China’s economy has experienced a slew of setbacks of late, problems that have seen it fall further behind the US in the global economic ranks and helped fuel a mass equities selloff.
But that’s just for now. The Asian nation remains on course to surpass America in economic size in the next decade, according to Li Daokui, one of China’s top economists and a regular government adviser. That’s one of several messages he wants to communicate to the US public in his first book in English meant for a general audience, China’s World View, which was released this month. Other key messages from Li include China’s leaders are insecure about the country’s position in the world and, well, more motorcycling could be an aid to growth.
In a brisk prose, Li explains often-mysterious topics such as the role state-owned companies and local government officials play in China’s development, how private businesses interact with the government and why topics like Taiwan remain so sensitive.
Some bits probably won’t win over US readers—like his description of China’s government treating the public “like children” when it comes to media control. But it isn’t a repetition of Communist Party talking points. With revealing details on how China’s state works, the book almost certainly couldn’t be published there. The top takeaway is arguably that China isn’t so much seeking to displace American influence as it just wants respect.
Li’s said his impetus for finishing the book was the nosedive in US-China ties at the end of Donald Trump’s administration. In an interview with Bloomberg New Economy, Li said he remains “very worried” about the trajectory of relations—which he sees as driven by a flawed perception of China’s political and economic system.
Here are some of the highlights of our conversation, edited for length and syntax:
Tom Hancock: A number of observers doubt whether China’s economy will overtake the US. Your take?
Li Daokui: China is so much larger in population than the US. So it does not take a miracle for China to be bigger. If China is going to be economically as successful as many of the Latin American countries in terms of per capita income, then its economy will be of the size of the US. I still predict that with a very firm confidence—I would say anytime between 2032 to 2035.
Hancock: What about China’s population decline?
Li: I don’t worry at all. The quality of education is increasing, and so is life expectancy, which means that there’s still going to be increases in the labor supply for the economy. But my concern is not enough domestic demand. Chinese policies should find ways to spend more money on people—find a way to push public welfare. Lift restrictions on consumption. Take the example of motorcycles: China has tremendous restrictions on motorcycles, so why not open it up?
Hancock: How should people think about China’s leaders?
Li: Chinese leaders are actually more anxious, more insecure, more paranoid than people in the US. [The ancient philosopher] Mencius said “the people are like water, the government is like a boat.” The water can float the boat, but the water can also undermine the boat. This mentality is deeply, deeply rooted in the minds of all leaders in China, all senior government officials in China: let’s be careful and let’s not fail the exam of governing China. If we fail, we’ll be like the boat overtaken by the water.
Hancock: How does that anxiety relate to policymaking?
Li: China’s policy of self-reliance in terms of fundamental core technologies isn’t an offensive move. It’s an anxiety-driven, defensive move. It’s not that China’s trying to prepare for war, fighting against the US, rather it’s to prepare that the US may attack China.
Hancock: You describe China’s diplomacy as “respect centered.” What does that mean?
Li: It’s aimed at getting people from other countries to come to China or to say good things about China, to praise China as a country, the Chinese political system as a successful model. Whereas US diplomacy—influence-centered diplomacy—is to project US influence in other countries. I emphasized in the book that China isn’t able to influence the world as much as the US. In the future, I predict that China as a country, and policymakers in China, will become more self-confident. So they can withstand more unfriendly views, unfriendly noise, whatever noise from the outside. I think with the increase of confidence, the tension will come down.