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Red New Deal or Raw New Deal? Unraveling China’s astonishing barrage of regulatory action

Illustration by Derek Zheng

Editor’s note: As the Chinese Communist Party gears up for 20th Party Congress in 2022, Beijing is implementing sweeping changes across a host of industries and parts of society.

At SupChina, we counted at least 17 areas that regulators have their thumbs in simultaneously right now. We called it China’s Red New Deal.

But what does it all mean? How connected are the actions — or are they connected at all? Is there a common framework or motivation behind many of these moves, or are the mechanisms too opaque to tell?

What follows is a complete transcript of this week’s Sinica Podcast episode, featuring Lizzi Lee, a journalist for New York-based independent Chinese media outlet Wall St TV, and Jude Blanchette, Freeman Chair at the Center for Strategic and International Studies.

Kaiser Kuo: Welcome to the Sinica Podcast, a weekly discussion of current affairs in China, produced in partnership with SupChina. Subscribe to SupChina’s daily access newsletter to keep on top of all the latest news from China, from hundreds of different news sources, or check out all the original writing on our site at Supchina.com. We’ve got reported stories, we’ve got editorials, we’ve got regular columns as well as a growing library of videos and of course, podcasts. We cover everything from China’s fraught foreign relations to its ingenious entrepreneurs. From the ongoing repression of Uyghurs and other Muslim people in China’s Xinjiang region to China’s ambitious efforts to eliminate poverty. It’s a feast of business, political and cultural news about a nation that is reshaping the world. We cover China with neither fear nor favor.

I am Kaiser Kuo, coming today from my home in Chapel Hill, North Carolina. Joining me from Nashville, Tennessee is a man whose viral TikTok dance videos have catapulted him to unimaginable fame, a fame that he has cleverly parlayed into massive sales of his own private label Ivermectin diet supplements. That man, of course, is Jeremy Goldkorn, AKA, Jin Yumi. Jin Yumi, you are an inspiration to all of us and how you have time to do all of this and still be on a podcast is … I’m flattered and I am honored to have you on the show, sir. Greet the people, won’t you?

Jeremy Goldkorn: Hello people. Yeah, no, when you live in Tennessee, they give you the instructions to selling horse medicine, when you move here. It’s part of the deal.

Kaiser: Excellent.

Jeremy: You get a pickup truck and horse dewormer.

Kaiser: So Jeremy, there are times where I feel a physical distance from Beijing really acutely, and I’ve probably never felt it more than I do right now. I mean, it is clear to me even at this distance, around the world, that — and I think we’ve seen this for some time now — there are major shifts currently underway. They are impacting many different facets of life in China from politics to the pocketbook, but without being there on the ground, without being able to talk directly and discreetly, I hope, with people from different walks of life, in different industries, with different priorities. And just to sense the feeling in the air and the energy, it’s just been really difficult for me.

And I think I speak for many of us to get a perspective on all it’s happening, how big of a deal it all is, whether our theories on how all of this and what this is, we’ll get to in a second of course, how it all fits together, how our theories stand up and how it’s been received. So what I want to do in the next hour with you and with our guests is to get an idea of how it all fits together. What the big picture really looks like. Something major is clearly going down. I think that we all want to understand the what, the how and the why. In other words, what’s the deal with the Red New Deal?

Jeremy: Yeah, what is the deal with the Red New Deal? And is it a raw New Deal? It might be a good idea for us to run through a quick list of all, or at least some, of the major regulatory actions and crackdowns that have been going on, beginning I think, we would date it as a lot of people would, in October last year when the Ant Financial IPO was pulled, and Ant Financial of course, is the Alibaba affiliated fintech company. There have been a lot of actions like that. Fines on companies, including Ant’s parent, Alibaba and on the titanic food delivery company Meituan for monopolistic practices, from the State Administration for Market Regulation is one major one.

Kaiser: Yeah, the CAC, the Cyberspace Administration of China going after Didi, after its IPO and pulling the app off app stores over data security concerns.

Jeremy: There’s also been talk of the government taking a stake in some of the companies, possibly in terms of … financially, it’s a token 1% that it’s representative of some kind of control that the government wishes to exert over the powerful social media companies, ByteDance and Weibo are most prominent among them.

Kaiser: Right, right and that actually dates back to before I left China, when I was at Baidu, that was already sort of in the air.

Jeremy: That was in the air, but that’s come back like a lot … I mean, many of these things we’re talking about were in there in some form or other, but they’ve come back with renewed vigor.

Kaiser: Yeah, now it’s in the lungs and in the bloodstream. Of course, there’s that basically lethal blow to the whole edu-tech sector, especially to the private tutoring companies like New Oriental and its ilk, which, they’ve said they have to reconstitute themselves entirely as not for profit companies. VIPKid can no longer use foreign English teachers to teach online. And it’s not just these after-school tutoring and test prep companies that are in the firing line. Our business editor Che Chang has been reporting this week about new regulations and government moves to reduce and control the whole private school industry.

Jeremy: And of course, games. The government is going after games with a suite of different moves…

Kaiser: Oh yeah.

Jeremy: …The most famous among which came out last week, limiting playtime to basically three hours over the weekends and on holidays, just an hour a day on those days, with strict real-name registration requirements. Now that’s for under 18s, but there’s all kinds of other moves against gaming companies going on and you have state media editorials calling gaming a form of opium.

Kaiser: Yeah. I’ve been addicted to that opium, I know. There had also been major moves that have impacted other forms of entertainment. They’ve been going after these toxic fandoms for celebrities that … So they’re banning these páiháng bǎng (排行榜), these popularity charts. They’re targeting high profile celebs for different unpatriotic behavior. There’s even these bands on these so-called “sissy men” on the screen, in this weird sudden reassertion of kind of heteronormative standards.

Jeremy: And they’ve gone after celebrities for tax reasons as well and there is some indication that that might extend to anybody rich, as some of the communications coming from Xi Jinping. Party documents are talking of. Xi himself mentioned excessively high incomes, which needs scrutinizing from the tax man and others.

Kaiser: Right.

Jeremy: There’s also been moves that perhaps aren’t as controversial, such as the new Personal Information Protection Law, which some see as a good thing. It’s similar to what GDPR in Europe does, but much stronger and will be used by the government for all its usual purposes, good and bad. Oh, and let me add, algorithms and artificial intelligence seem to be coming in for some scrutiny now too.

Kaiser: Yeah! Yeah, yeah. And so I don’t think this is an exhaustive list, but you know, even while all of this is happening, there are some seemingly important concepts, some slogans, some phrases that have been introduced. Not all of them are entirely new, but they’re showing up with increased frequency in Chinese media. The most prominent and probably the most widely talked about, of course, is “common prosperity” or gòngtóng fùyù (共同富裕). There are others, of course, and we will discuss some of those.

Jeremy: And as we discuss it, I think we need to hold two ideas in our head at the same time, which is notoriously difficult. The first idea, Xi Jinping is indeed a ruthless powerful leader who has systematically neutered or crushed any threat to his and the Communist Party’s rule, and he will continue to do so. But his government is also trying to achieve social goods, such as reining in the power of internet companies, paying gig workers a fair wage, fixing an unequal education system that privileges the urban elites above the rural working classes, and making billionaires pay their taxes.

Kaiser: And maybe trying to get people to have more babies too. I think that’s another thing that…

Jeremy: For sure, for sure.

Kaiser: We should keep in mind some of these other possible motivations for all this. I mean, these factors…

Jeremy: They’re probably looking at Texas with some envy right now.

