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Keyu Jin
Says More…

This week in Say More, PS talks with Keyu Jin, Professor of Economics at the London School of Economics and Political Science, and the author of The New China Playbook: Beyond Socialism and Capitalism.

Project Syndicate: In January 2021, you praised China’s pandemic-recovery strategy, but highlighted enduring risks, including a “structural deterioration, following years of economic reorientation away from exports and investment and toward consumption” and “looming” financial risks. More than two years later, China’s strict zero-COVID policy is no more, but the global economy has suffered major shocks, not least from the war in Ukraine. Which risks has China made progress in mitigating in this changed environment, and which have intensified?

Keyu Jin: The Chinese economy is currently suffering from a deficit in demand, largely due to a loss of confidence by the private sector. In 2009, “Team China” saved a plunging economy, with state banks ensuring that state-owned enterprises (SOEs) were flush with the credit they needed to undertake large infrastructure programs and projects. But, today, such quick fixes no longer work as effectively.

The private sector is now firmly in the driver’s seat and needs to do all the heavy lifting. How to manage expectations and sustain confidence will be a big challenge for the state. More broadly, China – like other major economies – has added “de-risking” to its agenda. From technology and critical components to energy and resources, China is trying to diversify, build resilience, and strengthen its self-reliance.