Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Swellsville in China

Or Swellsville in books about China, I mean. As in Nixon in China; or, more specifically, as in Apple in China (2025), a book about China that suggested to me this roundup of some recent books about China. 

China is another one of my ongoing Mr. Magoo retiree reading projects. Why China? In world history, a high school course I taught for many years, China is a big deal. The oldest and most populous civilization in world history. There were actually many patronizing attitudes and/or omissions in the history of Western civilization I was taught in school growing up but no bigger and more globally consequential oversight  than the poor attention given China. 

A byproduct of that Eurocentric oversight, going back at least to China’s Opium Wars with Great Britain in the 19th century-- notably, the subsequent 100 years up to China's communist revolution in 1949, a period known in Chinese history as the “Century of Humiliation”-- hardened into a condescending Western (or Washington anyway) consensus. China is viewed as technologically backwards, economically hobbled by communist dictatorship, inferior and incapable of matching the technological development of the free Western capitalist countries. 

Emboldened by a couple centuries of colonial and imperial global domination and the great technological advantages of industrialization, and distorted by 20th century Cold War paranoia, it is not hard to figure where arrogant western views of China came from but if you do read any world history before the Industrial Revolution (IR) you know China was nearly always in the mix if not a central driver in globalizing developments.   

And, now, or at least since the 2008 Summer Olympics, China has been projecting big time global superpower vibes again, showing off monumental world building in staggering scales and with awesome speed. China’s building for the games was impressive enough. Beijing's National Stadium, the "Bird's Nest," was broadcast via the wide world of sports in '08. Behind this coming out party, however, were already decades of what is now called the Chinese Economic Miracle. Or China’s “Opening and reform." China's “Economic takeoff.” Or just “China speed." All noting, essentially, the astonishing economic growth in China beginning in the 1980s. An industrial revolution in the building of housing and infrastructure in China, creating massive regional urban complexes, called Special Economic Zones (SEZs), like Shenzhen (mainland across from Hong Kong), a population under 100,000 in 1979 expands to over a million by 1990; or Pudong, a SEZ startup in 1993, and a district of greater Shanghai, metastasizes into a massive urban conglomeration of over 16 million by the end of the ‘90s.  

There might be some exaggeration in China’s growth numbers over this period, such claims they are exaggerated exist in the English press anyway. But the World Bank, a western created and dominated global institution, reports annual growth rates in China between 1990 and 2010 regularly hitting between 10% and 15%, and almost never dipping below 7%. By contrast, US growth rates in the same period average between 2% to 4%, actually dip into recessionary negative growth in three years (all republican, btw), and tops out in 1999 at 4.8%. In those same 20 years China’s annual GDP growth rate is below the US single year peak in only one year. In those same 20 years the annual growth rate in the European Union (EU) peaks at 3.9%. Nobody disputes anymore that China’s economic growth has far outpaced US/EU growth over the same period. There are patches of GDP growth numbers comparable, industrializing growth spurts in Japan, South Korea, maybe others, but none I know that sustain 10% plus growth averages for two decades solid.  

And nobody can seriously dispute that China’s industrialization of a population of 1.4 billion people is unprecedented. There are economies of scale in China's growth that we have never seen before. Going back to Deng Xiaoping’s “Reform and opening” program launched in 1978, the Chinese Economic Miracle is not the first industrial revolution by a couple centuries but China is the largest state so far to fully industrialize. Most the reduction in world poverty over the last forty years has taken place in China. Since that global coming out party in the '08 Summer games China has taken over the global economy for green energy technologies, solar panels and batteries, and EV cars, crucial to scaling down our dependence on fossil fuel energy carbon emissions and transitioning to some more sustainable energy future.

So now after nearly two centuries of waning influence China appears to be rising again in global influence. And as a long-time high school world history teacher, I’m interested in such international topics; international relations and global power politics. I make no grandiose claims for any expertise on any of these subjects. My background is reflexively progressive leftist retired schoolteacher from working class origins, semi-follows the news if always grumbling about the news. I like to shout back at the TV/social media and blogosphere now and then, maybe the way you might throw popcorn at the TV during games; or trash talk prestige TV shows while watching them. I have absolutely zero “influence,” and close to zero readers. Blogging like I’m doing is like publishing online your diary entries. In this case, the diary entries of an old geezer merely trying to keep what little wits about him he has left in some kind of working order. I read books, listen to music, watch sports, and follow the news.  

Anyway, so some people write books about China for us English-speaking peoples and I've read a handful of them. A recent spate of such books try to help us understand China’s economic miracle. How’d China get so big so fast? How much should we worry about China now that they're gotten so big so fast? Etc. In my random survey of popular books about contemporary China, comments following, I’ll establish upfront my general sense is these books do a little too much sensationalizing about the menace of a rising China and not enough careful consideration of how China got so big so fast but my sample size is small and probably idiotically random. Should you dear reader know a good book about China I've left out of my roundup, please, do share. 

The conventional history in these books begins with Nixon in China in 1972. This diplomatic event marked a new opening in US and China relations. Two conservative world leaders decide better trade relations between two big states like the US and China would be a good thing. Deng Xiaoping’s visit to the US in 1978 celebrated new trade and a new openness with China, signing several expansive trade deals in 1979. The exchange in theses trades? The US gets more economic trade access to China’s 1.4 billion potential customers, selling them lots of soybeans and other mostly agricultural products to start, and China, Deng, who was China's supreme leader at the time, wanted extensive knowledge transfers, deepening exchanges in science and technology and joint education ventures with the US. 

In some recent accounts of US-China relations the impression is given that China has been stealing technology know-how from the US. Point of historical fact: Deng, going back to 1978, was always quite up front about this. Deng's impressively blunt pitch was for spreading education, science, and technology as progressive values that build a better future, promoting peace and prosperity in the world, and what China always upfront explicitly asked for in trade with the US. (Related, in China's expanding global trade relations today they are reportedly offering now in return knowledge transfers to states less developed in Africa for natural resource extractions.) Anyway, back in the USA, hoping for the best in such promising beginnings, maybe most firmly believing that free market capitalism would promote more democracy in China, the US gradually welcomes China into big time global trade markets. China rejoins the international market trading system ran by the IMF and World Bank in 1990 and is finally fully accepted into the (neoliberal scripted) WTO in 1999. 

Lately, however, in the Trump era, sentiments about US-China relations have grown more cautious; if not openly hostile. There are China hawks who think we ought to get out of China altogether, "decouple," etc. 'We gave them the engineering codes of growth capitalism and now look how they’re doing us' might serve as a rough translation of free marketeers who were all in for opening up more trade with China in the 1980s when it looked like a potential new markets bonanza. We had hoped capitalism would make China more democratic and free and open and instead we get the China virus and China bullying Apple and threatening the democratic independence of Tibet. Or, more specifically, Taiwan, where as it happens almost all of the super-duper high-end computer chips essential, reportedly, to many national security weapons technologies are made. Gulp! If China decides it’s time to assert its claims over the islands of Taiwan, and they blow their horns about this inevitability all the time, they could possibly just like that (I know, not really just like that but we’re talking maximal risks here) control over 90% of world production in super high-end chips crucial to AI and national security weapons technologies. Ack!

(Que very scary dramatic major chorded music!)

An essential companion to the story of US-China relations since Nixon in China is Chris Miller's alarming Chip War (2022). An Economic history professor at Tufts, and a widely read NY Times bestseller, Chip War pushed semiconductors from business page news into everyday geopolitical vocabulary. So alarming Biden’s CHIPS Act, boosting investments in chips technology and science, was passed in the same year. 

In Chip War Miller tells the surprisingly dramatic history of how chips became the world’s most critical industrial input, essential to AI, essential to national security—and why the supply chain now runs through a few choke points in the United States, the Netherlands, Japan, South Korea, but above all, Taiwan, and even just one company: Taiwan Semiconductor Manufacturing Company (TSMC). Where reputably over 90% of these essential high-end chips are currently produced. This is a red alert national security issue, not surprisingly. The risk of China controlling (again, something they threaten with drumbeat regularity) that many of the chips used for military defense appears obviously inadvisable. 

