predicted, and priced. Economic capital likes risks as long as you can price it. Unfortunately, uncertainties you can't price. What's your take on all these for purposes of Southeast Asia's better performance in the next 30 years?

There are a few economic success stories, not many but still a few in the last century that has nothing to do with the mayor economy and has worked very well and from which Southeast Asian economies can draw lessons, uh, including South Korea, Japan, the Taiwanese economy, and Hong Kong, and so forth, and Singapore. Uh, there are common threads, however, despite the fact that all these economies have had somewhat different paths. And a common thread includes things like high saving, which ironically is now more of a problem for China than it is a blessing, but for the period of growth, it was absolutely instrumental because it does, it means that you don't have to rely on foreign capital, and we know the vicissitudes a country experiences when you rely on foreign capital. Uh, so saving is very important. Uh, very strong education system in all of these Confucian-based societies, um, that, uh, turns out the necessary human capital, and macroeconomic political stability, right? And how to achieve that despite all the things that are going on, the politics, the chaos sometimes that that goes along with democracies, is is a challenge, but it is manageable. And all these countries went through industrialization. Now, we have to carefully think about that going forward because technology is changing things at a rapid pace. But if we look back, lots of countries went through de-industrialization way too early, never developed an industrial base, including many economies in Latin America, and they went straight into services and they never made it to the higher income bracket because they weren't able to create not just the jobs, but really the technological know-how that comes along with industrialization and importing and exporting and the learning by doing, which is so critical. Also with the curse of the curse of, um, commodities, right? The, uh, if you are overly reliant on just exporting commodities, you might never make that learning curve that is important to to jump into the higher bandwagon. And so we have to rethink all of this in the context of AI and robotics and automation and what it means for manufacturing to be, uh, uh, developed in emerging poorer countries. We have to rethink that. But still, there these have been common threads, but I do believe the stability, political stability, macro stability has also still been fundamental. Right? Despite the fact that China is a very different system, investors wanted to invest. They saw stability, they saw exchange rate stability, they saw sound macro management. So they were, um, they felt comfortable investing in a higher risk, but higher return economy. And by definition, these econ, these developing countries are higher risk and higher return. You know, you can reap higher returns, but in the context of sound, uh, uh, a sound business environment. And so when you talk about all the licenses and all the permits, and that was also one of China's problems as well, but they were able to cut through red tape eventually, right? There's still a lot of red tape, but over time it has been overcome. And by the way, I would, I would fully embrace the digital revolution in curing some of these problems. If you, uh, need to take many, many months to open a business, well, now it's just been much easier to do it digitally. And that also requires a huge amount of transparency and fairness and, um, predictability, right? So developing countries have a chance to leapfrog. They really do. And and overcome some of these key challenges that have other developing countries have faced back in the time. They're able to overcome this with overcome this with new technologies and leapfrog and build the digital infrastructure. Again, Chinese infrastructure has been one of the fundamental productive factors that enables, uh, the rise of EVs and the rise of the digital economy and the logistics and efficiency and all that. So invest, right? But you have to invest on your own. You can't only rely on foreign investment. And so private investment, national investment has to be there. And I think most importantly, you have to give people a hope that there's a better future that's waiting for them as long as they strive. And that is what the, the Chinese opportunity gave the people. They were so poor, so poor, but they knew that their children would do much better if they strived for it, if they were well educated, and if they invested, right? Investing for the future was was really important. And so for countries in Southeast Asia, now is a really great opportunity, um, uh, with all this rerouting and restructuring of global supply chain. Yes, I think on the whole, the trade war has been very bad for the global economy, but lots of third countries outside of the US and China have indirectly benefited or on a path to benefit because it will build capacity. It will build the, um, uh, become the logistics or, uh, the global supply chain center for a lot of these activities and attract a lot of investment. Again, if we look at the data, the amount of Chinese investment that has gone to Southeast Asia and to Mexico has been, uh, really quite quite quite momentous, uh, uh, ever since the trade war. So I still believe the global opportunities are there. We have not seen deglobalization despite all the noise. We have seen a restructuring of globalization, and this gives other countries more of a chance rather than just to be working with China. Um, we have not seen really decoupling. We have seen that trade, at least in terms of trade goods, are pretty embedded, uh, sorry, countries are pretty much embedded with each other. But I think, um, I think there are common themes, right, that that that makes a successful society. You've earlier mentioned the importance of productivity over scale of population, and this is in the context of the one child policy. Explain why you're not overly concerned about the demographic decline in China.

