As tensions between the United States and China are reshaping the global economic order, China’s political and economic system often defies Western perceptions.
China combines centralized political authority with an aggressively decentralized economic structure—where local governments drive innovation, competition, and growth. The system is viewed in the West as hostile to private enterprise, though it fosters entrepreneurship and adapts quickly to market forces. Meanwhile, globalization remains central to China's rise.
This is a focus for Keyu Jin, a global economist and author of The New China Playbook: Beyond Capitalism and Socialism. Born in China during a time of economic reform, Jin moved to the United States for high school in 1997. She was a tenured professor of economics at the London School of Economics from 2009 to 2024 and is currently affiliated with Harvard University and the Hong Kong University of Science and Technology, where she chairs the Institute for Geo-Economics. Her book has been named one of the best of 2023 by Financial Times and Fortune magazine.
Jin describes her youth in China as marked by scarcity but also optimism. "Growing up in China, because there was so much scarcity of things, people were very excited about the future," she says. Her aspiration to serve as a bridge between the U.S. and China started early. She remembers telling her father, who worked at China’s Ministry of Finance and later at the World Bank, that she wanted to become a development economist, though she admits she didn’t fully understand what that meant at the time.
Her academic journey led her to Harvard and then the London School of Economics during the 2009 financial crisis, when U.S. universities froze hiring. Reflecting on her time at LSE, Jin notes, "London became my absolute favorite because it really is a truly global center." It was during these years that the idea for her book took root. "I felt that it was time to combine all this knowledge and put in my own personal insights to give a different perspective about the Chinese economy, maybe one from the inside."
Jin argues that misunderstandings about China run deep. She identifies three primary misconceptions. First, while China has political centralization, it also has "an equally extreme form of economic decentralization." She explains that local governments play a significant role in fostering innovation and economic growth, coining the term "the Mayor Economy" to describe their influence.
Second, Jin disputes the notion that the state suppresses private enterprise. "Local governments are very incentivized to help out productive companies," she states. For instance, when a semiconductor company achieved breakthroughs, Beijing officials supported it, aiming to create a "Beijing champion," not just a "Chinese champion."
Third, she addresses the relationship between the state and its citizens, asserting it is more collaborative than many assume. "There's kind of an implicit contract between the people and authority," she says, suggesting that citizens expect stability and prosperity in exchange for a certain degree of authority.
Jin also highlights the role of globalization in China’s rise. "China itself, and especially the government, clearly understand that globalization is one of the most fundamental drivers of China's prosperity," she explains, citing foreign direct investment and technology transfers as pivotal. However, she stresses that China’s success lies in how it utilized these opportunities, unlike many other emerging economies that remained stuck in the middle-income trap.
Discussing the unique Chinese model, Jin believes it transcends traditional labels. "Beyond socialism and capitalism…China has fostered a unique balance of state coordination and market mechanisms," she says. Jin notes that many issues facing capitalist societies, such as inequality and economic fragmentation, show the limits of those systems. She contends China’s dynamic entrepreneurship challenges the traditional view that innovation is exclusive to capitalist economies.
On the issue of decoupling, Jin is clear: "China does not want to decouple from the US." Internally, the term "decouple" is banned from public discourse. While she acknowledges that parallel systems will likely emerge in critical technologies like semiconductors, she argues that broader economic cooperation should continue. "There needs to be a continuous flow of knowledge and collaboration," she says, pointing to fields like AI and biotech.
Regarding trade tensions and the World Trade Organization, Jin recognizes that China’s dominance in manufacturing and green technologies poses challenges. Yet she insists much of China’s competitiveness is market-driven, not the result of government subsidies. "The level of competition in China is just so fierce," she says, crediting supply chain efficiency and relentless innovation.
Jin also addresses the concept of reciprocity in U.S.-China relations. She acknowledges past imbalances but asserts that "the situation has really turned around" with China becoming more open to foreign businesses. She advocates for a pragmatic approach: "Let's make money together."
Finally, Jin emphasizes the importance of China’s new generation. "If there's any hope of reducing US-China tensions, it will be the new generation who will steer that," she says. Describing them as confident, globally minded, and socially conscious, Jin believes they are less focused on material gain and more on innovation and cultural engagement. "They have soft power, and they have a greater eagerness to engage with the world."
For those interested in following Jin’s work, she shares her writings on Peking University’s website and publishes op-eds on current developments. As she continues her research, Jin remains dedicated to fostering a more nuanced understanding of China in a rapidly changing world.
The China Desk podcast informs policymakers and the public about critical issues in the US-China relationship and is hosted by Steve Yates. If you’d like to listen to the full episode with him and Dr. Keyu Jin please follow the links at our Federal Newswire Podcast page.