Nonetheless, Biden’s CHIP’s act invested in rekindling domestic production of cutting-edge AI chips with places like Intel. Where full-disclosure I worked in Intel's Fabs, manufacturing clean rooms, on the line and in training for three years in the early 1980s; although I possess no trade secrets of any value, I assure you. My point is some positive actions in this area are underway but reducing the scale of dependence on chips from TSMC is also not something you do over night. There was some promising industrial policy response initiated under Biden but all bets are probably off with Trump 2’s insane trade wars and deaths-of-despair anti-green energy crusade. 

Miller’s bigger history of the semiconductor industry in the US, the chip makers, goes back to WW2 and is on its own quite fascinating. Launched mostly by post-WW2 military investments--yes, the working stiffs behind cybernetics and technocracy images in comic books-- the chips industry begins as a military contractor and doesn’t turn to private production and consumer demand until the 1960s. When transistor radios and then calculators and Walkman’s and personal computers and iPods and finally iPhones lead the industry into the 21st century. Our little multi-purpose hand-held computers. There are some booms and busts in that history, of course, but the growth trend in chips was always up, I thought. But was it really?

Miller problematizes chip tech boom nostalgia with what he argues was a decisive break in the domestic chips industry in the 1980s and 1990s. A split between design and manufacturing in the US semiconductor chip industry devastates the industry, or Intel and the domestic production of chips anyway. The neoliberal global economic strategy rolled out in the '80s was that the US would move up the global production value chain, doing the high-tech design work domestically, at home, and outsourcing and offshoring the lower paying manufacturing work. This happened in the auto industry, hence the rust belt spread across the midwest. And this eventually happened in chips manufacturing as well. By 2010 former Apple CEO Steve Jobs was famously lecturing President Obama on how iPhone manufacturing couldn’t come back to the US. No way US workers could match the manufacturing acumen and "labor cost scaling" (read: endless supply of cheap labor) available in China. Apple designs the iPhones and China manufactures them, Jobs asserts conclusively. 

This leaves former CEO of Intel, Andy Grove, about the same time, 2010-ish, to point out the hidden tragedy in the story: the US was losing important manufacturing technology know-how that could only come from actually doing the manufacturing. Technological knowledge generated on the shop floor or in the Fab. Not only in designs and models, but knowledge developed directly in the factory production process. It only took another 12 years, 2022, before Biden’s CHIPS act (enjoy repeating that, sorry) finally does something about it. Boosting domestic production by Intel, Miller’s poster child for the pivotal 1990s downfall in the chips industry. 

Back to Miller's downfall of Intel story the business guys take over from the engineers and production people. They separate design from production in pursuit of the lowest building costs and cheap available labor. They focus on producing chips for cloud storage and cut Intel off from the chip development that would go into the iPhone. They outsourced their production labor costs to Japan and Korea and Taiwan, where a worker costs them 15-20% as much as a worker costs them in the US or EU. How could they resist? How could any manufacturing business resist those kind of labor cost differentials if they are offered to them? 

Since the 1980s, if not before, the chip makers, like many large industries in the US were aggressively looking for ways to cut their labor costs by outsourcing manufacturing labor to places in Asia. Low wage manufacturing labor still costs today in China or Vietnam 1/5 or 1/6 what labor costs in the US or EU. I see primarily mercenary concerns in this feature of globalization; if admittedly, I also see cost savings it would be hard for any profit seeking private business to refuse. What I don't see is much interest in spreading democracy. 

This is part of the story I think Miller glosses over a bit. He’s a scholar, he doesn’t want to be targeted by the right as anti-business or Marxist or woke whatever, but it’s this part of the story, that the chip companies were fine with the cheap labor conditions in China or Asia, even pursued them and preferred their “discipline” to labor unions or wage pressures and worker’s rights back home. Any actual evidence of the chip industry supporting the development of democracy in Taiwan or China or anywhere else in Asia, the hopes coming out of Nixon in China, are sorrily lacking. 

But I don’t actually learn much about how good or bad working conditions are for production line workers at TSMC in Taiwan in the 1980s and 1990s, the place that produces over 90% of the cutting edge technology chips in the world discussed in Chip War. I do, however, get a semi-horrifying look at working conditions for Foxconn and other Chinese production facilities contracting with Apple in the 2000s and 2010s in Patrick McGee’s deeply reported, Apple in China (2025), another NY Times bestseller. And let me tell you those working conditions are not good. They are not democratic in any sense. No respect for human rights, or even basic human dignity. 

In 2010 it got so bad over 100 employees of Foxconn, Apple’s biggest manufacturing contractor in China, committed suicide protesting working conditions by jumping off the roofs of the dormitories where as many as 12 people are crammed into one living space. Reinforcing my point, Apple, like most foreign industry in China and other parts of  Asia, only cares about local working conditions and worker’s rights when the worst sweatshop abuses make the news and only then so long as the story is in the news. 

At places like Foxconn’s vast “factory city” campuses in China—and at other assemblers in Apple’s orbit—the recurring picture is a dormitory-labor regime optimized for speed: young migrant workers housed on-site, standing assembly work and strict line discipline, and heavy reliance on overtime to hit launch-season quotas. Few workers last more than two years. It’s for young workers with no other better options. This is “China speed” as a form of brutally oppressive factory organization. Near prison labor camp conditions are reported. In fact, reviewing conditions at Foxconn you wonder how much worse could working conditions be in the Uyghurs prison labor camps in northwestern China? 

The global spotlight on working conditions in China intensified after the 2010 wave of worker suicides at Foxconn. An investigation commissioned by Apple reported serious noncompliance issues including excessive hours that, at times, averaged over 60 hours a week—followed by the familiar cycle of audits, promises, and partial fixes that never fully change the pressure-cooker incentives of “time-to-volume”-is-money electronics production. In short, working conditions for Apple’s front line manufacturing workers in China are, shall we say, not very democratic; and do not respect the dignity of the low wage worker. McGee covers for Apple, arguing that these factory labor conditions are organized by China, not Apple. But that is outsourcing to save on labor costs and then blaming the outsourcing when it turns out your contracted Fabs are being run like prison labor camps. 

My main point: For American business in China (or Asia), Intel or Apple anyway, it was never about spreading democracy in China. It was principally about securing a large and cheap factory labor force. Always.  

But there is another interesting way the story in Apple in China, in the late 2000s-2010s, differs from the story told in Chip War about US-China relations in the 1980-1990s. When Apple is scaling up production in China and iPhone sales are exploding in the 2000s, McGee argues Apple is giving away everything to China.  

In contrast with the stark separation between design and manufacturing portrayed in Chip War, Apple claims to have invested billions in Chinese technological development and manufacturing in the 2000s and 2010s. A big section of Apple in China is about the large and continuous flow of Apple engineers flying between Silicon Valley and China throughout the Apple expansion in China. Death march schedules worked in China by US engineers, problem solving the manufacturing process, refining manufacturing step procedures, doing that manufacturing technology know-how stuff, more or less the heart of Miller’s critique of the chip industry in the '90s and what Andy Grove was complaining about in 2010. The US was losing crucial chip manufacturing process know-how. But Apple in China paints a different picture. The design people, the engineers in Cupertino, were deeply involved in the iPhones manufacturing process setup at Foxconn and other manufacturers in China. 

Accordingly, McGee’s most sensational claim is that Apple was too involved, giving away manufacturing process secrets and expertise: “My argument is essentially that Apple is playing the role of Prometheus, handing the Chinese the gift of fire.” China’s recent official clap-back says Apple and McGee’s claims about Apple’s investments in China and taking credit for China's gains in technological development are over-stated and exaggerated. I will only say comparing the iPhone assembly process to the gift of "fire" does sound, yes, a tad overstated and exaggerated.  