This is just not China's biggest challenge currently. I just don't agree with everybody who believes that, even with a government who thinks that, first of all, productivity is more important than having is more important than the number of people in the labor force. Um, we always use this example where, you know, one Indian worker, sorry, one American worker was equivalent to, uh, four Indian workers in the 1990s, and suddenly, you know, they became over time, they became productive Indian workers. And then one American worker was equivalent to two Indian workers, and you didn't need to double the population to get the same amount of output. And productivity growth can grow very fast. Productivity is growing at double digits for China or many, many number of years. It has slowed down, but it can also be still very rapid, especially by, um, embracing the new technologies of the world. You know, we're in a at a time when we're worrying most about youth unemployment and unemployment in general around the world because of what AI would do and what automation will do, and at the same time, we're worrying about not having enough people in the labor force because of aging. Right? That's self, that's contradictory. But I understand the fiscal pressures that are involved with aging populations. But look, the US is a huge fiscal problem that does not come from demographics, right? So again, um, it's not a necessary condition, uh, uh, or sufficient condition for decline. Again, if you look at the latest studies, they show that after 1990, aging countries are associated with being more richer countries because these aging countries are exactly the ones that adopted technology much faster, and they allow this technology to be spread throughout the economy, benefiting the entire economy. And so I think what we really should be thinking about is really training the next generation, equipping them with the right skills to deal with this revolution that's going to be more momentous than the industrial revolution. Isn't that much more fundamental? Uh, uh, adapting the education system so that we, we will produce talent that is not only going to contribute to our economy, but also will foster more harmonious society. Because when these technologies come around, there will be a lot of discontent, and, uh, you know, there will be a lot more technologies to take care of the elderly, and that frees up time for the young people to pursue their own dreams. And so I just don't think that with the, you know, 1% reduction in the labor force, and by the way, China still has a lot of people, a lot of people, that it's going to ultimately be the most contributing factor, most important factor contributing to to economic, uh, uh, challenges. We really ought to think about again, how to reduce the gap, right? Whether it's education, skill, whether it's people looking for jobs and the jobs that are available to them. We really ought to think about how government is going to really, um, deal with this coming revolution that is not the China shock. It is a technological shock of magnitudes more profound than what we've ever seen in our lifetime. That is really what we should be focusing on.

You know, Ku, we're, we're seeing rising inequalities of wealth, income, opportunities, and rising centralism of economic development in many parts of the world, right? And and if you know, if you read that recent book by Darren Acemoglu on Power and Progress, where he makes the argument that technological innovation hasn't really entailed shared prosperity. To what extent are you concerned about the possibility of AI further elitizing the pre-existing economic order?

You know, in the last few decades, we have seen inequality rise within countries, but we have also seen inequality reduce across countries. And that is one of the greatest gifts of globalization that has given the poor countries a chance to catch up, and for people, the vast majority of people around the world, to enjoy even just the basic, uh, you know, decencies of human livelihood. That has been just the most beautiful thing, I think, that has happened, despite the fact that the richer are richer and the poor are poorer, poorer in relative terms in advanced economies, which is by itself, I think, a separate problem. Now, what I'm worried about is that not only is AI going to increase inequality within countries, it could also increase inequalities across countries because of the lack of access, um, and, um, lack of access to some of these technologies. And where there are many things that are winner-take-all, and it doesn't, it's not like industrialization, which creates more jobs and more diffusion, uh, of these technologies and propagation, that could happen. I still think that there's the other side that hopefully will dominate, which is that AI will help developing countries to leapfrog. And even in terms of nurturing human capital, these tools that are, uh, that they are given will will rapidly enhance their productivity, rather than waiting to slowly catch up with advanced economies. I'm still hopeful that that can happen. But again, you know, this also happens in the backdrop of international governance, right? I think despite the problems of WTO and post-Bretton Woods institutions, they have managed to, uh, preserve and and and and foster a relatively peaceful global economy that encourages trade. And the same thing is needed for AI, and, uh, access to AI and AI for developmental purposes. And you, you don't do, you can't do that without some kind of international coordination. Um, I don't know if I really agree with what has been measurable and quantifiable in terms of technology not being spread around, but I think if we just look around us, it's pretty obvious that it has, right? Access to water, access to electricity, access to, you know, these general purpose technologies that we use everywhere, the improvement of livelihoods everywhere. Yes, maybe it has made the richer uncomfortably rich, but in terms of the absolute benefits, uh, uh, that technology has brought to humanity has been nothing short of remarkable. And AI is another opportunity. And, um, even in our daily lives, especially education, especially health, these are the basic, you know, forget about technological competition at the US-China national security level. Just think about the stuff that really, really matters, right? For for common people, education, healthcare, and access to things that they need. I think that AI will, uh, provide this. But again, it has to happen in this backdrop of global coordination where fairness is still something to be desired, right? That, uh, opportunity for all is still something to be cherished. That human dignity is still commonly understood to be, uh, uh, to be, you know, provided for for the majority of people. We have to have that common moral understanding. And by the way, even though post-war US had a universal moralism that was done around democracy and liberal values, I think countries like China totally will rally around the moral universal value on more pragmatic terms, which is human dignity and improvement of human livelihoods.