Kaiser: [laughs]. So yeah, these factors, they combine in different ways, but to your point Jeremy, you’re absolutely right. Much of this does come from what I think many people in China and maybe even many outside of servers would say, especially those on the political left, they would see this as coming from a good place. That’s why I think we’ve been talking about this inside SupChina as this Red New Deal. Some of this really does seem to be in response to the excesses of neoliberalism to táng píng (躺平) or “lying flat,” and this whole idea of, this resistance to the 996 work culture and all of that. But obviously it’s not something that liberals or progressives in the west are all going to celebrate, especially because it’s so shot-through as I’ve said with homophobia. It doesn’t really have in mind the good of the oppressed Uyghurs or other people, and is I think in many parts, just still being justified by a national security rationale that mirrors, in many ways, some of the uglier American responses.

So anyway, joining us to pick through all of this are an old friend and a new one. The new one first, Lizzi Lee is an economist, turned China politics journalist and commentator who received her doctorate from MIT in 2019 and has since been just an incredibly prolific producer of China news programming. She’s on a personal mission to counteract all of the nonsense out there. Her channel is amazing. It’s called Jinri hua’erjie (今日华尔街; Wall Street TV) and you should definitely check it out on YouTube. It’s just — there’s new stuff on there constantly. She’s also got quite a number for our non-Chinese speaking audience, people who speak English. She’s got a lot of them, including I think yeah, well there’s one with me.

Jeremy: Oh no! [laughs] That was a mistake!

Kaiser: I know. Lizzi has also started writing just flat-out terrific pieces for SupChina. I’m really glad to see, including, there’s a great profile of the new Chinese ambassador to the U.S., Qin Gang. There’s an explainer piece on what happens at the summer Beidaihe conclave and most recently she’s done this piece on the CDIC’s graft probe in the city of Hangzhou and in Zhejiang province. So she is deeply knowledgeable about Chinese politics and we are very, very lucky to have her. Lizzi, welcome to Sinica. It’s such a delight to have you.

Lizzi Lee: Great to be here Kaiser and thank you for that generous introduction.

Jeremy: And Lizzi, may I just say that I wish every writer that wrote for SupChina had your attitude to deadlines. You’re amazing at delivering great work on time. It’s a pleasure.

Lizzi: Thank you.

Kaiser: And the copy comes in so clean. It’s great.

Lizzi: Well, thank you. That’s one thing I got from grad school, my previous life as an economist, because they learn the value of deadline. Well, but thank you for pointing that out. That’s the one thing I got from my five years PhD program.

Jeremy: That’s good. Maybe that’s what I should recommend to young journalists when they ask for advice.

Anyway, we’re running long. So let me get on to our second guest, joining us for, I think the sixth time, the euphoneously-named Jude Blanchette, Freeman Chair at CSIS, the Center for Strategic and International Studies. Jude is the author of China’s New Red Guards: The Return of Radicalism and the Rebirth of Mao Zedong and the host of the Pekingology Podcast by CSIS. He’s written about the very topic we’re discussing recently for Foreign Affairs. Jude, welcome back to Sinica. So great to see you again.

Jude Blanchette: Thank you, Jeremy. Thank you, Kaiser and great to join the virtual stage with Lizzi today.

Kaiser: Yeah, yeah. Let me start off with one of the big questions Lizzi. Are all of these things that we’ve talked about, these disparate regulatory actions, actually all part of some larger coherent whole in your mind?

Lizzi: So, and I might be a contrarian on this, but I actually think it’s more helpful to tease out the different regulations in different policies piece by piece, because if you’re a ban on finding a common denominator, inevitability it boils down to something like control, reducing diversity. And I actually think, for an informed audience like this one, that’s less helpful from the point of view of understanding what’s actually going on.

I would just raise one example. We usually think of the economic policies as a giant piece, but pulling Ant Group’s IPO is actually very different from pulling Didi’s IPO: the former is more about reinstating and monetary control, so to speak. While the latter seems the case of regulatory disarray different bureaucracies fighting each other, missteps, misinterpretations and misunderstanding. So the kind of implication/motivation of those two pieces are actually very different and I mean, for Jack Ma’s own business empire, the crackdown on Ant Group is very distinct from the crackdown on Alibaba.

The latter is more or less in line with the west’s scrutiny on big platforms like Amazon or Google. So, I actually think refining, looking at the individual pieces and sort of deep, deep diving into the motivation and the structure of that piece of regulation is more important.

Kaiser: But they’re all happening at the same time. What explains that?

Lizzi: So that’s a great question. So in terms of timing, I actually think many of these pieces have been delayed due to the pandemic because when the pandemic hit China, the priority seems to be preserving growth. And many of the regulations tend to be growth-dampening, at least in the short term, and growth promoting in the long term. So I think the pandemic actually pushed back the calendar of these regulations for at least one year. So now we’re at a point where we have a kind of a backlog of issues to solve. So this might be a time to clean up our backlog a little bit and tackle those issues head on. That’s just my personal interpretation of this.

Kaiser: Pent up regulatory demand.

Lizzi: Right, so to speak.

Jeremy: Jude, do you agree with that? And do you have any theories about how these different things fit together?

Jude: Yeah. I very much agree that there’s … Finding a unified theory here for all the regulatory actions, which some folks are doing in a post hoc manner, when all of a sudden the patterns are crystal clear. I agree that that’s a good way of looking at this, but I guess where I might differ slightly with Lizzi is, and Kaiser I think said this in his intro, the key question for us is not why this regulation or that regulation. I think we can intuit the underlying drivers and a lot of these make sense, and indeed overlap with some of the same discussions that other countries are having about data security, about environmental regulation.

The thing I’d circled in my notes was, it’s the question of why now? Why right now? Why two months ago? I was talking with Barry Naughton the other day, and Barry said something which is, as soon as he said, it clicked for me. He said, “You know? A lot of people think it’s at a Party Congress where you get these huge inflection moments.” He said, “But in fact, it’s often about a year before — when a Party Congress process really starts to kick into gear and of course the most famous example of this is 1992 with the nánxún (南巡), Deng’s trip down South, which was very much about the lead up to the 13th Party Congress, which happened the next year.” And I think Barry’s supposition was supported by the recent announcement of the Sixth Plenum, which will be occurring in November. The Sixth Plenum is often times about history and ideology, but it is also the Party Congress plenum. It’s when you really begin planning that process.

So I think, as is often the case to me when you see sort of movings in China, the Occam’s Razor is often about political calculations and bureaucratic incentives. And in this case, I agree with Lizzi. Xi Jinping had a lost year, last year and so there certainly was a sense of urgency, but that doesn’t really explain to me some of the ham-fistedness behind some of the regulatory measures. Some of the ways in which it was clear that these were not well thought out regulatory measures, which had sort of been shelved for the time being, and then pulled out. It was clear, CAC and SAMR were racing ahead in ways that MIIT didn’t know about and poor Fāng Xīnghǎi (方星海) gets rolled out to try to explain what’s going on. Instead, I think we have officially entered the 20th Party Congress season, where you start to have an added sense of urgency in the system. And critically, I think Xi Jinping is now starting to really push forward and create momentum behind some of these ideological and regulatory issues. And it’s clear as well to me, that something like a Common Prosperity, what we’re really seeing is the emergence of what will be the theme of the Party Congress next year. It’ll be about this great big grand social agenda where common prosperity will be the macro theme.

Kaiser: Yeah, just to ID Barry Naughton really quickly, he’s a very eminent economist of China. He’s at UC San Diego. I suppose that’s where he got to know him well, right, when you were down there?

Jude: Right.

Kaiser: Yeah, yeah. Barry’s great. He’s-

Jeremy: He’s been observing party conferences since the late 70s, I would imagine.