Both Chip War and Apple in China are very readable, Chip War a little drier and more academic but also significantly more convincing. From a national security standpoint alone, the US or EU, or any state really does not want to be that vulnerable to the possibility of China, or any potentially hostile state, controlling so much cutting-edge chip production relevant to your national military defense. And Apple probably should not depend on China for 80-90% of their iPhone production either. Although the national security threat seems significantly less with the iPhone. I own one, but truth be told I’m still not clear as to whether it is more a security asset or threat? If Apple doesn’t like China’s heavy-handed censorship or local data control rules or local labor conditions, the latter tellingly absent in most of Apple’s lists of grievances, btw, they ought to diversify where they produce iPhones. And they are apparently doing so, moving more production to Vietnam right now. 

But excuse me if I am unmoved by the crocodile tears in Apple in China about Apple feeling bullied by the Chinese state. Apple got fabulously rich in the 2000s producing iPhones in China essentially because, as Apple in China substantiates, the CCP gave away land to Apple nearly free, they subsidized and removed any regulatory impediments to expanding Apple manufacturing in China, and secured for Apple a cheap labor force living in what looks now like near prison labor camp conditions. A labor force Steve Jobs was lauding as incomparable in 2010, remember. And working conditions Apple never objected to until workers began jumping off the over-crowded dorms they lived in next to the massive manufacturing factory complex where Apple iPhones are produced in China. 

I’d like to see Apple keep a significant footprint in China and try to adjust to rising labor costs and social spending in China, which after all are to be expected and only fair. Obviously, trade doesn’t stop wars but I think significant trade connections can deter wars. Better to stay engaged with China, and work for better trade relations, relations that better respect worker’s rights and the environment. 

But McGee likes to pitch the conflict in extreme terms, however. For instance, claiming Xi Jinping vows to destroy capitalism in 2014, which appears to be based on internal CCP notes from a speech in 2013 in which Xi actually said, “the eventual demise of capitalism and the ultimate victory of socialism must be a long historical process.” This kind of Us vs Them, Capitalists vs Socialists, stuff goes viral on social media but it too is absurdly overstated and exaggerated. 

For a sharper, more economics-first explanation of the Chinese Economic Miracle-- or how China got big so fast?-- I read Yuen Yuen Ang’s How China Escaped the Poverty Trap (2016).  

“The poverty trap” is a self-reinforcing pattern in modern economic development identified in decolonization and national independence movements after WW2 taking place in what comes to be called the global south. But the roots of the poverty trap refer to centuries of European colonialism and western imperialism around the world. In the 19th and 20th centuries industrializing states in the global north extract natural resources and wealth from colonial and/or underdeveloped states in the global south, enriching a small local factory/plantation owner elite and trapping working populations and the general populations in underdeveloped states in austere cycles of grinding poverty. The Poverty Trap. What wealth the colonized and/or imperialized subject state produces, or a hog’s share of it anyway, was extracted and sent back to the industrializing and colonizing trade metropoles in Europe, the US, and Japan. The rip-off remains much the same after WW2 but the poverty trap becomes pervasive in the global south, where new decolonizing UN member states quadruple to nearly 200 nations in the second half of the 20th century. 

In standard modern economic development theory, heavily influenced by German sociologist Max Weber, rational “public institutions,” legal and bureaucratic expertise should precede the creation of new markets, defining a fair and predictable legal structure for businesses to grow and thrive in. Drawing on a close first-person study of China’s reform period during the 1980s and 1990s, Ang, a Professor of Political Economy at John Hopkins University, makes the case why China’s Economic Miracle escaped the Poverty Trap. She argues that economic development is "coevolutionary": growth and governance improve together, and the first move to escape the poverty trap is often to “use what you have” to build markets even under messy, seemingly weak institutions. Her key concept—“directed improvisation,” note compatibility with the Deng's pragmatic adage, “crossing the river by feeling the stones,” where China’s party-state leadership in Beijing sets broad direction while local officials experiment and adapt to conditions on the ground. This wild west Laissez-faire approach spread bribes and corruption, but it also unlocked economic growth while managing to keep private capital wealth interests, foreign or domestic, from capturing the power of the state. 

Another Deng quote, “Let some people get rich first,” gets at the essential Laissez-faire (leave it alone) principle at work. We can’t wait for the perfect plan, or expert legal officials. We need to let the builders and inventors and free-enterprise hustlers loose, even if this means tolerating some unfair labor practices and inequality and polluting externalities requiring people to wear masks in the cities for a time. This gets the wheels of commerce turning and growth and development happens.You can’t argue with the effectiveness of such an approach, Ang documents in detail how it worked in China, but it isn’t all that hard either to see how this could just be kicking the poverty trap can down the road a piece. It doesn’t eliminate the poverty trap but internalizes it inside China for hundreds of millions of low wage workers. This is an unfortunate pattern of capitalism, trapping low wage workers in sweatshop labor conditions. 

Another sharp economic take on Deng’s crucial “Opening and reform” decade of the 1980s is Isabella M. Weber’s How China Escaped Shock Therapy (2021), which I’ve raved about before. Widely discussed well beyond academia and decorated with major prizes, Weber reconstructs the 1980s fight inside the Chinese economic policy world over price liberalization, inflation, and the pace of market creation, arguing that China’s leaders used pieces of the state planned economy rooted in ancient Chinese history as positive and essential scaffolding for markets rather than getting rid of the state economic system altogether, as they were being urged to do by the big interests of global private capital. Weber's economic argument rubs against free market ideology and its ban on gov't meddling in markets, and provides critical insights into how China got big so fast over the past half century. 

At the time of China's "Opening and form" policy debates in the 1980s Milton Friedman and free-market global finance capitalist elites, IMF/WB, multinationals, libertarian neolibs, full-court pressed China to remove all state restrictions on the global flow of private capital in one “Big Bang”of shock therapy. Doing the neoliberal economic shock therapy kind of thing like in Chile in the 1970s; and would do to Russia in the 1990s. Essentially, armed overthrow of democratically elected socialists and letting private big business interests have their way with workers. The state violently suppressing any labor organization. That's the realpolitiks of neoliberalism. But in its fundamentalist free market dogma form peddled in China in the '80s debates shock therapy policies advocate removing all state taxes and regulations and state controls over the private economy in one big ripping off the band-aid of the overbearing state holding down the dynamic energies of the market economy. (Not unlike, btw, what Trump/DOGE and Project 2025 are trying to do in the US right now: Remove all limits on private wealth while, additionally, taking over the national security state.)

China struggled with these “Opening and reform” or "Opening" (read: privatizing) pressures from global capital throughout the 1980s and '90s but were able to establish effective state controls over the private economy in that crucial period in the '80s, limiting the flow of foreign capital while investing heavily in education and technology and infrastructure building. The inference in Weber's case is that state guidance and industrial policy and resistance to neoliberal privatizing pressures were crucial to establishing the institutional conditions for the Chinese Economic Miracle. Weber’s book is a close study of ideas and institutions, and also doubles as a reframing of state-directed “gradualism” as a legitimate policy frame, showing how statecraft can stabilize economic growth and avoid the social hardships and chaos that privatization shock therapy has produced elsewhere.

A couple years back when they were first trying to introduce Chinese EVs into the US some people complained that Chinese EVs had not been produced fairly. China’s EV industry received substantial state subsidies, Biden whined to the press. Maybe not at the same scale but rarely mentioned Big Tech in this country has also been subsidized heavily by the state; as have many other Big industries. It's not just the state subsidies but the state capacity and clear vision of a better future that wins out in China's green energy tech revolution. What China’s impressive green tech development over the last 10-15 years shows us is that any viable vision of an abundant and sustainable future will require more state industrial policy, not less. Not just because private capital, monopoly capital, and free markets in the West haven't delivered the green technologies we need at a cost we can afford, like China now apparently has (although no saying how long before we can enjoy those cost savings in the US), it's how China's green tech revolution has exposed Big Oil and Big Tech monopolizing and obstructing the development of new alternative energy technologies, as now with the Trump2/DOGE regime.   