You know, one of the most structural requirements also impediments to AI is energy. And if we take a look at the global South, which is about 84% of the planet, they're not blessed with adequate electrification. I, I can tell you, eight countries out of the 10 countries in Southeast Asia, you know, their power generation capability or electrification on a per capita basis is a lot less than 6,000 kilowatt hour, which in my view is sort of like the threshold for modernity. Singapore and Brunei are 10,000 kilowatt. So if, if any of these remaining eight nations, they want to AI themselves, Southeast Asia would have to build about a, you know, a terawatt worth of power generation capability, which will cost about two to three trillion dollars. The money is just not there. The technology is there to power up, right?

>> Yeah, do-

>> Don't you see that as something that can, um, for further elitization?

Yeah, I do. And there's going to be another energy race, an energy competition with the big powers. Um, I wonder whether there will be other, but you know, again, once we are too dependent on one thing, human ingenuity tends to go to find alternatives and alternative solutions. And that's what we saw with OPEC and oil, into, you know, alternatives. And I, I wouldn't rule out, uh, this, this innovation that will come because energy is finite, and there will be a mass competition even among the biggest powers, and to start and to try to to reduce reliance on one thing, one component. Um, but again, you know, developing countries will need support. And and I think this is where China could play, potentially play a role, as we mentioned, right? China still has the view today that prosperity breeds more prosperity, and that, um, one's prosperity begets another's prosperity. And so far, I can't promise for the future, but so far, so far its view is that if the developing nations around it does better, it will also do better, and it will also foster a more peaceful region. Uh, and, you know, delivering the right technologies and technological capacity to, uh, speed up the development is in every bit of its interest. So in that sense, I would hope that it will play a bigger role. But again, technology is now exponentially changing, right? With the recent, uh, developments. So nothing can be for sure and certain, and I wouldn't rule out the possibilities of other innovation processes.

You know, Deep Seek was a hugely inspirational phenomenon to many of us in the developing economies because it's non-linear, right? To the point where we believe in the possibility of a non-linear future event that's going to bring down and collapse cost and time. And that's, that's what we're hopeful for. I, I, I'm mindful of time. Uh, Ku, I, I want to ask you the last two questions, and these will relate to what, what I see as sort of like the new structure of multipolarity. You, you've decided to live in London because of culture, right? It's so cosmopolitan. And in in this new form or structure of multipolarity, how, how do you think we could help the world remultilateralize? Help the world with living in this new reality that's, I think, richer from a multipolar standpoint, where we have countries or economies that used to be really tiny, they've gotten so much bigger, they tend to be revisionist, you know, to the pre-existing order. Is that, is that a likely future, do you think?