Jude: So, just to clarify, I don’t think this means there’s a power struggle going on. I don’t think this means, but I do think Xi Jinping ultimately is the head of a massive bureaucracy, which he is now starting to really kick into gear. Next year’s Party Congress is not a normal Party Congress. It is truly going to be a historic event. And so I think that’s why we may see an added level of kind of urgency in the system right now.

Jeremy: Jude, in your Foreign Affairs piece, you describe a Xi Jinping as “a man in a hurry,” and you suggest he has an overarching vision for what he wants China to look like. Is that one way of seeing a unifying logic here?

Jude: Yeah, to some extent I think so and I think you see some of these macro framings, like “socialist modernization,” which are essentially creating frameworks to drive policies, such that you get a political system 10 or 15 years from now, which has really solidified Party control, which is steering resources into priority sectors that are going to be critical for China to overcome domestic challenges like the middle income trap, as well as compete and survive in an increasingly frosty external environment.

I guess, to argue against my own piece a little bit, I do think though, I’m not sure Xi Jinping has this kind of master blueprint that’s tacked up on the white board in Zhongnanhai, that he is now kind of moving all the chess pieces. I think this is a little bit, he knows his basic orientation. He knows the critical challenges that China has to overcome on the demographic piece, on the productivity piece, on the political control piece. But I do think as he looks out 10 or so years, the first few years may feel definite and concrete. I bet it gets pretty hazy after about the three or four year mark.

Kaiser: So yeah, it’s interesting. We’ve already heard a couple of alternative explanations here, sort of pent up regulatory demand, we’ve heard of the sort of the compelling logic of the political calendar — that this happens a year out before a major Party Congress. And I suppose, I flicked a little bit at this, of bureaucratic competition that they all want to sort of show each other, that they have teeth. “Hey, we can’t let those guys at Guangdianju get all the glory. We Wenhuabu guys have to do something too right? I mean, is that a fair take? I mean, there’s bureaucratic competition as a piece of this?

Lizzi: Right, I actually think that’s one of the crucial pieces to understand in all this. And let me just remind this audience. Remember in 2015, I believe, China’s market regulator at that time issued a report saying many products on Taobao were fake. What happened then was, Alibaba threatened to file a complaint. Jack Ma himself actually flew to Beijing and met with the then head of the State Administration for Industry and Commerce, and later that day, the regulator removed the report from the website.

Kaiser: Oh, I remember, yeah.

Lizzi: Right. So that episode actually spoke to how weak those kinds of monopoly or fake product watchers were back in those times. And I think Beijing’s initiative to a bulk up of the State Administration for Market Regulation SAMR actually came earlier this year. So that was quite recent and that came as China revamps its competition law, et cetera. So those agencies are agencies who used to be very weak, but have now gained tremendous power. And I think it’s reasonable to conjecture that there’s some sort of internal sorting-out going on, trying to figure out what’s the best way to do things. They’re using power they didn’t have previously. And that would lead to sometimes missteps, sometimes misunderstanding and sometimes just infighting between different bureaucracies. And I think a perfect illustration of this is actually the case of Didi.

If you remember, so when DiDi’s IPO was pulled, the data security law was actually not put into place. So, CAC the bureaucracy in charge of some of the security issues, actually have been fighting with MPS, The Ministry of Public Security for years over, who has authority over what we call CRR, so that’s Cybersecurity Review Regime. And from what I read from media reports, and also from my understanding from people directly related to Didi, CAC basically proposed a self-review procedure to Didi, but Didi misinterpreted that as a sort of a optional review process, instead of a compulsory piece that has to go through it before IPO.

So that was sort of the beginning of the debacle that happened later on. And Beijing has since sort of moved to stanch the loophole in the regulatory procedure. But that incident told me that, there’s a little bit of messiness going on inside different bureaucracies administrations. And I think that sort of spoke to the complexity of all those issues.

Kaiser: So Lizzi, even though you, and to some extent you don’t seem to see an overarching theme to what’s happening here, some people in China do. There was this guy in Hubei, a retired newspaper editor named Lǐ Guāngmǎn (李光满), who wrote this WeChat post that then went viral. I mean, he wasn’t anyone famous or anything. I’d certainly never heard of them before, but some described it as a dàzì bào (大字报), a big character poster, and he referred to this as a “profound revolution.” Maybe we can recount what it was that Li Guangman meant when he said this and what he was asserting in that post.

And then Jeremy, I’d love you to talk about that reaction, because Li Guangman’s post was criticized by none other than the ordinarily highly nationalistic, very deeply red editor of the Global Times, Hu Xijin. So can you break down what happens — first Lizzi, about this Li Guangman post?

Lizzi: Sure. Yeah. So if you remember the Li Guangman post is a hyper nationalist way to talk about a “profound revolution,” a “return to the red roots,” hóngsè huíguī (红色回归). So I think, when that piece came out on the web and it was sort of republished by many state media outlets, the reaction was pretty fierce, but more establishment-minded advocates of reforms, they tend to view that piece with alarm, which I think is correct. But then, one of the more nationalistic media commentators, Hu Xijin, the editor in chief of Global Times, chastised those arguing for a revolution, basically suggesting that, “Oh, that kind of fast and loose rhetoric only served to arouse ongoing comparisons to previous years of Cultural Revolution.”

So how do I actually understand that? I actually think when the state media outlets republished Li Guangman’s piece, the one important thing many tend to neglect is that, that piece was not published in paper, not published in print. It was only published across all the websites. So…

Jeremy: And subsequently deleted from many of those state media outlets.

Lizzi: Yes. Yes. So what’s that all about? My personal take is that there was some low level state media editors who didn’t really understand how to get the tone right, because there’s sort of a delicate balance of whether you go too far over this or whether you don’t go far enough. That piece seems convincing, eloquent, seems broadly in line with this theme of common prosperity and the crackdown on celebrity.

So they push that piece out, publish it but the reaction was worse than they anticipated. And actually, I think South China Morning Post had an exclusive article on this, quoting sources from Beijing media outlets saying they had received direct from the administration in charge of those propaganda outlets, that they should try to balance that piece out with milder pieces to sort of stem the influence of that Li Guangman’s piece and I think that’s why the Hu Xijin piece that came out, because Hu Xijin is clearly much more knowledgeable about how propaganda system works and how to find the correct balance of tone. So that’s my understanding of what actually went on.

Jeremy: He perhaps may also not particularly enjoy somebody else getting the foreign media spotlight as the attack dog of the Communist Party.

Lizzi: That’s also true.

Jeremy: In the media business, you can often attribute what seems like something big to the most petty of motives.

Kaiser: It’s all ego, right?

Lizzi: Right. But can I just add one more thing?

Kaiser: Sure.

Lizzi: It’s actually not the first time we saw this kind of ultra-nationalistic kind of scary piece coming out on State media. If you would remember in 2018, there was this commentator Wú Xiǎopíng (吴小平), who is basically an unknown blogger. He wrote a piece saying that, “The private sector should be phased out gradually” — basically, as the private sector has accomplished its historical mission of achieving growth. And that blog also went viral and was republished by many official media outlets. So that was even more scary than Li Guangman’s piece if you ask me, but…

Kaiser: He got singled out by Xi Jinping though for praise.

Jeremy: That’s Zhōu Xiǎopíng (周小平) that you’re talking about. Zhou Xiaoping.

Lizzi: So this is a different Xiaoping.

Kaiser: Oh, okay. Getting my Xiaopings confused.

Jeremy: So that’s Wu Xiaoping, because there was also much earlier, maybe the very early years of Xi Jinping, there was a Zhou Xiaoping who was a kind of a similar character.

Kaiser: Oh okay, okay.