For the bigger political history and backstory behind the Chinese Economic Miracle and China’s economic takeoff, Ezra F. Vogel’s biography of Deng Xiaoping and the Transformation of China (2011) is now my go-to doorstop classic on the subject—a big award-winning, widely read biography that helped popularize Deng as the central architect of the “Opening and reform” era. 

Vogel follows Deng from revolutionary insider to pragmatic modernizer, explaining how he rebuilt party control after the humiliating violence of the Cultural Revolution, while unleashing markets, foreign investment, and export-led growth that reshaped daily life for hundreds of millions in China. Deng was purged twice under Mao, forced to live in rural re-education camps for a total of seven years in the long period before he came to power, and still he was above all to the very end a staunch CCP loyalist, and even still loyal to the legacy of Mao. For Deng and many Chinese, Mao was the George Washington of modern China’s political independence. And, recall, a hard-won independence gained only after a century of humiliating foreign control. The book doesn’t dodge the darker side of China's revolutionary independence legacy, including the harsh limits Deng set on political liberalization, but it’s a useful reminder that today’s China was engineered as much by political institutional decisions about where the buck stops, so to speak, as it was by GDP charts. 

The keys to Deng’s “Opening and reform” were liberalizing private enterprise and making continuous and large compounding state investments in agriculture, industry, national defense, science and technology, what Deng called the four modernizations —while never letting private wealth, foreign or domestic, get the upper hand over CCP state power and control. 

Deng errored in favor of the heavy-handed state, most famously during the Tiananmen Square crackdown of June 3–4, 1989. After weeks of student-led demonstrations in Beijing calling for political reform (and broader protests in other cities), the government declared martial law and sent the People’s Liberation Army into the capital to clear protesters from the square and surrounding streets using lethal force. The exact death toll remains disputed—official figures were far lower, while many outside accounts describe hundreds, possibly thousands killed—followed by mass arrests, long prison sentences for activists, and decades of censorship and enforced forgetting inside China. Still, overall, Deng's rule, especially in contrast with the humanitarian catastrophes of the Mao era, is typically characterized by Deng's relative benevolence and his progressive investments in education and science and technology. 

Additionally, from another angle, one cultivated by Vogel, Deng’s fierce commitment to not letting anything threaten the power of the state, or the political control of the CCP, not foreign capital, foreign states, nor student protesters, was arguably crucial to the Chinese Economic Miracle, drawing strict boundaries around China’s political independence from private capital and foreign control. Deng’s Chinese nationalist engineering task, what I think you could reasonably call Deng's Mandate of Heaven (even though he was in fact a devout secular modernist), was to encourage economic liberalism while never allowing any challenges to the authority of the single party-state government of China, a party-state gov’t that won China’s sovereign political independence in 1949, and above all for significant majorities of the Chinese people, insures that political independence to this day. 

Stepping back even further, the strengths of centralized political control are a feature of Chinese civilization going back three or four thousand years. This point can be exaggerated. In China’s actual history political control was often split into warring states or China was ruled by foreign powers for centuries at a time. But, even so, actually not so much as most other world civilizations. And a meritocratic national civil service examination system, reinforcing centralized authority, goes back 2000 or more years in China’s history. At any rate, amongst centralizing political heroes in China’s history I should think Deng has to be one of the greatest, and to my mind has to be on any short list of the most productive and benevolent world leaders of the 20th century. Professor Vogel makes a persuasive case.    

Dan Wang’s Breakneck: China’s Quest to Engineer the Future (2025) is a punchy, highly popular addition to the the growing genre of books trying to explain to Americans the Chinese Economic Miracle. When the book was published Wang worked as a research fellow for the Hoover Institution at Stanford University. He name-drops Ezra Klein’s and Derek Thompson’s Abundance book (2025). Wang’s central argument is that modern China is an “engineering state” and the US is a “legal state,” and the differences explain the Chinese Economic Miracle and why US governments (and especially Blue governments like California, chime in Abundance devotees) are always getting bogged down in process and litigation and can’t build anything. 

Wang mixes on-the-ground reporting with political economy to explain how China learned to build big stuff at astonishing speeds—bridges, rail, factories, whole cities. He shares historical experiences of “China speed,” like stories of China building hospitals during Covid from the ground up in a matter of weeks. Wang takes a bike tour through a rural region of China transformed in a only a few years with roads and massively scaled urban industrial infrastructure. He doesn’t ignore the human and political costs of China’s social engineering, surveillance, and coercive campaigns. But the book’s central contrast (China run by engineers, America run by lawyers) is blunt and reductive in the way binary comparisons always are. 

I’d like his engineering state argument (and the abundance arguments, for that matter) better (Deng did have the mindset of an engineer after all, and the Chineses Economic Miracle is a colossal achievement in civil engineering) if these arguments didn’t rhyme so damn much with monopoly power and lawless dictatorship and more corporate disregard for labor and the environment. There is a weird sense in how Wang’s engineering state eerily seems to prophesize and/or endorse a host of illiberal engineering schemes, Foxconn labor, Project 2025, the unitary executive theory, Musk's DOGE. Only recently Ezra Klein was still apologizing for Musk and DOGE as wrong-headed but at least trying to bust through walls and cut through all the red tape and get something done in a government stuck in democratic gridlock. (Yeah, gridlock caused by millions in campaign donations to block popular democratic reforms; and instead getting stuff done like destroying gov't programs saving hundreds of thousands of lives.) Anyway, it's this tendency to reductive binary evaluations that makes me skeptical: let the Engineers cook, sideline the lawyers; building good, rules and regulations bad. 

To be clear, I think the US ought to build more and invest more in public goods and infrastructure too, like China. Unfortunately, when Wang and the Abundance crowd talk about the engineering state (and techno-optimism) it is always about these heroic engineering world builders eschewing rules and regulations to build and get great things done. But Japan in the 1930s and 1940s has been described as a Techno-fascist engineering state. Surely, China's prison labor camp system for Uyghurs is also a product of China's engineering state. DOGE is a cartoon troll version of the engineering state. Each of these are arguably just various ways the engineering state builds power and doesn’t get bogged down by legal processes or NIMBY neighbors or human rights concerns. Nearly any lawless action can find justification in Wang’s engineering state argument if it can be attributed to some constructive end goal of the engineering state, rendering the distinction kind of useless, if not in fact a negative frame for understanding the Chinese Economic Miracle. 

Changho Sohn’s China Worldcraft: From Beijing: Four Concise Keywords of Chinese History You Need to Know to Deal with Chinese (2022) is a compact, thematic “China primer” written from the vantage point of a South Korean diplomat stationed in Beijing, and so naturally it is a bit of a hagiography. Sohn emphasizes often neglected Chinese stories in the west. For instance, how the CCP actually stabilized inflationary pressures after WW2 much better than many “free market” western economies. A story Weber also reinforces in How China Escaped Shock Therapy. But ever the diplomat Sohn also completely ignores shameful humanitarian disasters in China like The Great Famine that plagued rural China between 1959 and 1961, resulting in 30 to 46 million excess deaths, or the Cultural Revolution that terrorized China from 1966 to 1976, leading to 1.6 to 2 million unforced deaths and massive forced displacements. Both standard bullet point history of communist era China in high school history courses in the US. Sohn’s overall message emphasizes China’s long, rich, imperial history and its immense size and ability to absorb conflict and change and still maintain centralized state control. Like I said, China is the oldest and most populous civilization in world history. India, or South Asia, is close but never experiences as much centralized state political control as China. 

