Transcript
Intro
0:00
So, how did we do it?
0:02
How did China transform from having one of the
0:04
lowest GDP per capita
0:11
0:14
0:17
0:22
and having just survived two disasters in human history
0:26
the Great Leap Forward that killed 30 million people
0:29
"{confirmed) with the crisis of too many people and not enough food"
0:32
and the Cultural Revolution that not only
0:34
wrecked the country economically
0:36
but also shattered its social fabric
0:39
"During the Cultural Revolution"
0:40
"Chinese people fell into"
0:41
"a crazy and hysterical mood"
0:46
"There was no difference between justice and injustice"
0:48
"truth and non-truth"
0:51
"or superiority and interiority"
0:52
"There was nothing. It was purely a scuffle"
0:55
And so, how did China go from this place
0:58
to becoming the global second largest economy
1:00
lifted more than *[800] million people out of poverty
1:03
and hold the entire world’s attention in terms of its wealth and power?
1:09
And some people say that's because
1:10
China introduced capitalism
1:12
And that is a huge part of the story
1:14
But the Soviet Union under Gorbachev also introduced capitalism
1:19
but it ended up bringing the country to a downfall
1:23
So clearly, capitalism on its own is insufficient to explain China.
1:28
And I know that you might be saying, well
1:30
that’s because China has basic growth factors
1:33
such as abundant human capital
1:36
and coastal cities that are ready to export
1:39
Again, that’s also a large part of the story
1:42
But India also has a large population
1:45
and dominated the global trade in cotton textiles
1:49
But since the 1980s, its development has lagged
1:53
So, how basic inputs are mobilised by the country is also critical.
1:58
And that being said
1:59
capitalism and having basic growth factors
2:02
are not a sufficient explanation to
2:05
Why China’s transformation is so successful and unique
2:08
and that is what we are trying to do in this video
Summary
2:12
From my research, there are three main factors that came up quite repeatedly
2:16
And I am going to give them upfront
2:18
The first one is China's intelligent leadership
2:21
China was lucky enough to have leaders
2:24
who could reform the country in a way that was a drastic departure from Mao’s era
2:30
under which the country's economy was strictly controlled by the government
2:35
And the second factor is that China implemented pragmatic economic policies
2:40
China was special in that it adopted a *[gradual] approach to its economic reform.
2:45
And that was able to unleash the big potential of China’s labour force
2:50
which in return stimulated its trade economy and domestic enterprises.
2:54
And the last one is very close to my heart
2:57
And that is the Chinese culture
2:59
that put a lot of emphasis on hard work and education
The Chinese Leadership
3:04
So let's talk about the Chinese leadership
3:06
And a very solid place to start would be in 1978,
3:10
the year Deng Xiaoping took power
3:13
"China's national anthem"
3:20
Quite unlike Mao, who was insistent on anti-capitalism campaigns and sentiments
3:27
which had encouraged a lot of people to make up numbers and falsify the economic results
3:44
Deng decided that we are going to ground ourselves in the reality
3:49
"We have wasted a few decades (not reforming)"
3:52
"If we hadn't wasted time (and reformed our economy)"
3:54
"Our country would look a lot more different"
3:56
"We have to act now"
3:57
admit we were backwards
3:59
And keep an open mind
4:01
and learn from other people
4:03
And most importantly, make our priority
4:06
be about improving the economy
4:08
and people's standards of living
4:11
"We must continue to develop our economy"
4:14
and improve people's life
4:16
"Only that can make our people trust us"
4:18
"and support our leadership"
4:20
Here’s an example that illustrated this mindset change:
5:26
From there, Deng successfully convinced Chinese leaders
5:29
to adopt this mindset to reform the Chinese economy
5:33
I know China’s success depends on
5:35
the collaborative efforts from the entire nation
5:38
but I think this initiative that changed the tone of everything else
5:43
deserved a special credit
Unique economic policies
5:45
And next, let's move on to the smart economic policies
5:48
China adopted during its transformation
5:51
And at the time, there was a discussion around
5:55
the type of policy that was the best for developing countries
5:59
And especially among the academic and the policy communities
6:03
people believed that the root solution was to copy the developed countries
6:08
and implement policies such as free trade, privitisation
6:13
and removing government intervention
6:16
And this is also known as the shock therapy
6:20
And of course China wouldn’t have any of this
6:23
Because at the time, China didn’t completely get rid of
6:27
the influence of Mao Zedong
6:30
So in a sense, China still didn't have
6:33
the political environment for such a drastic approach
6:59
So instead, China went the opposite
7:02
and reformed gradually
7:04
And this mainly came in twofold:
7:06
The first thing China did
7:08
was to break down the economic communes under Mao’s era,
7:11
where everyone’s working together
7:13
and there was no division of responsibilities
7:17
And now, farmers were given lands that they were individually responsible for
7:23
And this massively increased the productivity and the motivation of Chinese farmers
7:29
And next, these farmers would be
7:32
making money under a two-tier price system
7:35
And under the system
7:58
And this two-tier system increased the income of Chinese farmers
8:03
which was basically the entire population
8:06
And as their cash grew, their bank savings also grew
8:11
and these money were able to fund the manufacturing enterprises
8:16
that could satisfy farmers' demands in things like
8:20
fertilisers and farm equipments
8:23
And this in turn created a lot of new jobs and quasi-private enterprises
8:28
that later accounted for half of the national GDP by 1985
8:34
So, this was the baby of China's capitalism
8:37
and how china initially wealth
8:40
to boost its economy later
8:43
But that was just a part of the story
8:45
The second thing China did
8:47
was to set up a special economic zone in Shenzhen
8:51
to attract foreign direct investment
8:54
aiming to to build up China’s light industry
8:57
In this special economic zone,
8:59
Foreign companies were granted access to the Chinese market
9:03
And in turn, they were incentivised to invest in China’s infrastructure and technology.
