Keyu Jin

It's less about economics.

It's more about national security.

It's more about politics.

And I think that is probably the single biggest barrier to continued good economic growth.

As a contrast to Soviet Union, the Chinese economy, as I mentioned, was extremely decentralized.

In Soviet Union, the ministries were in charge, it was central bureaucracy, but a lot of the power were given to these provincial governors, party secretaries, mayors of different sorts, and they were incentivized.

That's the key, is that these mayors were incentivized to do a good job.

If I were successful on a radical reform,

If I were successful, I'd be a national hero.

And then that reform would be rolled out in every single city in the country over time.

And I would be promoted to the higher run of the central government.

And who knows, I might even become vice premier, premier president one day.

That was how the individual was motivated to carry out these really tough reforms.

Now, China has changed a bit, right?

It's not about being radical and radically successful.

It's about being safe, right?

So when you shift from basically an entrepreneurial state to a safe state, then the objective function changes and you see it in different economic outcomes.

Well, the central leadership politically is extremely powerful and very consolidated, but they hold a very crucial key to the local governments, which is that they decide their fate.

Am I going to promote them?

Am I going to put them in jail?