China Worldcraft is explicitly aimed at outsiders trying to make sense of how Chinese leaders and Chinese public culture reasons from history. Chinese history through Chinese (or a Korean diplomat's) eyes, so to speak. A look into how the Chinese think so that we English speaking people might learn to get along with China better. Instead of a straight dynasty-by-dynasty review of imperial Chinese history, Sohn organizes his story around four recurring keywords in Chinese history—cycle, harmony, evolution, and humiliation—and uses them as a kind of interpretive frame for everything from philosophy and statecraft to modern economic and foreign-policy behavior. Examples: China’s worldcraft is about the dynastic cycle in the Mandate of Heaven, authorizing centralized political authority in an emperor or autocrat; It’s about the harmony in Confucian hierarchy and social order, the Daoist harmony in the yin/yang “unity of opposites; It’s about the evolutionary value of China’s centralizing state in China’s ancient meritocratic civil service examination system; And finally, again, and undoubtably most importantly, it’s about the humiliation of the Opium Wars of the 19th century, and perhaps the bitter residue of all the other periods in history when China has suffered foreign rule, as an absolutely resolute force behind China's commitment to political independence and the centralized authority of the CCP. 

Ian Johnson’s Sparks: China’s Underground Historians and Their Battle for the Future (2023) shifts the focus from the Chinese Economic Miracle to its victims and collateral damage. Built around writers, filmmakers, and citizen-archivists who document everything the state, the political authorities, and the CCP would prefer to erase—famines, political campaigns, local massacres, and the lived reality of recent crackdowns—Johnson, a journalist and Pulitzer Prize winner, shows how control of history functions as a pillar of oppressive political power. China tolerates no political dissent, and runs a repressive surveillance police state. One measure of that repression is to what length the state will go to suppress historical memories they would rather be forgotten.

Sparks is about how people in China, jailed, driven underground, driven into exile, still fight to reclaim some of those repressed historical memories. Johnson’s book circles a few especially searing collective “memories,” beginning with the starvation deaths in forced labor camps in the late 1950s/early 1960s, terrible public humiliation mob rituals during the cultural revolution, all the way up to the earthquake of 2008—especially the evidence gathered by parents and citizen investigators that many schools collapsed during the earthquake from shoddy construction, followed by the harsh suppression of accountability efforts backed by the loved ones of victims and local communities. 


The title, Sparks, was the name of a magazine published in 1961 and committed to sharing the stories of family and loved ones that lived through the Great Leap Famine. The publications’ staff were all jailed and/or sent to “retraining” camps in distant rural sections of China. The “underground historians” chronicled in the book, including connections to the original Sparks publication, continue to dodge the authorities and continue to document and distribute historical memories from The Great Leap Famine to housing crackdowns during Covid, but I have to admit what stays with me most from this book is how relentlessly intolerant the CCP is of any organization or publication critical of the government. It doesn't even have to be a direct insult but anything the party thinks might reflect badly on government authority. . 

I’ve accumulated a whole other shelf of books I’ve read about China’s older history, pre-economic miracle (1978 to present), pre-Communist Revolution (1927-1949), many older titles, but none more relevant historical background to understanding China today than Stephen R. Platt’s books about 19th century China. One title about the Opium Wars (1839-1860) and another about the Taiping Rebellion (1850-1864). 

For a dramatic run through a couple of gargantuan geopolitical shocks of the 19th century—the era that set the humiliated chip-on-a-shoulder terms of China’s modern encounter with the West and its global neighbors—Platt's books leave a strong impression. Imperial Twilight (2018) traces the long fuse leading to the Opium War, when the British force a trade in opium on China, rationalizing British military aggression on the pre-text of “free trade.” And then Autumn in the Heavenly Kingdom (2012) plunges into the Taiping Civil War, a catastrophe at least in part provoked by the Opium Wars, and certainly one that foreign powers ultimately helped shape, and a catastrophe on a scale that’s still hard to comprehend. A Christian missionary educated Chinese religious prophet, Hong Xiuquan, says he is the younger brother of Jesus Christ, and leads a rebellion against the foreign rule of the Qing dynasty. Western powers side with the foreign rulers, not the Christian rebel they educated, essentially to preserve existing trading relationships with China's Qing state. It’s estimated that 20-30 million die in the 14-year civil war. I’d recommend reading them in chronological order and not the order in which they were published. Both books are written with novelistic drive and serious archival muscle, making Platt’s books a great guide to a time when China’s “last golden age” gave way to violent upheaval and humiliation.

Armchair takeaways-

1. The economies of scale, the state capacity to build out infrastructure, roads, bridges, hospitals, massive high-tech factory complexes, solar panels, batteries, and EVs, and assuming a dominant market position in green energy producing technologies with astonishing speed, are all something to behold and feel like possibly some kind of great game changer. At the very least, it is a new model of industrial policy operating at scales and speed never seen before. Where will this new found immense economic power China is now generating lead? At least for now it appears that it will act as a significant counterweight to the monopolizing demand and scarcity economic model of private capital in the west, or anywhere China chooses to counteract private capital’s dominant global market power anyway. This doesn’t have to be so bad. So it turns out China will be delivering the Green New Deal, they could have done much worse with their newfound economic might, right? But this does appear to also indicate that the scale and speed of China’s state industrial policy buildouts will now force older global economic powers like the US and EU to adapt to and adjust to China’s economic development priorities, and not the other way around. Like the cold war in the 20th c maybe checked the exploitation and abuse of workers in the capitalist West, maybe China's industrial policy will check the private billionaires monopoly on progressive technologies. I just learned that the Chinese are now producing learning units of AI so much more cheaply than they are available in the US that several if not all the AI tech giants in the US are training their cutting-edge AI models on AI they buy from China.  

2. Of course the Chinese state, the party leadership in China,  and the CCP are paranoid. To a degree all political power blocs or groups demonstrate this tendency. They always have great ideas about how to make things better when they're not in power but when in power they end up spending all their time holding onto power. It's a rule in political science; machine politics, dominant party rule, etc. China is no different in this respect but the CCP is a particularly bad case of paranoid party leadership. For some good historical reasons, as I've recounted. It took the CCP 22 years to win China’s independence from foreign meddling and unequal treaties (1927-1949); a humiliating condition that China had lived under for the previous century, going back to at least the Opium Wars (1839). The CCP was also, as reported in the Deng biography, traumatized by the collapse of the Soviet Union in 1989, and feared any sign of weakness by party leadership could jeopardize state power like Glasnost and Perestroika had in Russia. And, actually, beyond contemporary times, as I've already alluded, there's more than enough warring states and foreign rule in China's history to warrant a strong tradition of paranoid nationalist leadership. 

Besides, complicating matters, it appears almost certain that China’s paranoid insistence on absolute political sovereignty and power over private foreign capital, haunted by the century of humiliation at the hands of Western colonialism and imperialism, directly contributed to the Chinese Economic Miracle, enabling China to avoid privatizing shock doctrine economics and escaping the poverty trap and avoiding the IMF/WB Structural Adjustment Programs (SAPs), neoliberal afflictions attacking democratic state capacity to build for the future everywhere else in the developing world but China at the end of the 20th century. 

It's not surprising to find China very resistant to foreign capital and foreign entanglements with foreign states for reasons already stated. But why does China and the CCP have to be so hard on their own students and workers? Why force over a 100 million workers to toil and live in sweatshop conditions? One big reason I've picked up from various sources, although they shall go unnamed so as not to be blamed for my crude translation, is that Chinese leadership, Xi and the CCP, fear raising the living standards of workers and making them bigger consumers would only increase the laboring classes crazy demands and turn them all into potentially angry street protesters like in democracies. Like the George Floyd protests. Etc. Again, very paranoid. 

China’s paranoid dilemma now still looks a lot to me like Deng’s dilemma: how to open and reform economic development in China, modernizing industry and technology, while never compromising or jeopardizing China’s political independence or the established authority of the CCP leadership. Party dictatorship, basically; free speech and dissent not allowed. You might say the Chinese Economic Miracle is powerful evidence that the CCP has figured out how to effectively defend China’s political independence from foreign private capital and still prosper impressively, still build like nobody's business. But what Deng never figured out and what the CCP has still not figured out is how to extend to its working classes living wages and basic human rights, let alone other democratic rights, which China's leadership views as grave threats to their authority. 