9:10
For example, from the late 1990s onward,
9:13
Hong Kong poured billions of dollars into building China's
9:17
roads, ports and residential and commercial property
9:22
This experiment later expanded to the rest of the country
9:25
And by 1984, China opened up 14 its coastal cities
9:31
In 2001, China officially joined the WTO to fully trade with the world
9:37
And the results were incredible
9:39
In the next three decades
9:42
China delivered a near 10% of growth rate
9:45
and lifted more than 800 million people out of poverty
9:50
What’s interesting about this process is that,
9:53
although China was and still is, an authoritarian, one-party state.
9:59
But in reality, at least economically, it’s highly decentralised
10:04
So here, the key, is really
10:06
Regionally, decentralised
10:09
totalitarian system
10:11
in the sense that all the local governments
10:14
all the different levels of local governments
10:17
have the resources and control
10:21
what they are going to do
10:23
So a lot of successful policies actually came from
10:27
local experiments, the cooperation between government agencies and private enterprises and
10:33
eliciting social feedback
10:35
This is the process of how China transitioned to a mature market economy
10:42
by giving people a lot of freedom to experiment
10:45
and by doing things slowly and incrementally
10:49
It provided China with a stable and healthy environment
10:53
that allowed growth factors to compound at an exponential rate.
The Chinese culture
10:58
And lastly, let's move on to the final factor that
11:01
that created China's economic miracle
11:04
And that is Chinese culture
11:06
I really want to talk about this from a personal point of view
11:10
because I experienced it so deeply in my upbringing
11:14
In Chinese culture
11:16
we believe in being ambitious, hardworking and thrifty
11:21
And we also value good education and success
11:25
This culture has always been there
11:27
for as long as I could remember
11:29
When I was younger, the most common advice heard from teachers and parents
11:35
was definitely to study and work hard, in order to have a bright future
11:40
And in schools, the subjects we most value were always subjects
11:45
that directly contribute to business and the advancement of society
11:51
So things like maths, physics, and medicine.
11:56
Roughly speaking, every year China educates about 6-7 million university graduate students,
12:03
40% of which are in the STEM field.
12:07
And this culture also pertains to the working world as well
12:10
especially in big cities like Shanghai and Beijing and Shenzhen
12:15
people work all the time
12:17
Literally, all the time. And,
12:20
there is this 9-9-6 culture.
12:23
People work from 9am to 9pm
12:27
and for six days in a row
12:29
And in the past, I used to work for a trade company that sold Chinese goods
12:34
to the rest of the world.
12:36
And let me tell you
12:37
People don't ever stop working
12:41
and I was only able to take 1 day off in a month.
12:45
And that was how crazy it got
12:47
But the point is, our culture is just super competitive
12:51
And that directly drives people to work harder and
12:56
I think that's going to be norm for years to come.
13:01
Anyways, this is the condense version of how China became so powerful
13:06
With the intelligent leadership that focuses on China's economic development
13:11
and improving people’s life,
13:13
smart economic policies that catered to the China's society and
13:18
reformed in a gradual way
13:20
and a Chinese culture that emphasises hard work and ambition
13:25
China was able to lift itself up from the bottom and raced to the top
Outro
13:31
Okay I hope this video addressed this topic in a more satisfying way
13:36
And you got something out of it
13:37
This is a very important video for this channel,
13:39
as I plan to cover more in depth on China to add to the conversation
13:43
to add to the conversation
13:45
and to talk about it from a Chinese point of view.
13:48
And if you enjoyed this video
13:50
I would appreciate it if you could do the algorithm stuff
13:53
by liking or sharing this video
13:55
Or any kind of interaction will do
13:57
If would help me know that viewers like you enjoyed this content
14:00
And also help more people better understand the complexity of China
14:06
And alternatively, if you have any thoughts on this video
14:09
please leave me a comment
14:10
It would be really fun to have a chat on that too
14:13
Please consider if you don't normally do this
14:16
But either way, if you have watched to this far
14:18
I really appreciate you spending the time with me
14:22
And I will see you in the next video
14:23
Bye
14:25
"Zen music"