Lizzi: Right. So, I mean the Li Guangman’s piece is significant, but this is definitely not the first time when we saw that kind of a hit piece went viral and the reaction, it was sort of more fierce than the editors originally anticipated and that piece sort of got silenced and taken down. In the case of Wu Xiaoping, if I remember this correctly, it was actually Wú Jìngliǎn (吴敬琏) the pro-market Chinese economist who had told a conference when Li Hu was present that, “We’ve heard some un-harmonious voices condemning private enterprise. The phenomenon is worth noting.” So when Wu Xiaoping came out and said that, I think people kind of interpreted that as, “Oh, Wu Xiaoping does not represent the official line on private sector.” So I thought that was something, I had to add in case we forget Wu Xiaoping, our blogger.

Kaiser: So some might argue also, the Party leadership is often … I mean, I think you’re basically saying this, it’s often more reactive than proactive. We’re not seeing a grand vision for a new era, but a bunch of ad hoc responses to a lot of disparate issues. I mean, you look at how family planning was implemented and then lifted. That was all reactive, right? So the senior leadership now sees these over-leveraged loans by fintech companies and so it pulls Ant Financial’s IPO and cracks down, as Lizzi was saying. It sees the groundswell of complaints against overwork and hyper competitiveness. So it declares 996 illegal. It goes after tutoring. A lot of this, the reaction is going to be conditioned obviously by their ideology, by what they’re used to. Xi Jinping, he’s a child of the Cultural Revolution, so he reaches for tools that he finds in the familiar Maoist toolkit. But I think there’s obviously a bunch of different facets to this vision. There’s a socioeconomic facet that he answers with maybe common prosperity. There’s this political one that he answers with nationalist chest beating and improved surveillance and security. And there’s this cultural component also that he answers with zhèng néngliàng (正能量, “positive energy”) and with this obsession with virile men. But how much of this is being driven, do you think, by ideology over responding to these exigent circumstances? How much does ideology play into that Jude, do you sense?

Jude: Yeah. If I just tack on to connect the two with what Lizzi was just saying, I just wanted to maybe build out a few points because I think the Li Guangman … I guess I had a slightly different take on it and try to connect it to the question you just asked.

The bar for deleting digital pieces in China’s propaganda system is below my big toe, right? It’s very, very low. And the Li Guangman’s piece, I’m looking at it on the Guangming Ribao (光明日报) website right now. So it’s still up and it’s been taken down by some, but it’s still up on some, whereas the…

Jeremy: Guangming one should perhaps say, that’s a serious publication.

Jude: Right, exactly. Yep.

Jeremy: That’s a central Party-controlled organ.

Kaiser: Yeah.

Jude: And Zhāng Wéiyíng (张维迎), the Beida economist, kind of a market-friendly economist, wrote a piece in response that has been subsequently scrubbed. So if there was a real repudiation by the propaganda authorities, Xi Jinping is certainly aware of Li Guangman by now, or those under him are, and yet it’s still allowed to persist.

I think the other point I wanted to make is, if you actually read the Li Guangman piece, I actually think there’s a sensible take he has of interpreting the velocity and direction of events. And while there’s a little bit of clear Neo-Maoist spin on the ball and little bit of naive hope that a “profound transformation” is coming, nonetheless, it is the case that the Neo-Maoists are looking what’s happening right now under Xi Jinping and saying, “It’s finally happening!” So I think we have this really nuanced external take of, “You know well it’s probably a low-level propaganda official and they were misreading the signs, and no this isn’t …” But then of course you listen to people in the system on the Left, who I’ve been following for a while and they’re pretty excited about this. As the Li Guangman’s piece says, “The Communist Party is finally returning to its original intent.”

And the final comment I wanted to make is, if this piece had come out in 2013, it wouldn’t have gotten any press, right? It’s getting press now, not because anyone knows or cares about Li Guangman, but we’re in this profound moment of uncertainty about where China is going and where Xi Jinping is taking the country. And so that’s why the Li Guangman piece has resonated, even if I think all of us can sit here and, “No, the Culture Revolution is not coming back to China. No, the Communist Party still wants capitalists pouring money into the economy. They’re still definitely afraid of foreign investors leaving. Yes, yes, yes and yes, but still I think this piece is resonating because I certainly don’t know where China is going under Xi Jinping, especially now that power is being centralized. And the fact that we’re having this conversation is because all of us have been watching what’s going on over the past couple of months and totally scratching our heads about, how far does this go? What’s next? Is there an ideological reorientation occurring at the senior-most levels of the Party? I think all of those are open questions.

Kaiser: Yeah. Yeah.

Jeremy: I mean, I think to an extent Lizzi, you said you were contrarian right at the beginning of the show and in some ways it’s taken the wind out of Kaiser and my sails, because I think we’ve premised this whole show on the idea that there is a connection between everything. That doesn’t mean we shouldn’t tease out the individual threads. But to return to the connection, Kevin Rudd gave a speech at the Asia Society just this week, on the 8th of September. And he laid out his idea of what tied this all together. So he also sees it as a set of things happening in some kind of coordination. He called it the “red thread” which — red, Communist Red obviously — it boiled down to turning away from the private sector and toward the state. Lizzi and Jude, what did you make of that argument?

Lizzi: I mean, my honest answer is I honestly don’t know what to make of it, because I think for someone like me, when you make an argument, I would like to see some citations and quotations and your line of logic.

Jeremy: And Kevin Rudd didn’t put any citations in, at least in…

Lizzi: So, that strikes me as a grand theory of things. And I kind of see that as a framework, but in order to convince me your theory is actually correct, I would like to see more concrete evidence of why, just to be scientific. What’s the falsifiable hypothesis and what are the evidence against it versus supporting it? So that’s sort of my grand take on that, but I should say Mr. Kevin Rudd obviously knows China more than I do. So that’s just my personal take on that.

Kaiser: Well that’s being very modest, but I am not sure of the validity of that. Jude, what about you? What did you make of Kevin’s…

Jude: Yeah, my first impression was … I thought this had the appeal of being a grand unifying theory, but as I dug into it, I had a similar impression to Lizzi’s. There were components of it where I just disagreed and I think we mentioned over email. One of them was just an interpretation of what he was describing as a core central plank of Xi Jinping’s new economic framework, which is called the New Development Concept or the New Development Philosophy.

Kaiser: Right.

Jude: Where we’ve done a fair amount on this. There’s a documentary trail of Xi Jinping laying out over these past five years, what the New Development Concept or Philosophy is, and it didn’t overlap with what Kevin Rudd’s speech said, in a pretty profound way. And the other thing is, I actually, when I was a few paragraphs into it, was excited to read what the “red thread” is, what is the grand unifying theory, and never really felt like I got it, because the elements he was describing, “Rise of the state sector, industrial policy.” We could have had this, we could have done this podcast a year ago, and I would have had the same exact … We would have been talking about, made in China 2025 industrial policy, the rise of the State sector, the Party asserting more control. Those have been of course occurring since…

Jeremy: Even before Xi Jinping, the first time the …

Kaiser: Guó jìn mín tuì (国进民退) [the state advances, the private sector retreats] that kind of …

Jude: Definitely, but even in the kind of amplification under Xi, I mean, these are trends which have been, I think, the dominant trend since 2015, 2016. So the kind of what’s different now, I didn’t feel like I got to this. Saying that at the core, the New Development Philosophy, the ideological core is more Party control, I thought that was an interesting take, but it differs from mine because again, 24 months ago, I would have told you that the key dominant ideological plank for Xi Jinping is core Party control. The New Development Concept is a different, and actually I think a different interpretation of it by Kevin in his speech would have actually gotten us a little bit closer to understanding common prosperity, because when you unpack the New Development Concept, as it’s been articulated in speeches and in documents, it’s about innovation, more shared development. So a development that crosses that’s more regionally distributed, more distributed between urban and rural areas. Shared Development, they call it. So income inequality. Green Development. So development that doesn’t come at the expense of not GDP over the environment. What they call Open Development, which is more about that sort of remaining integrated in the international economy, but as things like dual circulation indicate hedging a little bit against fears of being cut off on supply chains.