You would think the leadership would eventually realize that in the the long-term the legitimacy of their authority also depends to some degree on them at least incrementally improving the conditions of their laboring masses. But you are not getting China to submit to anything that feels like a threat to their national independence and/or political authority. Apple or the US; Students or workers. This goes back at least to the emergence of the CCP in China's 1949 revolutionary independence movement, and almost certainly originates as a paranoid form of national leadership in the humiliation of the Opium Wars and unequal treaties of the 19th and early 20th centuries. 

3. United and disunited nations. A lot of the commentary about the Chinese lab leak theory during Covid struck me as crude bigotry and harassment, probably why I've avoided reading so far any of the China books about Covid and the pandemic. But China’s alienating lack of transparency and cooperation around international efforts to investigate the source of Covid was a big blow to peaceful international cooperation and the UN system. Likewise, cracking down on democracy in Hong Kong isn't smart or honorable. I hoped China would try to live with Hong Kong as another SEZ, a democratic SEZ, another SEZ experiment, and see how that would go; Deng's “Feeling the stones as you cross the river.” But the crackdown on Hong Kong's democracy reinforces the CCP’s paranoid abhorrence for democracy and basic civil rights protections. I also wish China would at least try to show some respect for Taiwan or Tibet’s right to self-determination, a nationalist right certainly very important to the Chinese. 

But for all that, for all their paranoid state tyranny, China has now electrified global green energy markets, selling relatively cheap solar panels and batteries and EVs in very big numbers all over the world. Or except in the US where they are banned as products of unfair competition but are actually about the most democratic thing China could possibly do for the working poor around the world. Creating the impossibly ironic situation where the adamantly anti-democratic, CCP party-state dictatorship in China, what some are now calling political capitalism, could save democratic capitalism from the monopolizing stranglehold of the fossil fuel industry. Maybe more, who knows? 

And, of course, what the conservative right takes from all this is the necessity of the billionaire "engineering state" takeover and aggressive police-state surveillance and suppression of labor organization and protest agitation and antitrust litigation, which they slander as "illegals" or "leftist radicals" or a "woke mind virus." Drill baby drill, etc. 

When the real abundance supply-side takeaway of the Chinese Economic Miracle and US-China relations over the last half century, to my mind, oughta be the necessity of big state investments in education, science, and technology, including sustainable energy tech adaptations and projects, and expanding basic civil rights protections for all workers. 

For one big reason, in the last instance, supporting workers and providing basic human rights protections and a rule of law and justice that does not favor any particular race or religion or gender or class over another remains our biggest comparative advantage with dictatorships like China, even if we have often fell short of this multicultural democratic ideal. Just as the EU and UN General Assembly and the promise of more justice and peaceful coexistence remains a powerful animating social force in the world, and we may hope can mount some defense of the "free world" against the power-grabbing march of tyranny now in control of the US and China.   


How China Escaped Shock Therapy: The Market Reform Debate By Isabella Weber (2021)

"Shock therapy" is a form of market liberalization, or privatization, ripping off the bandaid of government meddling in the economy and ending state control of the economy with one Big Bang. No half-way measures, no incrementalism; "Let's get rid of all regulations so we can get something done!" The tariff trade war being perpetrated by the Trump regime right now actually obscures understanding Musk's DOGE and the Christian Nationalist's Project 2025, slashing consumer protections, disarming the IRS, eliminating government services, as essentially radical privatizing economic shock therapy projects; perhaps the biggest ever embarked on. 

Some irony then that here's a relatively little book, an economic history study, contending, basically, that China escaping the adoption of economic shock therapy in the 1980s, avoiding the policies being pursued by the current US regime, was crucial to building one of the greatest economic growth spurts in the world since the launch of the industrial revolution.   

Shock therapy economics emerged originally as a quick-fix strategy for transitioning from a "planned economy" to a "market economy" in the crude binary that dominated conventional economic thinking and became entrenched in the Cold War of the 20th century. It was a branded package of austerity economics promoted by economic theory heavyweights like the University of Chicago school of Economics, Milton Friedan, and marketed to communist or socialist states, any state really, looking for ways to open and grow their economies. And as such it was a hot topic of market reform debates in China in the decade following Deng Xiaoping's opening of China in 1978. 

Actually, to step back for a moment, austerity economics like shock therapy-- i.e., campaigns to cut public spending and reduce democratic oversight of the private economy-- are not new and go back at least to the 19th century beginnings of the modern economy. They kick-in whenever capital, the rich,  feel threatened by democratic pressures and government reforms; popular suffrage, labor organization, minimum wage laws, environmental regulations, antitrust, anything that might impede maximizing private profits and wealth. In WW1, 1914-1919, governments naturally expanded involvement in their economies, organizing production for the "total war" effort. This improved working conditions for labor, and after the war workers pressured big employers and the government for better wages and job security. In response, big business elites, in Italy, Great Britain, and to one degree or another nearly everywhere in the developed world, launched austerity campaigns to discredit these democratic demands for better working conditions as budget busters, socialism, etc. 

The Reagan Revolution, 1980 to the present or until proven otherwise, bent on deregulation, disarming antitrust enforcement, tax cuts for the rich, hostility to labor organization, was another such campaign of austerity economics and has resulted so far in the redistributive transfer of 50 trillion dollars of wealth from the bottom 90% of the income scale to the top 1% of Billionaires. 

During the industrial revolution, from 1800 to the present, whenever labor asks for a raise and/or a government asks private industry to pay their fair share for the development of basic public infrastructure they are condemned as anti-business, overreaching sound Laissez-faire or "free market" principles, and offered instead some austerity economics. The only state or public spending capital, or Wall Street, likes are contracts with private industry and strong police and militaries to protect their massive holdings in private wealth. 

Shock therapy, specifically, a radical Big Bang austerity project to expand private control of the economy, grew out of neoliberal reforms developed at the International Monetary Fund (IMF) and World Bank (WB); both established after WW2 to promote global economic development. In the 1960s and '70s the IMF/WB peddled Structural Adjustment Programs (SAP)'s to member borrowing states. As an end-run around the Group of 77 and the growing democratic influence of Global South countries in the UN General Assembly, and as a condition for loans, states receiving IMF/WB funding were required to aggressively privatize public utilities and other public assets and eliminate or dramatically reduce or pull back on taxing and regulating capital, implementing price controls, and supporting labor organization. The World Trade Organization (WTO), formed in 1995 ostensibly to update and replace the General Agreement of Tariffs and Trade or GATT (1948), but, again, formed essentially to get around the growing democratic pressures of states in the Global South has promoted privatization and shock therapy since it began operation.

The market fundamentalist ideas behind shock therapy economic policies are relatively simple, if increasingly in gobsmacking contradiction to reality. Privatizing public assets, letting private industry drive the economy unfettered by government interference leads to more economic expansion and modernizing technological development. This philosophy of political economy has gone by numerous names in the modern period, classical liberal economics, Laissez-faire, free market capitalism, ordoliberalism, neoliberalism, and probably others I don't know or I'm forgetting. But why I say they contradict reality is because the historical record increasingly indicates all these so-called "free market" regimes promote hoarding, monopoly, oligarchy, class war transfers of wealth, endemic exploitation of labor and plutocracy, corporatist state authoritarianism, and, yes, even fascism and Nazis, all of these things before and over general economic prosperity, in nearly every historical instance.  

Isabella Weber's relatively humble case in How China Escaped Shock Therapy: The Market Reform Debate is that China's state-directed growth spurt between 1980 and 2020, better known as "China's economic miracle," is at least in part, significantly, attributable to China escaping privatizing capital shock therapy policies in the crucial 1980s.  

