Keyu Jin: Economist at the London School of Economics specializing in China's economy, international macroeconomics, global trade imbalances, and financial policy. She is the author of 'The New China Playbook: Beyond Socialism and Capitalism.'
What this episode covers
Keyu Jin argues that China's economy is far more decentralized than outsiders assume, driven by a competitive 'mayor economy' where local officials are incentivized to chase GDP, real estate, and innovation. She unpacks the blend of ferocious capitalism and socialist social fabric, the 'innovate first, regulate after' approach, and why China excels at scaling and diffusing technology rather than zero-to-one breakthroughs. She contends US export controls and tariffs backfired by spurring 'crisis innovation' like DeepSeek, and that tariffs cannot fix trade imbalances rooted in US savings behavior. The conversation also covers Taiwan, the one-child policy's deep social and demographic effects, the real estate crisis, and the cultural importance of respect, face-saving, and social harmony in US-China relations.
The guest's own work
The New China Playbook: Beyond Socialism and Capitalism
Keyu Jin
“She wrote the highly lauded book on China titled The New China Playbook: Beyond Socialism and Capitalism that details China's economic transformation since 1978 to Today.”— Lex Fridman
Also referenced (named, not recommended)
Xiaomi
Xiaomi
“You know, look at Xiaomi. It was making phones and now it makes one of the world's best EVs. 270,000 cars sold in one day a few days ago with a new model.”— Keyu Jin
Pop Mart
Pop Mart
“these companies um PopMart, they're coming from these second tier cities that care about the local economy, about fun entertainment.”— Keyu Jin
Big reveals from this episode
- Jin says the biggest Western misconception is that one person or a small group runs China's economy, when in reality it is more decentralized than the US.
- She describes the 'mayor economy': local officials competing on GDP growth were incentivized to drive industrialization, real estate, and now innovation unicorns.
- China's model is 'innovate first, regulate after,' the opposite of Europe's regulate-first approach, enabling fast financial and tech experimentation.
- DeepSeek emerged from 'crisis innovation' triggered by US chip export controls, which Jin argues backfired by accelerating China's domestic capacity.
- China's negotiating principles are equivalence, reciprocity, and realism, with hard red lines: don't mix Taiwan/Hong Kong politics into trade deals.
- Tariffs cannot close trade deficits because the imbalance is a macro phenomenon: the US saves less than it invests, not a trade problem.
- The one-child policy created a 'golden age' for Chinese women, with families now often preferring daughters and women gaining bargaining power.
- The real estate crackdown ('housing to be lived in, not speculated') hit the economy hard because property underpinned both local government finances and household wealth.
Worth remembering
- Jin's school had 60 students per class and 10 classes per grade, illustrating the scale of Chinese educational competition.
- In middle school, students were publicly ranked from number one to number 800 across the entire grade after every exam.
- A popular Chinese motto is 'short, flat, fast,' originally a volleyball strategy, now describing impatient business and even marriage culture.
- Xiaomi, originally a phone maker, sold 270,000 cars in a single day with a new EV model.
- At one point roughly 80 Chinese cities were each developing their own EV companies due to local-government yardstick competition.
- Jin compares China's tech mobilization to its Olympic gold-medal strategy, marshaling the whole nation toward a goal.
- About 98% of urban Chinese households had only one child, with twins (the legal exception) being the rare way to have two.
- Chinese youth afford expensive housing via 'six wallets': the couple plus both sets of parents and grandparents pooling money.
- Recent evidence shows post-1990 aging economies became richer, not poorer, because they more rapidly adopted automation and new technology.
- The West has predicted China's economic 'collapse' four to six times since the 1980s, during its fastest-growth period.