China’s economic and investment landscape is undergoing dramatic change. There’s a big disconnect between what’s happening on the ground and what we read in the financial press. We dug into the real story behind China’s tech crackdown and the latest policy moves with Trivium partner Andrew Polk.
Here’s a pared-down version of our salon. You can watch the full conversation here.
On understanding Chinese policymaking
You should not be surprised by Chinese policy decisions because the process is extremely rigid and quite predictable. A meeting is held by an important body like the Politburo, then four to six months later the State Council will pick up the issue and provide high-level guidelines, which are tasked out to various ministries. Three months later, the ministries come back with their plans and the localities go on from there to implement. It does take discipline to closely watch and follow all those timelines and meetings.
Many people say China is a black box, but it is more of a gray box where you can see a lot of things. The problem is not that there is too little information coming out of China, but that there’s too much information coming out of China. Our issue is filtering out the signal from the noise.
As the intelligence community says, Chinese is the first level of encryption. Most people just don’t read or they’re not able to read. If you can get into the native language and pay close attention, you can have a good sense of what’s going on.
On Xi Jingping’s swagger
The key message to focus on from the party’s centenary celebrations is swagger. The party has been around for a hundred years, and they want to stay around for another hundred years.
There’s been this idea in the West that if China didn’t move closer towards a Western democracy, it would buckle under its own weight of the contradiction between an authoritarian regime and a fairly liberalized economic system. The party has obviously moved in a different direction and is now more convinced than ever that its system is a viable alternative to what the West offers.
Senior Chinese leaders lost faith in Western economic systems after the Global Financial Crisis. They thought that if the US economic system can come close to blowing up the entire global economy, maybe it’s not so great after all. That’s when they decided we should move away from the dollar.
And over the past year, they lost faith in the governance systems of Western...