In the middle of the 1980s China held several international economic conferences to address market reforms. China wanted to expand economically and develop technologically, and had been moving in that direction since Deng's first big visit to the US in 1979. The conferences in China were attended by WB/IMF officials, conservative economist Milton Friedman and his entourage, the usual suspects in international finance, including Eastern European states like Yugoslavia, all making pitches to the Chinese leadership in Beijing to privatize their economy with shock therapy economic reforms. And no doubt all the while drooling at the prospects of getting more access to China's potentially massive markets. 

So how did China escape the shock therapy onslaught? Scholars at an economic research institute in China set up by Deng reviewed shock therapy doctrine and concluded it was too preoccupied with hypothetical principles and ignored real economic impacts. Unfettered capital pitted private property against the state and encouraged self-dealing capitalist corruption. These Chinese economists promoted, instead, pragmatic, incrementalist, "crossing the river by touching the stones" market reforms.  

Scholars dug into Chinese history. They studied closely "The Discourses on Salt and Iron," appearing in the 1st century BCE during the Han Dynasty, and recognized price stability as crucial to sustained economic development. They found evidence of the rudiments of a dual pricing system going all the way back to the Shang Dynasty and the second millennia BCE. They noted persuasively that China prioritized, from its imperial beginnings, price stability over unfettered growth on the principle that wild swings in prices and jobs generated social unrest and depressed commerce.

They found a tradition in Chinese history of separating commodities into Heavy and Light categories. Heavy commodities, like salt and iron, like grains, were in heavy demand (or inelastic demand), everyone needed them, and so people, communities, were very vulnerable to sharp changes in the prices or supply of these commodities. And so the state took a role in stabilizing these Heavy markets; maintaining stable prices and supply. They did this less by price controls as we think of them today, although they did use them to set strategic boundaries constituting fair trade, but stabilized markets more by state procurement, or reserves, of the given Heavy commodity sufficient to offset fluctuations in private prices and supply. When private supplies in grain ran low, and prices rose, for instance, the state would release more grain reserves into the market; when supply exceeded demand, and prices fell, the state would purchase more grains to hold in their reserves. 

In this way China's state protected consumers from price gouging and other manipulations of private profiteers. Most commodities, the far longer list, were designated Light commodities and required no state interventions or fewer and looser price controls. When you get into the weeds it should be noted that some commodities moved between the Heavy and Light categories by the season and over time the Heavy commodities list, rice replacing millet, for example, evolved, naturally. But the position of the state in this tradition of Chinese economics remains a constant, trying to protect people from predatory greed and the wild swings of the market. 

My overall sense after reading Weber's study is that the pressures to privatize and deregulate the Chinese economy in the 1980s were particularly intense and consequential to China's subsequent economic boom but the neoliberalizing pressures never really stop. Weber, late in the book, references slackening price controls, enacted in the early 1990s that precipitated some wild swings in inflation and social hardships. The formal dual track pricing system was given up by 1989 but by then Weber makes the case they had already established a big state role in stabilizing the markets for so-called Heavy commodities, which was a shifting but relatively short list. 

Weber's biggest claim, or one I'm giving her anyway, is China's resistance to full-on Big Bang shock therapy privatizing market reform in this crucial historical moment, coming to head in two big international economic conferences held in China in the 1980s, was also likely very crucial to China's big modernizing push, enabled state-guided economic growth in China, industrial policy, "market socialism with Chinese characteristics," to reach a scale and resiliency that enabled it to effectively resist being taken over by private global financial interests. 

And resulted, let's remind ourselves, in a state-directed growth spurt between 1980 and 2020 that rivals any in modern economic history; growing by 10% a year when overall average annual growth rates in GNP around the world over the same period hover around 2.8-3.0. And led to China's global dominance in nearly every technology relevant to the coming 21st centuries energy transition: solar, wind, rare earths and battery technology, and EVs. 

China still puts significant limits on capital flows, again, seeing the unlimited flow of capital from outside China as a potential threat to China's political independence, presumably. 

In the first period of the opening, the 1980s, they were very careful about how they setup the first market reform zones, special economic zones (SEZs), the biggest one setup next to Hong Kong and another across from Taiwan; both in southern China, far from Beijing, the center of Chinese political power. Expanding the freedom of capital to flow first into these SEZs, experimentally, and then incrementally outward from there. They were wildly successful almost immediately but did unleash a lot of capitalist hustle and corruption.  

I've heard in recent commentary that China's limits on capital flows in and out of China have made it harder for China to expand the global trade in yuan/renminbi as a global reserve currency, as a viable alternative to the dollar or euros. Global investors want more liquidity, confidence they can cash out their assets in China whenever they want, and China doesn't want to be subject to extortion by global capital. It's in the news again but it's an old tension; and one, again, it should be noted very likely closely associated with China's tremendous economic growth over the last forty plus years. 

China, or Deng Xioaping, set out in the late 1970s to build a market socialism that worked, expanded, and prospered, but didn't threaten the authority of the central political state or China's sovereignty. They were wildly successful on the economic side of this equation but much less so on the political side, where Xi Jinping is now paramount leader for life and Uyghurs in western China live and work in or near concentration camps. 

This is Weber's first book. I first heard of her via Zachary Carter, my favorite Keynes biographer. And she's recently appeared in the news by helping the Biden admin deal with inflation. To offset rising oil prices triggered by Russia's invasion of Ukraine, and abetted by Saudi Arabia, the Biden admin released strategic oil reserves in 2022 or 2023, bringing back down the price of gas or at least mitigating the impact of Russia and Saudi Arabia's weaponized gas inflation against Bidenomics and the US. But when Weber's part in these policy actions first got out, Paul Krugman, the most popular economist in the US, called her an idiot. He was apologizing shortly thereafter but it's another illustration of the orthodox economic reflex against price controls and industrial policy, and the mainstream economic bias against the caring economy and essential government services and state capacity to build in America. It's a problem; I know I keep repeating myself.  

Meanwhile, we'll see how shock therapy economics works out this time for the US. 

Footnotes: 

1. First, pulling back again to world history scales, if you ask me, you have to add China's Century of Humiliation, 1850-1950, as relevant and crucial here to understanding Weber's study. China felt ripped off by the West and Japan in the 19th century; and has felt so since the Opium Wars with Britain in the 1840s and "unequal treaties" allowing imperialist nations to run nearly all China's biggest port cities and foreign trade until after WW2. Foremost, I think, China's resistance to shock therapy economics and "free market" shock doctrine is rooted in their deep suspicion that such foreign ideas can be threats to Chinese sovereignty and independence, as Western ideas and foreign relations have been in the past. Deng Xiaoping's strong hand and general Chinese wariness were a ballast moderating the market fundamentalist pressures coming from outside (and inside) China. Deng's aim was to open China one step at at time, without ever compromising China's sovereignty and political independence. His intolerance for political dissent was too harsh and illiberal but his state support for economic and technological development, research, and education were astonishingly effective and productive. 

2. Still, any study of China's economics comes up against how much economics are influenced by China's police state crackdowns on political dissent. Many of China's liberalizing economic reformers, those on the side of shock therapy reforms, found themselves on the wrong side of the authorities in the crackdown on protesters in Tiananmen Square during demonstrations in 1989. And it's not clear at all that the crackdown was necessary; there was no evidence of any organized armed uprising against the state. Up close it appears what protesting college students wanted most was more control over choosing their own career paths. They showed no interest in handing China's independence over to multinational corporations; they appeared as committed to overcoming the Century of Humiliation as any previous Chinese generation. But to the communist party leadership in China, Deng Xiaoping, masses of street protesters were a political threat. Overall the crackdown didn't even slow economic development in China much or for very long but it did draw a red line suggesting that economic reforms would not be allowed to challenge or threaten political authority in China. It subordinated economic power to political power, a political power that did not tolerate political dissent, could brutally disregard basic human rights, and still agitates against international standards on human rights and democracy today. Nor is it clear China has solved the problem of poverty and inequality domestically, by any stretch. But China has been exceptionally successful at fostering economic growth and technological development. It's something of a paradox, perhaps, but one that deserves more of our attention, not less. 