Anyway, so I think it was a really interesting take on it in terms of it had a really high-level look at it, but I’m still in the same page of, after reading the speech, still not being entirely sure, what the kind of unified theory of action from Beijing…

Jeremy: The needle hasn’t been red threaded properly.

Kaiser: Right, right.

Jeremy: But to Kevin Rudd’s point, I mean, it is obviously a huge economic component, all of this. I mean, it makes sense to me to connect this with dual circulation, which you just mentioned, shuāng xúnhuán (双循环) which is a kind of Party speak for basically making China have a more robust domestic economy and being less dependent on the outside world, because everything’s win-win, you also have as component and it’s a dialectic, so there has to be another component of the outside world. But it’s not just a move against IPOs on American stock exchanges. I mean, there’s evidence of this attitude, perhaps you could call it, maybe in the moves against English requirements in school, which were just reported this week and crackdowns on foreign online English teaching. Are these connected? Is this decoupling? Is this dual circulation?

Kaiser: Yeah, I mean, I think just to add to Jeremy’s question here and maybe clarify it a little bit: Rudd talks about these three things that have triggered all of this, right, in his grand theory and I’ve actually thought the same thing, that there’s the trade war, right? There’s all these moves by Trump to kneecap China’s tech capabilities and then there’s the COVID pandemic that exacerbated every preexisting stress in US-China relations already. And then there was Beijing’s realization that things are not going to get a whole lot better under Biden, and that decoupling is kind of the order of the day still. It’s going to go forward. That competition is going to be the watchword and that the ideological chasm is not going to narrow magically. And maybe this is why Beijing is flexing its State capacity muscle right now.

And there’s this new nationalism which we’ve talked about on this show, the one that’s more rooted in confidence, maybe hubris even, the one that says not just, it’s not the old defensive nationalism of, “Oh, you’re being biased against me.” But rather, “Sit down and shut up. I have something to tell you.” I mean, does it feel like … I feel like Beijing, this is my sense is, that Beijing feels like, it’s got a lot of political capital banked. It’s got a lot of regime support banked and it feels like, it’s time to break some eggs and make this new type of omelet. That’s my sense of it. Jude?

Jude: I think that’s correct. I mean, I think coming off of last year, which we had mentioned as kind of a lost year for long standing agenda items, but it was a gain year for Xi Jinping in so far as you know, he comes out of it with, I think, a newfound sense of pride in the mobilizational capabilities of the political system to overcome a significant challenge like COVID-19. I think the second critical factor though is, growth rebounded quickly last year and there’s strong growth right now. And so I think there’s a feeling, we’ve got popular support and we have the growth momentum or growth window to really sort of push ahead on some of these areas.

I think, Andrew Batson at Gavekal Dragonomics gave a presentation the other day, I thought it was really good, where he was saying, there’s another fundamental shift underway where he thinks Xi Jinping is willing to take a hit on short-term growth to tackle problems, which are going to deliver long-term growth. Now that’s always been this hard tension or trade-off in the system and it’s not going to be perfect even under Xi Jinping’s. Sort of, short-term exigencies still matter a lot to the Communist Party and it oftentimes sort of gets in its own way over longer term objectives because it panics and feels like it needs to put a floor under growth. But I think that sense of, “Okay, we’ve got some time and we’ve got some support to make some aggressive moves here,” is clearly in the calculation.

I think what will be interesting looking forward though and we may not know this for a few years, this critical debate of, is the heavy handed approach right now, especially targeting the private sector and the tech sector — what are the knock-on effects of that? I think Beijing thinks there are not going to be knock-on effects because it’s not going after robotics companies or kind of deep innovation companies. It’s going after sort of these kind of consumer tech, which frankly Xi Jinping probably … He doesn’t care if you get your meal delivered 16 seconds faster over a food app.

So I think he finds these kinds of effects, bourgeois technologies, which are frankly probably sucking up capital technology and talent that he would rather be redirecting towards the kind of deep innovation technologies, which are going to power national security and growth over the long term. But that definitely is a gamble. He might be right. Maybe there is no knock-on effect to innovation, but maybe there is, and we probably won’t know for some time.

Kaiser: Yeah, yeah, yeah.

Jeremy: The Cultural Revolution is used frequently by foreign commentators and even by younger Chinese, to basically mean something bad that happened a long time ago, before I remember, that I don’t know too much about. So, you’ve seen comparisons in the media of what’s going on right now in China to the Cultural Revolution. I generally will pour scorn on that kind of comparison, because I think it’s just meaningless, but what I think you can detect, and again Lizzi, you may completely disagree with this premise. I think you can detect a certain way of doing things that would be very familiar to a Communist Party member in the 50s.

Kaiser: You mean campaign style stuff.

Jeremy: Yeah, campaigns and they may or may not be executed under the direct command of whoever’s leading a particular department, but there is a certain kind of movement that’s built. It involves language, it involves slogans, it involves multiple organs doing different things. Does that make any sense, Lizzi? Do you see a kind of campaign style politics going on?

Kaiser: You mean like the kind of thing that makes billionaires give up a whole bunch of profits voluntarily?

Jeremy: Yeah, landlords handing over their property. Exactly.

Kaiser: Exactly, exactly.

Lizzi: Yeah. So I mean, there’s this similarity there, but I think fundamentally, the campaigns we’re talking about right now and the campaigns during the cultural revolution are fundamentally different, right? Mao attempted to destroy the Communist Party, bombard the headquarters and we saw Red Guard zealots, basically on the streets.

Jeremy: You know what? Let’s talk about the 50s rather, if we’re going to compare, because I think the Cultural Revolution, it just puts everyone on the wrong way of thinking about everything.

Kaiser: Nobody’s serious is making those comparisons, right.

Jeremy: I mean, that was kind of my point in bringing up the Cultural Revolution, but I think it’s the campaign mentality. I mean, to me, what it smacks off more is the 1950s, not actually the Cultural Revolution. So, that would be the question I guess I’d ask you is …

Lizzi: Right. So I would point out sort of one key difference I see. So I think what Xi sees on economic matters, we see Party control, we see an increasing role for the state. But if we read from Xi’s actions, especially during his early Zhejiang years, he is a very different leader from the 50s in the sense that he wants to redirect the energies of entrepreneurs, not eliminate them as a class. And I think, it’s correct to say that the emphasis now is on state control, but Xi’s focuses very much on sort of aligning the entrepreneurs’ priorities with what the Party wants, redirecting their energies into what he thinks is more productive activities. A sort of a counter example to that would be, the crackdown on celebrity incomes. That’s what we call unproductive income. So that income is high, but it’s mostly for accumulating personal wealth rather than reinvesting into the society to profit more, as opposed to see an entrepreneur’s income. In that, celebrity income is something that’s targeted. So I think, we see this force to redirect but not eliminate and I think that would be sort of the key difference between what we see now versus what we see in the 50s. But I do agree that the kind of fast and loose rhetoric, the kind of fierce sort of mass campaign on a certain issue — I do see the resemblance there, but I don’t think it’s correct to sort of make direct comparison between the two eras.

Kaiser: Lizzi, in a piece that you wrote for us recently, you cited, approvingly a paper from Angela Huyue Zhang at the University of Hong Kong, and that was called, “Agility Over Stability: China’s Great Reversal And Regulating The Platform Economy.” And that’s a really interesting paper. I mean, it looks at structural reasons why regulatory actions tend to be just so sudden and so heavy-handed, and why it produces so much volatility in China. So I guess I’m wondering, is this how the Party has always been? Or do you think that this is particularly pronounced during the Xi Jinping period?

