Kent Deng

Kent Deng interviewed by Alan Macfarlane 7th May 2019

0:05:11 Born in Beijing in winter 1953; my parents were southerners but I was born in Beijing because their careers had taken them to the north; my father was in the Zhongnanhai where the Central Military Commission was located and that was how I was related to the new regime of Maoism, so my father was a ranked officer of the new Government; apparently on the record my first ancestral figure was a prince from the Yin Shang Dynasty; the surname was JJi; he was granted a fief in a county called Deng 3,800 years ago; he was a minor prince, rather unimportant, and once he was granted the lordship of that small kingdom he adopted the name Deng, so this was the beginning of the Deng clan, a very ancient clan in Chinese history, twice as old as the clan of Confucius; that bit of history is something my father always mentioned, that we were once a prince of the first dynasty of China; it was in Henan Province very close to the heartland of Chinese civilization, in area of the Yellow River; the Deng clan suffered a huge blow at the end of the Northern Song Dynasty in the twelfth century, when the Mongols came; the Deng people were forced to leave their home and moved as refugees to the south; they reached a point between today's Hunan and Guangdong provinces when the clan decided to split because the future was so uncertain; one group went further south to Guangdong and the other went west towards Sichuan Province; that is how the Deng clan became two; we have two sub-clans, one still based in Guangdong which was my great-grandfather's branch, the other in Sichuan where Deng Xiaoping came from

5:30:06 My great-grandfather lived in Foshan, Guangdong Province, where he was a petty entrepreneur; the family record shows that he went to Indonesia to earn some money to buy a wife; my grandfather followed suit and went to the Philippines to earn some money and then came back to buy a wife; as the family story goes, the situation in Guangdong was not prosperous, so he then moved to the Lower Yangtse and settled at Zhenjiang between Shanghai and Nanjing, [where the Grand Canal passes by and] where the best silk was produced at that time - we are talking about a period between 1910 and the 1930s, until the Japanese invasion; he established himself as a real estate agent and also a comprador for the silk trade; he spoke some German; he bought silk in the region and sold it in Qingdao where the Germans were based; he was an arbitrage between different locations and economies; he had a very comfortable life; we know that he had a large, three-storey house; one side was all glass windows which at that time were very expensive; for someone to have such a large house with glass windows shows that he was very wealthy; he managed a whole street as a real estate agent and actually had some properties as well; also he owned a theatre for Peking Opera; my father was an amateur Peking Opera singer because as the young master he got a free ticket every night; my father's generation until the time of the Japanese invasion knew nothing about poverty, and has a very comfortable upper-middle class upbringing; they had a piano, magazines, records of Western music as well as Peking Opera; my father majored in English and economics at Jinan University in Guangdong [Fujian] Province [during the war time]

9:28:20 The Japanese came in 1937-8 as they marched from Shanghai to Nanjing, and attacked Zhenjiang ; they made a swift attack on the river; my father told me that when the Japanese left the whole block of streets were destroyed by fire; the Japanese just burnt everything and the only thing that he could recognise in his large house was the barrel of his BB gun and all the family members were forced to hide themselves in rural China; they mentioned an island in a river somewhere in Jiangsu Province where the Japanese didn't take enough interest, and they hid there for three [long] years after which my grandfather had used up all his money; so the family went bankrupt because of the Japanese; it was only later that my father learnt of the massacres in Nanjing; they knew it had been captured by the Japanese, and because of that the family decided to join the resistance; it split into two: half my father's siblings joined the Republicans and half the Communists; my father joined the Communist Xīn Sì Jūn, the new 4th Army, in Fujian Province; the Communist movement had two branches - in South China, in Fujian with the new 4th Army headed by Chen Yi and in North China, headed by people like Mao Zedong and Liu Shaoqi; my father was not on the Long March with the Yan'an group in the North; my father's group started as guerrillas [in China’s mountainous South] before they were recognised by Chiang Kai-shek during the United Front Movement against the Japanese

13:11:02 After the unexpected victory and the surrender of the Japanese, the message was that all should grab their territory and my father was involved in civil war against the Republican troops; he was involved in the Huaihai Offesive in 1948 which was the second largest campaign launched by Mao to grab territory in Lower Yangtze; after that Chiang Kai-shek escaped from mainland China to Taiwan; my father didn't know then that his brother and sister went with Chiang to Taiwan with the air-force, and also his own mother went too, and they ended in Taipei; they lost contact with each other until 1955; apparently someone told my father, so being a good officer in Mao's army he reported this to his superior, describing that half of his family, including his mother, were now the enemy; he was promptly removed from Zhongnanhai and was asked to surrender his pistol, and take off his army uniform, the symbol of his power; there is no proper rank for his position but he should have been a Colonel by that time; he was asked to leave the military and became a civil servant, so the end of his career

16:29:10 My grandfather married twice; his first marriage was in the village and he had a son; he then migrated to the Lower Yangtze and married again because his first wife had died; my own father was the eldest son of his second marriage; in all he had three sons and three daughters by his second marriage, so seven children in all; he died in poverty, possibly of cancer, and the whole family scattered in all directions, half joining the Communists, half the Republicans; the last place that they were all together was on the island in the Yangtze where they could no longer survive; my mother is equally interesting; she was the third generation overseas Chinese, born in the Philippines, in Manilla; she joined the resistance movement against the Japanese when she was about fourteen; she joined the Filipino Communist Party when she was fifteen, and became a messenger; she was then selected by the Party to do some training in Hong Kong in a spy school run by Zhou Enlai and Dong Biwu, two very important Chinese Communist leaders; she spent a year and a half in Hong Kong doing special agent work, she could shoot and do all the things a professional spy would do; we have photos, they are all very pretty young girls and modern; at the point where she was to be sent back to the Philippines to do more special agent work, the Chinese Communist Party won their struggle in 1948; Chairman Mao declared total victory in 1949 but the whole situation became very clear; instead of going back to Manilla my mother was ordered to go to Beijing where she met my father, fell in love, and they got married and produced me; both my parents are now dead

