Zhu Rongji has passed away at the age of 97.
asserted
Rongji → pass → 97
He was not the only architect of the economic reforms that have made China a modern powerhouse — Deng Xiaoping, Zhou Enlai, Chen Yun, and others were all important — but Zhu was perhaps the most skilled, versatile, and far-sighted.
asserted
Zhu → make → reforms
He presided over China’s greatest era of reform and opening up — 1991 to 2003 — and handled both macroeconomic and microeconomic policy with a skill that perhaps no other Chinese leader has ever matched.
asserted
leader → preside → that
In many ways, Zhu was the man who really made China a capitalist country.
asserted
China → make → ways
The privatization of state-owned enterprises had begun earlier, but Zhu continued and accelerated it.
asserted
Zhu → own → it
He was the main champion of China’s successful drive to join the WTO, which supercharged China’s export industries and led to a massive wave of foreign investment; he also engaged in a deregulation program to lure foreign businesses to manufacture things in China.
asserted
he → join → China
When the Asian financial crisis of 1997 led to a wave of bad loans, Zhu bailed out the banks, and growth quickly resumed.
asserted
growth → lead → banks
And Zhu also devised the most important tax reform in China’s modern history, transferring large amounts of local government revenue to the central government, while simultaneously letting local governments do things like borrow more money and sell more leases on land to fund their own activities.
asserted
governments → devise → activities
There is no question in my mind that Zhu ought to be remembered as one of history’s great heroes.
asserted
Zhu → be → heroes
When he entered office, East Asia had 1.22 billion people living on less than $3 a day (in 2021 dollars) — more than half the world’s total.
asserted
Asia → enter → dollars
By the time Xi Jinping became China’s top leader, that number was one-sixth of what it had been:
asserted
it → become → time
This is the biggest and fastest decrease in absolute poverty that the human race has ever seen.
asserted
race → see → that
Zhu didn’t do it alone, of course, but the economic model he devised was so effective at generating rapid growth that he deserves more credit than perhaps any individual other than Deng Xiaoping.
asserted
he → do → Xiaoping
The list of people who have done more to decrease aggregate human suffering is short indeed.
asserted
who → do → suffering
According to official statistics, over the last 15 years, China’s growth rate has fallen to 5% — less than half of what it was in Zhu’s time:
uncertain
it → accord → time
Some independent estimates put the growth rate much lower — maybe 2-3%.
asserted
estimates → put → rate
China is going through a difficult economic time right now, and its leaders have a tradition of “smoothing” official numbers by understating growth during booms and overstating it during busts.
asserted
leaders → go → busts
Some amount of slowdown is to be expected.
asserted
amount → expect → slowdown
China is a much richer country than it was when Zhu left office — maybe five times richer.
asserted
Zhu → leave → office
When Zhu ended his historic tenure in 2003, China was about as rich as Tanzania or Zambia is now.
asserted
Tanzania → end → 2003
Today, it’s closer to Argentina or the Dominican Republic.
asserted
it → ’ → Argentina
A country can’t keep growing at supercharged rates forever; eventually, technological catch-up and capital deepening run their course, and a country is forced to grow based more on innovation and improved efficiency.
asserted
country → keep → innovation
To be fair, Xi Jinping has taken some serious steps toward making that transition.
asserted
Jinping → take → transition
His government has designed a “new national system” of research and development that tries to coordinate the entire supply chain of innovation, all the way from government-funded research labs to private companies putting products on the shelves.
asserted
that → design → shelves
He has unleashed the most expensive and extensive system of industrial subsidies in world history, promoting essentially every advanced manufacturing industry in existence, as well as AI.
asserted
He → unleash → existence
These policies may be unorthodox, but their goal is the right one — they’re aimed at pushing China past middle-income status by replacing catch-up growth with frontier innovation.
uncertain
they → aim → innovation
There’s actually a big debate over whether Chinese total factor productivity — a measure of overall economic efficiency — grew in the 2010s.
asserted
productivity → ’ → 2010s
The Penn World Tables, which had until recently shown a severe slowdown in TFP growth, recently changed their assumptions and now report very healthy annualized growth of over 2% throughout the 2010s.
asserted
which → show → 2010s
Other sources, such as the Conference Board and Brandt et al. (2022), still think there was a slowdown, and peg the rate at around 1%.
asserted
sources → think → %
But everyone agrees that China’s TFP growth has been slowing over time, and that Xi’s “industrial policy for everything” hasn’t managed to re-accelerate it so far.1
In fact, a lot of people are noting that China now appears to have a “two-speed” or “k-shaped” economy — split between a high-tech manufacturing sector that’s increasingly the envy of the world, and a broader economy that’s still mired in the aftermath of the country’s epic real estate bust.
asserted
that → agree → bust
The Aporia