Lizzi: So I do think the way China approaches these problems, reflects new found confidence in a sense that, the kind of reforms that’s currently going on in China right now reflect the confidence that China can solve its problems through its own system. We don’t need to follow the model of the west, which is depicted as decaying right now.

Kaiser: Right.

Lizzi: And from my perspective, the way China does things, the heavy handed-ness, the clumsiness, has this feature of trial and error. It’s not a well thought out approach based on previous examples. It’s kind of, look at how the different sectors react and then decide what to do next. So, usually when we devise a piece of income policy, we think about the different players, I mean almost by definition, an economic activity involves at least two parties. So if you strike on one party, the other party will be affected and to the extent that, that activity is related to the labor market and broader, other sectors in the economy, you’ll want to take into consideration other potential effects. But I think that kind of systematic thinking that’s so common in Western style policy making is absent here. It’s kind of like tóuténg yī tóu jiǎo téng yī jiǎo (头疼医头脚疼医脚, “when the head hurts, treat the head, and when the foot hurts, treat the foot.”). So, “Oh, this is a problematic piece and let’s just go ahead and strike that.” So, I mean, what is this all about? Is it a lack of deliberation? Or if it is after a careful deliberation, Beijing still decides that this is the best way to go, “There’s really no reason for us to worry about international investors, those people are just not part of our consideration” — that’s the question that I don’t really have a solid answer to.

Jeremy: Jude, we haven’t talked much about how investors are reacting to this and I think this is very much worth discussing. So the actions against ANT Financial against Alibaba, Didi, they have really spooked some investors, not others, but many are spooked. Ray Dalio famously is not. But recently, the people’s daily leaders like Liu He seem to be trying to walk back a little bit, some of the apparent harshness of the different crackdowns and to assure investors that the private sector is important to China’s economy and that the country is going to encourage entrepreneurs. What’s your sense? Will this actually placate investors?

Jude: No. But I think the inverse of that, which is are investors fleeing is also, I’d answer in the negative. I think there’s a profound sense of anxiety right now about … And that’s why there’s such a determination by investors to discover the ultimate logic here, because then at least there’s some predictability. And of course, after the edtech crackdown, you saw a whole coterie of analysts coming out and saying, “Well, Xi told you. He said it in a speech in 2018.” So then there was this two-week period where everyone was scouring the speeches of Xi Jinping to find out what the next sector, which was going to come under crackdown. Which I was telling people at the time, “Anyone who was seeing this in advance would have already retired, based on the extraordinary amount of money they would have made shorting these stocks,” but I’ve yet to see that person emerge.

Kaiser: Right.

Jude: So this is a case of finding a pattern after the fact. But I do think China’s walking … I think there’s a line that they’re walking. On the one hand financial services is probably the bright spot in terms of where you’d look for policy liberalization. And of course you’ve had prominent investment firms, hedge funds basically say, “We’re doubling down on China.” Simultaneously, you have had some VCs and investors pause or exit the market at the margin because they feel like the domestic churn in regulation right now, combined with US pressure, on a kind of financial decoupling agenda, and now that we’re seeing both Beijing and the US focusing on capital market regulation, whether that’s the VIE structure in Beijing or on the US side here concern about companies listing on US equity exchanges, mean that, even if you’re comfortable investing into volatility, there’s just too much uncertainty now.

So I think that’s why you’ve seen Beijing folks like Fang Xinghai at CBIRC come out and try to essentially calm the market and let them know, “Don’t worry. We’re not moving against capitalism. This isn’t a Cultural Revolution.” But I think, Beijing and DC both have the best and the brightest problem right now.

Kaiser: Yeah.

Jude: I think both think they are so smart. They’re going to be able to have their cake and eat it too, but investors have a vote here. And so I think this is going to be a tricky one for regulators to navigate.

Kaiser: So Lizzi and Jude both, I mean, with all of this talk of common prosperity, as we’ve suggested, some people are imagining a return to Marxist roots or return to the red roots. In your mind, does this thing that we’re calling the Red New Deal, is there a chance that this spells the end of the bourgeois mode of production? I mean are senior Party people, I think this is very far fetched, but are senior party people thinking now that capitalism has, as your Marxists like to say, “Fulfilled its historical mission to produce the material abundance” that we were promised in Das Kapital, and it’s now time to get back on the path toward real communism?

I mean, Jeremy, we’ve been talking about this, but if it does signal some kind of return to the ideological roots, does this really mean that the Party was truly Marxist all along and that this has always been in the plan? Or was it ever the case that the Party leadership has just been guided by pragmatism, and has just been muddling through and improvising just doing whatever it can do to maximize wealth and power? And yeah, sure: there are some ideological commitments that are going to induce them whenever it’s possible or convenient to reemphasize Marxism, but for the most part, they’re just making it up as they go along?

Lizzi: Right. So, I mean, the short answer is I don’t think that’s a valid idea and what I would point out is, if we look back probably almost 10 years ago in 2013, when Xi Jinping released his blueprint for China’s economic reform, the bullet points are actually quite consistent with what we see right now. What are the bullet points…

Kaiser: This is the third plenum of the 18th Party Conference.

Lizzi: Right, right. So, an emphasis on domestic consumption rather than exports and investment as a principal driver of growth. The enhanced role of Party and SOEs in private sectors. And third, I think it’s a kind of a directive to leapfrog the West in critical new technology sectors. So, my view is, there’s much more consistency and sort of logical heritage across all Xi Jinping’s approaches and I don’t think we were seeing sort of a sudden return to the Marxist root. I think that’s sort of an exaggerated view on what Xi Jinping is doing now.

Yes, there are certain moves that didn’t happen back in 2013. COVID didn’t happen back then. The trade war didn’t happen back then, but I think Xi Jinping’s vision on the economy was pretty clear from that 2013 document and I still refer back to that document when I see sort of new development in the Chinese society and Chinese economy, and see whether it was consistent with that. I honestly, don’t think there’s sort of a dramatic turn in recent years. I think Xi is pretty consistent in his focus on party, on SOEs, but also in his focus on making China a strong economy, sort of mobilizing private sector to serve the purpose of the state and the Party. I honestly don’t think he’s going to return to the fundamentalist communist way of approaching the economy.

Jeremy: So Lizzi, but it also sounds like to me, what you’re saying is, that though you don’t think there’s really a lot connecting all the different crackdowns we’re seeing going on in the last, let’s say two months particularly, and the ideological debate, that those things aren’t really connected. In some ways, they’re all the fruits of what is in fact, a very big and strategic plan and a strategic way of thinking about things that Xi Jinping has announced quite plainly right from the very beginning.

Lizzi: So I do think that Xi has his philosophy on how to approach the economy and I think it was even clearer back in his days in Zhejiang and in Fujian, how he views the private economy and its relationship with the government. I think Xi’s consistent. What changes was back in the back in his time in Zhejiang, he was in charge of a state, sorry he was in charge of a province and the growth of that province and the effect of GDP growth on his career trajectory. Sort of that’s the priority for Xi Jinping, but now he’s the leader of the country, and the country happens to be in this sort of multi multifaceted war with the United States, that the country is much stronger than when Xi inherited the reign of China from Hu Jintao.

So I think his objectives are different and his priorities necessarily change, but I think his underlying philosophy is still consistent. And if I can add to that discussion a little bit, I think there’s also another thread of Xi’s philosophy, which I think commentators tend to overlook. We hear Xi quote Marx all the time, but Xi also quotes Confucius all the time. And I’m not talking about, “Oh Xi, is sort of heavenly mandate emperor of China,” but Xi does seem very paternal. I think Xi has this idea that he’s a grand custodian off the country. He knows what’s best for the country and what’s best for the people. When we talk about the crackdown on gaming, the crackdown on feminine actors, I think that’s what’s going on here. I can honestly see Xi as sort of the biggest tiger mom of the Chinese society.

