Hosts: John Cochrane, Niall Ferguson, H.R. McMaster
Guest: Stephen Kotkin
Recorded November 2022
Xi’s perp-walk of Hu Jintao
Not sure if pre-meditated, or if it was triggered by Hu reaching for a key personnel document
Never had an economy this large run by a political system this opaque
China’s Leninist structure never went away – you can’t be half Communist just like you can’t be half pregnant
Central Party School – Soviet collapse is #1 subject there, terrified of Gorbachev reform and the subsequent collapse
Xi will shave off as much GDP as necessary to keep Party monopoly
China’s economy went from $200B -> $18T
$500 -> $20K per capita
Soviets reached US military parity in 1970s – despite 1/3 economic size – but nothing like what Chinese have done
Mao in 1966 – targeted own state, destroyed planning mechanism (planned economy personnel), peasants decided they didn’t want to starve again
Peasants instituted market relations with each other — ignored collectivized statutes and norms
Communist Party latched onto this
Under Deng, grudgingly and in stages, accepted this growing market behavior and tried to control it
“Party hijacked the process and the credit for it”
Mao didn’t care about trade, wasn’t economically literate
Deng visits the US, decides to change partners – divorce Soviet Union and marry US
Why? Saw the success of Japan, Korea
China took Japan model — free and open access to US market
Peasants moved to towns, cities, and built enterprises from ground up
Party steals credit too from HK’s success
All the foreign money came through HK, which then invested into China’s Special Economic Zones
Niall:
-US essentially sponsored China’s development – technology transfer and access to higher education
-Xi made clear he prioritized Party’s success over the economy
Apple can make 10M phones in Vietnam, but 500M in China — scale is irresistible
At least 600-800M Chinese who are not part of world economy, didn’t finish high school, no healthcare, invisible China
We didn’t think it’d happen this quickly – that China would become a peer competitor in 1-2 generations
Niall:
-Hubris of Xi – reached climax in 2020, thought pandemic exposed US
-now China has a latent economic crisis, controlling covid, “building tower blocks for nobody”
Does the Party need the private sector? Or does it care more about its Leninist system?
ONTO RUSSIA — 34:00
Shocking for young Russians what’s happened to their country
(stopped here)