Monthly Recommendations (September 2021)

This month’s theme is the Chinese state. Lately, there has been a lot of news out of China. As Xi Jinping guides the China story towards the inevitable conclusion of overtaking the US economy in size, he has started announcing reforms that look unthinkable to many but deal with the key underlying issues in late-stage capitalism. Rising tuition fees and the unsustainable costs of tutoring are a key issue in India. Coaching classes that train students for the entrance exams of leading engineering and medical colleges cost about INR 50,000 per annum, which is a third of the annual per-capita income of India. China’s crackdown to make these coaching classes non-profits is the most refreshing reform that I have seen imposed on this industry in the past decade. Another industry that has been on the rise in India is online gaming and online gambling. The rise of this industry has made strange cases unusually frequent. (These cases remain the exception and not the norm.) China’s recent regulation on gaming time for minors is an ambitious step. I am not convinced about its utility; but I can see that drastic changes are required to curb Big Tech’s unfettered access to data collection and the Chinese state does not balk under pressure from Big Tech lobbyists. This alone is encouraging to me and I hope that it convinces democratic governments to try something in their own jurisdiction.

  1. Life on Lockdown in China (Hessler)

    New Yorker (archived), 30 March, 2020

    China’s system works in times of crises. Societal responsibility, a collectivist mindset and swift government action was the answer to COVID19. Every country that tried other approaches failed at getting a good outcome for society. This article also shows the early opposition to school closures. (Even as early as March 2020.) It also ends on a hopeful note during a short period of relaxation in lockdown regulations.

  2. China Crushed Jack Ma, His Fintech Rivals Might Be Next (Chen et al)

    Bloomberg (archived), 25 June, 2021

    The action that the Chinese government took against Jack Ma (his mysterious disappearance, his reappearance, his changed positions) right after he voiced his opinion about the Chinese political system was a stunning reminder of the depth of state power. Just as this article prophesized, the Chinese government has gone ahead with a complete ban on cryptocurrencies (ostensibly a “Financial technology” business).

  3. China’s Risky Bet on Afghanistan (Marlow, Curran)

    Bloomberg (archived), 24 August, 2021

    China is flexing its muscle on the global stage and warzones seem like the best place to make a big profit, at a modest investment, owing to the high risk nature of the investment. This is due to the chaotic nature of the post-war period in general. In the case of Afghanistan, the chaos is compounded by the debacle that was the American withdrawal from its 20-year war in August 2021. Biden and his administration have tried hard to reinforce the idea that 120,000 people were evacuated from Afghanistan during the withdrawal. They have repeatedly distanced themselves from the original commitment to end the war and talked about how they were simply abiding by an agreement that their predecessor had drawn up. They have also taken pains to emphasize their commitment to democracy and women’s rights (even as questions have risen about their domestic commitment to both these issues.)

    It is clear that America lost the war, left the country in shambles and handed the country over to a government whose goals are unclear and whose conduct is erratic.

    Strangely, Biden’s remarks about ending the war did not reflect the celebrated American exceptionalism that appeared to me to be a main stay of articles and TV shows about America: (such as Robinson’s Don’t Give Up On America).

    To me, there are two [things] that are paramount. First, we must set missions with clear, achievable goals — not ones we’ll never reach.

    In this environment, a government with a larger appetite for risk will be able to make some meaningful gains. China has taken this leap of faith.

  4. Xi Jinping May Be Leading China Into a Trap (Brooker)

    Bloomberg (archived), 9 June, 2021

    What is the West’s fear about China? It is that Xi and the Chinese Communist Party will rewrite the rules of traditional economics and show that the power of markets, which is fetishized by institutions such as the IMF and the World Bank, is limited and only one of the many possible pathways to transitioning from a lower-income economy to a higher-income economy. This article crystallizes the terror that Xi’s recent non-capitalist reforms strike in the hearts of the traditional capitalists: Capital is not King; Governments that focus on Social Reform can succeed. Bloomberg Media is owned by Michael Bloomberg and is pro-capitalism and staffed by economists who believe that the West’s path out of poverty is the only path that exist and is viable. Their articles criticizing Xi and the Chinese government for not accepting the power of markets or institutions always provide an interesting perspective. For me, they show the height of the pedestal on which these journalists and economists place markets, even though they will freely admit that they are tools for development and ridden with many shortcomings.

    This paragraph stood out to me:

    If Xi succeeds in steering China into the high-income bracket without undertaking the institutional reforms that have accompanied the transition in other countries, then it would rewrite the rules of conventional economics and burnish the international standing of Beijing’s authoritarian governance model. Developed democracies have hardly demonstrated their superiority in this regard recently, having failed to reverse their own decades-long trend of widening inequality (even if disparities mostly remain far narrower than in China).

    This rewriting of rules spells disaster for most publications, and is a common thread I have noticed in recent China coverage. Bloomberg is no exception.

  5. China’s Port Shutdown Raises Fears of Closures Worldwide (Deaux, Li, Koh)

    Bloomberg (archived), 13 August, 2021

    World trade. I have found the topic to be confusing and intractable. How can the delay of a shipment in Philippines stop assembly lines halfway across the world? Now, I understand the basic contours of this concept: companies set up supply chains to procure materials from around the world (because they get it from the cheapest buyer) and assemble them at some central place; each component that they procure has its own supply chain. This article demonstrated the fragility and sensitivity of this system well. A port closure in China saw shipping volumes drop across the world. Shipping prices have been spiking since last year due to unrelated reasons and both bulk and container shipping prices were affected. This article is not very detailed in how the port shutdown affects the prices of real-life products; Nevertheless, it is a good primer. I’ll be on the lookout for another article which expands on the topics covered here.