Kaiser: Oh my God. That is so exactly what I have been thinking. I mean, it’s just like my dad, my super-serious, highly moralistic, avowedly egalitarian but pretty socially conservative dad — at least before my brother came out and he got a lot more woke about sexuality and gender issues. I mean, he was like, censorious about the TV we were allowed to watch. He was disdainful of anything that he thought was frivolous. He hated video games, kind of like Xi, he would let things get pretty badly out of hand and then he would crackdown on a whole bunch of seemingly quite unconnected issues. This is something that I’ve seen a lot of people with Chinese roots comment on, this kind of peculiarly Chinese form of righteousness, of moralism in a very authoritarian manifestation. That sounds so right to me.

Lizzi: A patriarch, a proud patriarch.

Kaiser: Yeah.

Lizzi: Can I just add one anecdote…

Jeremy: Xi Jinping as tiger mom. Is that…

Lizzi: At least … Well, maybe you can edit this out if you don’t want to let this air, but Xi Jinping’s daughter actually overlapped with me a little bit. When she was in college, she was an undergrad at Harvard and I was also in Cambridge. So Xi Mingze is very normal. Xi Mingze is also very much into the fandom culture. She has her celebrity favorites and stuff. So in that regard, I think Xi Jinping was not that successful in sort of being the tiger mom of his own family, but he’s a patriarch of China. That’s just the one anecdote I will add.

Kaiser: Oh, it’s a lovely one. I’m glad we got that one in there.

Jeremy: “You may wish to leave this out,” She says. Lizzi, that’s …

Kaiser: Right. No, definitely not.

Jeremy: We’re going to run that on a continuous loop, that soundbite.

Kaiser: Yeah. As I was saying at the beginning of the hour, I get really frustrated that I don’t get a clear sense of how Chinese people are taking this all in. So from what you guys can tell, I mean Jeremy, I would love to hear you, because you’ve got your finger on the pulse. You’re always doing this sort of vox pop-py stuff. And Lizzi and Jude, what has the reaction been from China at different levels of society? And Jude, I’ll ask you, because you’re the elite politics guy to talk about. At the highest echelons of the Party, is there some kind of consensus about all this? Or are there clear signs of any kind of fracture? Jeremy, why don’t you go first? What’s your sense, just talking to people? I mean, our colleagues. We have colleagues in China. I mean, they’ve been telling us what they’re hearing, right?

Jeremy: I think I get two takeaways. I think as has characterized Xi’s rule right from the very beginning, there is quite a lot of good feeling about the things he’s doing. Business people think that, like they do in America of course, that the tech companies have too much power and that they’re abusing us. A lot of people, I mean, we’ve covered a great deal of social media anger. Jiayun, our society columnist who writes a lot about social media reactions, many Chinese people are angry that these internet companies exploit their workers. I could cite numerous examples, for every crackdown they do. The education system and the pressures on families, financial and every type of pressure because of the problem of education.

All of these things are connected to popular discontent about one thing or another. And I think because of that, they probably, to the average person if I may venture to speak for 1.4 billion people, perhaps don’t come off as sinister necessarily as they might do when summarized in a headline in the Wall Street Journal or by yours truly. I’m not saying I don’t make things sound different from the way a Chinese person would perceive them when I write. But I think you’ll find quite a lot of popular support for much of what is going on. I think there is also anxiety because what the (beep) is going on, you know?

Kaiser: Lizzi, what about you? What do you think? Does this sound about right to you?

Lizzi: So, yeah, in general, I think that that’s correct. I would just sort of point out one example, which I think is pretty representative of all those, is the crackdown on private education. I think that’s a case that illustrates the popularity as well as the potential problems of this crackdown. So I think Xi Jinping is right to identify the extremely stressful education system as a main point of grievance for many Chinese families. And when the crackdown on private industry was first initiated, actually many parents welcomed that as well as many students, but things changed a little bit later on because people realize that the rat race is still going, that kind of fierce competition from early childhood to middle school to high school, bootstrapped all the way to marriage market and the housing market is still going on.

So I think that’s why we saw those nannies with PhD degrees in physics popping up on job market. I think, the loopholes emerge as soon as those measures are initiated and that loophole is creating a new sense of anxiety. Are we smart enough to jump across the loops and to figure out how to get our kids a private tutor, when everybody is saying they’re not doing it, but they’re still doing it? So I think that’s a new source of anxiety created by the crackdown probably as an unintended consequence of that. So I think I still need time to see how this all goes and whether it’s successful and whether those loopholes can be identified and sort of a shutdown before they create a new black market of private tutoring. And I think that’s a one case that I tend to focus on.

Also, speaking with my parents who are Chinese university professors, they actually welcome that because it’s crazy when you think about it, but according to them, Chinese kids are so burnt out in high school. Once they get into college, they basically stop studying at all. It’s just, playing games and surfing the internet all the time and that is so frustrating for college professors. So when they saw private tutors are on crackdown, they actually welcomed it, because they think the kids will have more energy to study in college, which they think is more important for their future career, which you might not agree, but I feel like that’s an interesting comment from my parents who have firsthand experience with those kids.

Kaiser: Yeah. I mean, it’s telling that they sent you to the United States to do college, so …

Lizzi: Yeah. They just don’t want to see me anywhere near them, I guess.

Kaiser: I can’t imagine that’s true. Anyway, Jude, what about at the elite level? Jude, what are you hearing with your interlocutors who are maybe more attuned to what’s happening within the higher echelons?

Jude: I think the global environment for China, especially the perception that China is being increasingly encircled is undoubtedly giving tailwind to Xi Jinping. And I think that’s privately likely his value proposition as he positions for a third term, as general secretary is, “The world is dangerous. Now is the time to keep a steady hand at the tiller. I’m the one who’s going to steer us past the reefs.” And I also think as he’s making these regulatory waves, where we focus on the losers, the Jack Mas, the Pony Mas, the folks who are being rectified and giving, “Voluntary contributions.” But of course, a lot of people win when you have a reallocation of assets, especially as they’re being extracted from the private sector and moved into state and quasi-state institutions.

Jude: So there are certainly winners here, but I think there’s also a profound sense of unease about where things are headed now. And even if we just talked about why the historical metaphors don’t capture this, I still think nonetheless, there is a subtle narrative that Xi Jinping is driving too hard, too fast, and potentially at the risk of undermining some of the elements of international goodwill and national power. And so I think that, that is likely to persist certainly over the next year or so through the 20th Party Congress. But on a final note, I think this old heuristic of kind of looking for disaffected officials who are going to rewrite the ship, this is like, imagine if there was a third term of Donald Trump. You could be looking around for who in Treasury is upset with the direction of policy, but it wouldn’t matter, right?

Kaiser: Right.

Jude: Donald Trump would be calling the shots. And I think that’s what we’re dealing with here. There’s no one of any significant power in the Chinese political system, who even if they were off at Xi Jinping could really do anything about that. And that’s just the kind of linear iron law of political consolidation that the logistics involved in trying to shift or challenge Xi’s policy trajectory are so extraordinary.

Kaiser: Well, Lizzi, Jude, it’s been just such a pleasure having you both on the show. Wow Lizzi, it’s going to be hard for me to resist asking you to be on every show now because you have so much good stuff to say.

Lizzi: Well thank you. I’m honored.