You know, the vast majority of the world wants to have multipolarity and multilateralism. It is really only one main one that doesn't want it and wants to stay out. Well, that doesn't mean that everybody else is going to stay out, right? Everybody sees the benefit of working together, especially on the economic, trade, financial front. And so the desire and urgency is there. I've seen lots of countries thinking about more diversification, more openness than ever. If you look at what the Chinese premier has been saying as a response to Trump's trade spats, he has been saying, we're going to lower, China is going to lower tariffs for everybody. China is going to lower, maybe reduce tariffs to zero unilaterally for the least developing countries, being more open than ever. And I see that spirit quite alive, uh, around the world, whether it is in the Middle East, where I go to often, and obviously in Southeast Asia, Latin America, embracing these new relationships and forging new partnerships. We are seeing that all being built, right? All these collective, you know, the coalition of the willing to to pursue a win-win solution is all there. And, um, so that spirit has to be kept up. And of course, one leader has to play a role, and that could be China, that could be China along with India and Brazil and the larger countries. But look, the middle powers are also more, you know, thriving more than ever. The distribution of opportunity, whether it's economy, wealth, and technology, has never been as wide as it is now, because the middle powers have also risen, not just China, and not just India. And so all these middle powers exert, uh, uh, exert some degree of power and influence in this network. Most of countries want to be part of this network. Most of the countries want to be working with each other. Most of the countries want to avoid conflict and pursue this win-win strategy. And Indonesia is a very, very important, uh, middle power with unique advantages geopolitically, in terms of its population size, uh, uh, commodity resources, proximity. And we are seeing greater regionalization. And by the way, we're lucky to be in Asia if we're going to regionalize, right? It's better than to be in lots of other regions around the world because, first of all, Asian economies still want to be part of that, uh, regional supply chain. And I think a lot of this new model will rely on, as we mentioned, Chinese technology, more localized capacity, because a lot of the industries have moved to Vietnam, Indonesia, Thailand, and so forth. Um, but also you have China's big scale economy and big market. By the way, there are lots of, uh, stuff that Chinese consumers desire that are actually from, uh, the region, rather than from Europe or the US. And even Japan, you know, Japan, South Korea in in that region, Asia is probably the best region to be in, if we're to be honest, if we're talking about a greater regionalization of supply chains and cooperation, even monetary, financial, financial architecture, infrastructure, all of this is is there. So I think we, my advice is that we need to separate, you know, the differences from the goal, right? There's always going to be differences culturally, politically, there will be skepticism, there will be mistrust. But at least one thing is clear, I hope that is clear, that a country like China wants to have pretty pragmatic economic relationship. And again, I want to emphasize the fact that its worldview is that another's economic success begets more success on its own and for everybody else. So that kind of spirit of collaboration, uh, will continue. Um, leaving aside the differences, ironing out some of the differences, common pursuit of goals and common development, uh, could be very useful. And if you look at South Korea and Japan, even though they are US allies, they have not just sided with the US when it comes to even really, really quite, you know, really, really sensitive things like cutting-edge technology, the, the semiconductors, the trilateral conference between U, sorry, China, Japan, and South Korea on even more collaboration in semiconductors goes to show that they're carrying a completely different view from what the US is projecting currently, that China still represents a huge economic opportunity, even though the US provides security to these two countries. And thirdly, probably because of US unreliability, Japan and South Korea also wants to hedge. It's fine to want to hedge. You know, Southeast Asian countries want to hedge, that's great. The corridor that is being set up between the Middle East, China, and Southeast Asia is just very, very, very significant. And maybe even greater collaboration with Europe, as Europeans are finding themselves in a little bit of a trap with Latin America. I think the coalition of the willing is actually quite, is the majority of the world.

My, my last question, Ku, that Indonesia, like a typical developing economy, has the aspiration of moving up the value chain and the global geopolitical order, and that it does have desires to expand upon its pre-existing strategic autonomy. Right? In order to do all those, it sees China and the West as indispensable inevitabilities for a long time, at least 50 to 100 years, right? How realistic is a modus vivendi between China and the US in the near future and going forward?

The stakes are just really too high, I think, for anything major to erupt between the two countries. In the end, I think they are still run by experts and rational-minded people. I mean, that there are at least enough of them around, and there are enough constraints around. And there is a real understanding that anything, any confrontation that happens between these two countries is ultimately going to lead to the, the ultimate destruction of humanity. Right? That's how high the stakes are. And so we're going to see the temperature, you know, fluctuating, even though the weather might not fundamentally change. The frost that has set upon these two countries might not fundamentally change, but I still believe that it will be managed. Um, and that they will find, come to terms and find an equilibrium on the things where they're competitive, the things on which they're collaborative, the things on which they are opposite. And these red lines will be will be drawn. I'm even make, you know, uh, uh, uh, going with the idea that eventually the US will accept finally accept that China is here to stay and not nowhere to go. And that no matter what it does in terms of the economics of suppression and the tools and, you know, all these things that are used against China, trying to stop China, it's probably not going to happen. You probably can't stop a country. And you can't, you couldn't stop a country hundreds of years ago. You definitely cannot stop a country now, just because of the diffusion of knowledge and technology and the markets and the substitutes that are around and the leakages at the global scale. They finally come to the terms that China is going to be a close competitor in your rearview mirror, not going anywhere. And, um, that they will always be in kind of, you know, close lockstep with each other for at least some time to come. That America would just be more intent on focusing on its own internal challenges and maybe focus on strengthening itself rather than trying to, you know, part of a global scheme to create chaos or or escalate China itself as well, right? China's part of the story, but, um, they will have to mutually deescalate, prevent escalations. But I, I think that talking to people around there's enough awareness of that.

>> I'm with you. Amen to that.

>> Thank you so much, Ku.

>> No problem. Pleasure.

>> That was Professor Ku Jin, a renowned economist who just wrote a great book by the name of The New China Playbook: Beyond Socialism and Capitalism. Thank you. Heat. Heat.