S3E37: China's Economic History - Why China's Innovation Fell Behind Europe's

Did you know, that the compass, gunpowder, paper, and the printing press, all history-changing technologies, were invented in China? Yet, the realization of their economic values happened in Europe, not in China. This is the story of the steep price that imperial China paid for the sake of stability and scale, a story that Communist China seems to be repeating now.

Dr. Yasheng Huang of MIT’s Sloan School of Management, HbN's guest for this subject, analyzes China's colossal economic successes and gigantic failures ("gigantic" is his word) in the context of innovation, freedom of ideas, and diversity of ideologies. Similar to other countries, China's economic success depends on the right balance between scope and scale, terms that Dr. Huang explains. But in most of China's long history, this balance has tipped towards scale, with grave consequences for China's economy and civilization. In this episode, Dr. Huang discusses the following:

1. What new perspective does his book (see below) offer about China? Hint: EAST.
2. When was China's golden age of innovation?
3. China's civil service exam system was an opportunity ladder - similar to America's rags-to-riches stories.
4. China's universal education system was established centuries before Europe's.
5. Unlike European monarchs, China's emperors were surrounded by commoners who entered the inner sanctum of the Imperial Court through merit, not by birthright.
6. Why didn't China's rigorous education and meritocratic civil service system contribute to innovation and economic growth?
7. When did China's innovation and economy fall behind Europe's?
8. Despite its gigantic failures, why has China's Communist Party proved so durable?

Read more about this episode, see historical images and watch videos on the HbN website here.

This New York Times article, which I mention in this episode, is about a Chinese woman whose journey epitomizes the entrepreneurial spirit that was the backbone of China's economic miracle. A Gigantic Ponzi In China?

Is China's real estate debt structure, essentially one gigantic Ponzi scheme? According to Dr. Victor Shih - yes it is. Dr. Shih is a professor at UC San Diego’s School of Global Policy and Strategy, and the Chair in China and Pacific Relations. I spoke with him last year in Season 2, Episode 1, as China's giant real estate developer, the Evergrande Group, was defaulting on its loans. Our conversation then was timely for another reason: the publication of a book edited by Dr. Shih, Economic Shocks and Authoritarian Stability, which is about how authoritarian governments, such as China’s, handle economic crises.

I hope you enjoy these episodes.

Adel

Host of the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠History Behind News⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ podcast

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