Kaiser: I look forward to revisiting this topic in just a couple of months. We’ve invited both of you to speak at our NextChina Conference on November 10th. Oh, by the way, that conference is just going to be star-studded. We’ve got just great stuff, including a live podcast with none other than Peter Hessler and that’s going to be on November 11th. Hopefully, Delta willing, we’re going to be doing that on the 11th live, but we’re going to update this conversation in November and maybe delve even more deeply into some of the issues that we’ve just raised. So I really look forward to that.

I have a lot to think about between now and then. Lizzi, it’s been really very stimulating to hear your contrarian view and I think that there’s a lot to it. There’s an awful lot to it.

Lizzi: Thank you so much.

Kaiser: Yeah, it was a delight. For now, let’s leave it here and move on to recommendations. But first, a quick reminder, that the Sinica Podcast is powered by SupChina and really the thing that we need you all to consider is whether you can spare a few bucks to support the work that we do by signing up for SupChina Access, our daily newsletter that Jeremy and Anthony and Lucas and Jiayun and Che Chang, and all of our wonderful editorial staff put together every day. It is a one-stop shop for all the vital news out of China you need every day, and it is great value for money. So contact us if you are interested in group discounts, because we’ve got a lot of universities and embassies and NGOs and companies that have group discounts and that’s a really great way to go. Just jeremy@supchina.com or go to the source, Alex, A-L-E-X @supchina.com, if you’re interested. Okay, onto recommendations. Jeremy, kick us off man. Whacha got?

Jeremy: So, very quickly. NüVoices is this great podcast by the NüVoices Collective. We first interviewed them on Sinica way back when Kaiser?

Kaiser: Yeah, 2015 or something, ’16.

Jeremy: Yeah, about this list they keep of female experts and specialists in various China related subjects, which they made as an attempt to help media companies have a fair gender representation essentially. It’s a great list, great resource. So that list, but also a podcast. The last one, sadly with SupChina, they have started a nonprofit and need to be independent from us. We are amicably parting with this great podcast with Barbara Demick, whose most recent book Eat The Buddha, chronicles the life of a town on the Tibetan Plateau and she was interviewed by NüVoices. And I’d also quickly like to recommend a video by Tony Lin called, “How China’s Queer Youth Built An Underground Ballroom Scene.”

Kaiser: That sounds great. All right, cue excellent recommendations. Lizzi, you are up. Whatcha got for us?

Lizzi: So I would recommend my own channel, but that’s probably too …

Kaiser: I was going to do that!

Lizzi: But let me just recommend a book. I think many of this audience already have heard about, which is this book by Desmond Shum, the ex husband of …

Kaiser:

Whitney…

Lizzi: Whitney Duan Weihong, believed to be a business associate of Wen Jiabao’s family, the previous premier of China. It’s a fantastic book. If you’re into elite politics and if you’re into the kind of Cloak and Dagger style, power struggling within the elite class of China, that’s a fantastic read. So, go ahead and buy the book. I think it’s a great read.

Kaiser: Jeremy read it, yeah.

Jeremy: I’d second that. It’s a really fun read. If you were in Beijing in the 90s and first decade of 21st century, it’s got a great feel for the city and all the scamming that was going on.

Kaiser: Do you show up in it?

Jeremy: No. Well, no. He does describe, he gets the name wrong. Jin Xing, the dancer.

Kaiser: Yeah, of course.

Lizzi: Yes.

Jeremy: She had this bar called Half Dream.

Kaiser: Yeah, I used to go there all the time.

Jeremy: And he describes it as being a place for, I think he calls it, “The disheveled expatriates and demi-monde of Beijing.”

Kaiser: Oh that’s awesome.

Jeremy: I think I was one of those disheveled expatriates. But aside from that, I don’t show up in the book.

Kaiser: Oh man. Well, great recommendation. I read the excerpt that ran in the Wire China for the China Stories Podcast. If you want a taste of what that sounds like, you can check that out. All right Jude, whatcha got?

Jude: Well, actually it builds quite nicely off of the last recommendation because I read the book this week for a review that I’m doing for the Washington Post of the book. And simultaneously I was reading Milovan Djilas’ 1957 book, The New Class. Djilas was a highfalutin member of the Yugoslavian Communist Party and at one time, thought to be a successor to Tito, but then had this very pronounced break and wrote this book in 1957, which was this … The subtitle is an analysis of the Communist system, but it was this really extraordinary document breaking apart the pathologies of bureaucratic communism, the ways in which, rent seeking and graft occur, how you leverage kind of grain coupons over the rest of the population.

So I was reading this as I was reading Desmond Shum’s book, and there was so much of Shum’s analysis about how the Party operated sort of behind the scenes, that was right on the nose with what Djilas was describing. So anyway, as we’re kind of flexing our Kremlinologist muscles to try to figure out where kind of system is going, Djilas’ book is just really interesting. You always have to recognize that Communist Party of today is not the Yugoslavian Communist Party of 1957, but some of the ways he describes bureaucratic processes and rent seeking and corruption and graft overlap nicely.

Kaiser: Yeah, yeah. Milovan Djilas also wrote Conversations With Stalin, which I read when I was an undergrad. It’s also really, really worth reading. Excellent recommendations.

So mine are … I got one fun one and one serious one. I guess I’ll do with the serious one first. It’s Adam Tooze’s new book Shutdown, which looks at the global response to the COVID-19 pandemic. It’s not a first draft of history, but it’s kind of a second draft of history and it’s really impressive, I mean in its scope and in its detail. It’s just the tour de force.

I’m about like nine to 10 chapters in right now. And what always blows me away about Tooze is just how he has this big picture historical sensibility, but he combines that with more than your average bear’s grasp of macroeconomics and an ability to explain pretty complicated macroeconomics, and the whole interconnectedness of the global banking system, the global economy. He’s drifting definitely towards sort of New Monetary Policy [correction: New Monetary Theory] in his thinking. He’s more Keynes than Keynes could’ve ever Keynsed up, but he’s an interesting guy and he’s been on our show a couple of times and I’ve just loved having him on. His whole take on the outbreak in Wuhan also is just one of the best accounts that I’ve read in terms of just how he just is unflinching in how he talks about how Beijing screwed up. He talks about how it did buy the rest of the world time, that the rest of the world then squandered, and he looks at why. It’s very interesting. It’s very factual and very fair. I think it’s an impressive book. Definitely recommend it, even though I haven’t finished it.

My fun recommendation is this show on FX. It’s on Hulu, it’s where I watch it. It’s called Reservation Dogs. It’s written and directed by and it stars almost entirely indigenous Americans and it’s very funny. It’s all shot in Oklahoma and on the reservations there, and it deals very squarely with a lot of the issues that indigenous people in America face. It centers on a group of these four teenagers who are petty thieves, all dealing with their own issues, gangs and stuff like that. They’re trying to earn enough money to escape the reservation and go to California and it’s … Lizzi, thank you so much. What a pleasure.

Lizzi: Thank you. It’s great to be here with you. Thank you, Jude. Thank you, Kaiser and thank you, Jeremy.

Kaiser: Jude, thanks man. As always, it’s just such a pleasure to have you.

Jude: Likewise, likewise. I really appreciate it, enjoyed the discussion.

Kaiser: Yeah, and Jeremy, as always man.

Jeremy: Yeah. Thank you, Lizzi. Thanks Jude. That was great. We could have actually blathered on for several hours quite happily.

Kaiser: Yeah, yeah, yeah. This will do.

Jeremy: Yeah.

Kaiser: Okay, thanks everyone.

Lizzi: Thank you. Thank you.

Kaiser: The Sinica Podcast is powered by SupChina and is a proud part of the Sinica Network. Our show is produced by me, Kaiser Kuo . Drop us an email at sinica@supchina.com. Follow us on Twitter or on Facebook at SupChina News and make sure to check out all the shows in the Sinica Platform. Thanks for listening and see you next week. Take care.