3. Worth noting also that Weber insists on this deep historical tradition in Chinese economics; its conception of the role of the state in economics: that, in the main, Chinese state economics prioritizes price stability over market freedoms. Weber takes a detour in her discussion of the market reform debates in the 1980s to point out that China maintained relative price stability in the inflationary aftermath of WW2 far better than Ludwig Erhard's "Economic Miracle" in West Germany during the same period, the latter a cherished model of shock therapy trumpeted by Friedman and neoliberals to this day. A year or two into Erhard's so-called miracle Berlin was rocked by inflation rates over 20% and suffering brutal poverty before abandoning the privatizing obsession for price controls and social democratic reforms; by the early '60s Erhard is already denying there was any liberalizing shock therapy economic miracle in West Germany at all. But Friedman and the neoliberals would rather go with the legend, of course. Which when you get down to it might be most of what market fundamentalist economics, neoliberalism, Econ 101, continues to run on. Myth and legend.  

4. Naomi Klein's 2007 book Shock Doctrine chronicles the disastrous results of shock therapy in Chile in the '70s and Russia in the '90s. Friedman's Chicago School, the neoliberal braintrust in the US at the time, working with the CIA, fomented a military coup that overthrew a democratically elected government in Chile. In Russia selling off public assets after the collapse of the Soviet Union subsidized the rise of a corporate oligarchy that brought to heel by Putin undermined democracy in Russia, generating a political system that How Democracies Die's Steven Levitsky calls "competitive authoritarianism," and what everyone else calls a murderous dictatorship. And, needless to point out, serves as a model to the current regime in the US. Klein's book is a big takedown of shock therapy economics and a brilliant example of investigative journalism. But her admittedly sensational account got a lot of pushback from mainstream economists at the time, castigating it as muckraking journalism depending on economic over-simplifications. None of the economic criticism I've seen is very convincing but I'm just a poor retired school teacher partial to New Deal social democratic economic reforms. The reaction, though, does encapsulate for me, again, the reigning power of free market dogma amongst economic policy elites and the populist Chamber of Commerce mob. The prevailing binary formula since the 1980s goes something like this: 

Deregulation, tax cuts, free (legally unfettered) capital=Pro-economic growth. 

Consumer protections, living wages, and regulations/environmental reforms=Anti-economic growth. 

It's becoming increasingly obvious this is a ridiculously false choice but money talks and here we are. 

5. At any rate, this last bit about Klein raises a question about who is a an academic economist that might appreciate the insights in Weber's study and corroborate the critique of the shock doctrine and has their own interesting takes on the real history of shock therapy economics, neoliberalism, and economic privatization being discussed here? Here's one: Ha-Joon Chang! Scholar at Cambridge for over thirty years, long time consultant to the World Bank and other international economic development agencies. Chang's like the Mr. Roger's of liberal economic development and reform. He unpacks and gently demolishes various "free market" orthodoxy in Bad Samaritans (2008) and many other delightfully readable economics books; Kicking Away the Ladder (2002) and 23 Things They Don't Tell You About Capitalism (2010) being only two more I've read of the over ten Chang has written on the topic. For an example of his thinking: The Asian Tiger economies since the 1960s, Japan, Singapore, Hong Kong, and South Korea, are often held up by mainstream economists as models of successful neoliberal capitalist economics. Chang argues, by contrast, that South Korea, where he grew up, and the other Asian Tigers, actually took off economically and continue to develop with lots of essential state guidance and industrial policy; tariffs protecting infant domestic industries, price controls, etc. He makes the case that so did Great Britain, and the US, in the 1800s, when they were first industrializing, but they forget this now that their principle economic aim is to sustain and extend their own dominant position in global economic markets. Anyway, I'm a fan and would recommend his books to anybody interested in the history of political-economy.  

Cuts to Science Funding Are Anti-Economic Growth

The study, by a team of economists at American University’s Institute for Macroeconomic and Policy Analysis, is among the first efforts to quantify the risks posed by Mr. Trump’s cuts. Because the full extent of the administration’s plans is not yet clear, the researchers studied a range of scenarios.

Even the mildest approach — a 25 percent reduction in public support for research and development — would correlate to a drop in economic output.

U.S. gross domestic product, adjusted for inflation, would be 3.8 percent smaller in the long term — a decline similar in magnitude to that in the Great Recession, which ended in 2009. The drop in output would be much more gradual than that downturn, taking place over years rather than months. But it would also be more lasting. Cuts to scientific research would sap innovation, leading to slower productivity growth and, as a result, permanently lower economic output.

The researchers estimate that a 25 percent cut to research funding would reduce government revenues 4.3 percent in the long term.

Larger funding cuts would have even greater effects. A 50 percent reduction in funding would lower gross domestic product nearly 7.6 percent, the researchers estimate, and a 75 percent cut would reduce it 11.3 percent — a larger decline than in any recession since the Great Depression.

NY Times

Economic historians argue over what contributed most to China's economic miracle between 1980 and 2010. I've read a book recently that argues a huge factor was China's refusal to adopt privatizing shock therapy policies during market reform debates that were conducted in China in the 1980s; privatizing shock therapy policies that resemble the privatizing thrust of DOGE and Project 2025 today, notably. But typically the biggest contributing factor mentioned as foundational to China's astonishing economic development is Deng Xiaoping's massive investments in education, science, and research, after taking over China in 1978. Again, near the opposite of what the republicans are doing right now. Or look to US history. The success of the industrial revolution in the US in the late 1800s is typically credited with large investments in scientific research and university education. Neolibs like to grouse about how taxes and regulations are anti-economic growth. Want to know what's really anti-economic growth: anti-science culture war politics. 

The Right Response to China's EV Subsidies

According to Gernot Wagner and Shang-Jin Wei, Economists at the Columbia Business School: 

Some of the Chinese government’s EV subsidies are justified, both on the supply and the demand sides. They can represent the best option for internalizing positive learning-by-doing and scale externalities, and for helping producers climb the learning curve and slide down the cost curve beyond what the market would deliver on its own. That is especially true for batteries, a key input in the EV supply chain. The patent system provides crucial incentives for private innovation, but it does so highly imperfectly. Research and development has positive social spillovers, making it deserving of taxpayers’ support. Targeted demand subsidies are similarly justified, because they speed up EV adoption, helped by positive learning-by-doing and network externalities. The latter calls for direct support for an increase in the number of charging stations, itself deserving of direct subsidies (though over time, policymakers should phase down subsidies and instead increase gasoline taxes). While the success of Chinese EVs has spooked Western car manufacturers, some of the pain is self-inflicted. Having bet on massive gas-guzzlers for too long, they delayed the all-but-inevitable switch to EVs. But that’s not all: Chinese EVs are cheaper for the same reason that most everything manufactured in China tends to be cheaper than American or European products. Introducing EV tariffs in response to intense lobbying by Western car manufacturers might make for good election-year politics. After all, taxing one’s own citizens – including via carbon taxes – is politically difficult, while “taxing” others is sometimes viewed more favorably, especially by those with lower trust in government. But while some tariffs, like Europe’s Carbon Border Adjustment Mechanism (CBAM), are eminently justifiable, because they specifically address the negative carbon externality, those aimed at Chinese EVs or other products such as solar panels, which are crucial for the global green transition, are not. A much better idea is to subsidize domestic manufacturing, an approach reflected in the US Inflation Reduction Act and Bipartisan Infrastructure Law, and in targeted EU subsidies. Some of these subsidies can be justified simply as a politically feasible, second-best alternative to carbon pricing, including as a stepping stone toward pricing policies.

The Right Response to China's EV Subsidies, Project Syndicate