22:10:20 My mother was a very quiet person; she observed everything as a special agent should; she was very cautious about her words and had beautiful handwriting, in English, Spanish or Chinese; remember you must be multi-lingual to operate in South Asia; she was the only one in her large family of eight siblings who left her own family to join the resistance movement, go to Hong Kong and then return to China; if you had seen her she would stand out in a crowd because she would sit properly like a lady, would not make a noise, but be in the background watching; she was a very good mother and gave me a lot of support; she was the one who said if I could stay in the West I should do so, as she was the only one of her family to return to China and was the poorest; that says something about this revelation in her later life that she probably regretted it, possibly because she could not perform her duty to her parents, and when they died could not go back for their funerals; my father was never a civilian but had the attitude of a dashing army officer; he was a very demanding father with myself and my younger sister, and you could not argue with him; naturally I felt much closer to my mother; he said that if we had not had a Cultural Revolution he would have sent me to a military academy to be trained as a soldier

25:57:00 I left Beijing at the end of 1983; I spent a lot of time during the Cultural Revolution in Heilongjiang when I was a teenager, from 1969-75, in Keshan, a State-run prison farm [meaning a farming for released prosoners]; I was sent out as Mao had decided that urban youngsters should go to rural China to be re-educated; I was not alone of course; about 12,000,000 young urban Chinese were sent out to the countryside; the problem for me was that not only was I sent out, but my father was sent to training centres [a labour camp] for problem civil servants for nine years, and my mother was sent to another camp for four years; so with one family we went in three directions while my younger sister was looked after by an aunt; so the whole family was actually pulled apart during the crazy years of the Cultural Revolution; my father's problem was because he had close relatives in Taipei which was considered very suspicious - brother, sister, mother and the air-force link, which was investigated by the Communist Party; my father's younger brother was an air-force General who became the Vice-Minister of Defence before he retired, so very important in Taiwan; for that reason alone my father was considered to be not trustworthy; my mother was slightly different; she had a very clear record of being an underground member of the Communist movement, recruited by the top leadership of the Chinese Communist Party, trained as a special agent in Hong Kong and sent to the mainland; however, because of her marriage and her overseas identity she was considered, not dangerous, but certainly not one of us, so she was sent to a different kind of camp; so if we add the numbers of years together, we three spent nineteen years away, crazy

30:50:08 I did not suffer earlier [during the Great Leap Famine] as my parents sent me to an elite school called the Yuying School which was open to privileged families modelled on a military academy in the Soviet Union; it was a boarding school; there were only about five in Beijing and ours was the best, run by the Central Party Committee; all the children were from good families; we spent six days a week in school and were allowed to visit parents on the seventh day; I didn't know of the famine; we certainly had proper meals, clothing, and were comfortable; when I was about ten I thought I would be an engineer; I did not do well in and did not particularly like humanities or history but was good at mathematics and physics; I might have been a doctor, a mathematician or an officer in the Chinese Army, especially in a high-tech division; however, the Cultural Revolution changed everything; I started to think about our own destiny, why we were sent from heaven to hell; remember I was a privileged kid living in a boarding school and knowing nothing about the outside world, eating properly, sleeping properly; we even had a zoo within the large compound of the school, with peacocks, a tiger, monkeys, foxes, rabbits, a flock of sheep and all sorts of exotic birds; suddenly we were kicked out of this privileged life to Chinese Siberia where the temperature was so harsh it could be 30o below zero, and we start by living in a stable and we didn't have proper housing; we had to build everything with our own hands; it was then that I started to question why, and took a sharp turn and started to read history, and that changed my life; the six years of a rather hard life in Heilongjiang changed my view of China's destiny, culture, myself, my family, and everything else; for the first four years I tilled the land; I changed my view about agriculture; I think is a great occupation because you feed yourself and don't need anybody else, which is very important; in the second part of my life in Heilongjiang I became a part-time teacher at the local primary school because I could read and write; why they decided to hire me as a part-time school teacher was simply because they didn't have anybody else available, so I volunteered; I taught local kids and because I spoke standard Chinese that was important then; I taught all age groups the same subjects - mathematics and some basic Chinese characters - part-time for two years, before I got the opportunity to return to Beijing; by that time I was twenty-two

37:21:17 When I returned to Beijing I was permitted to resume my education; I had two choices, either to learn English or Politics; I wanted to learn English because my father had a double degree in English and Economics; by the time I returned to Beijing I had passed all the qualification needed, but found I had been replaced by someone from a more influential family, so the only option left for me was Politics; regretfully I took that opportunity; going back to Beijing meant a lot to me and I didn't want to stay on for another six years, so I returned quickly; I went to Beijing Capital Normal University as an undergraduate; it was a quite intensive education; remember that I didn't have a proper secondary education as all my education was interrupted by the Cultural Revolution; I had taught myself; I actually had to take a test before I was permitted to go on with tertiary education in all subjects - Chinese language, history, some English, chemistry, physics, mathematics, I actually taught myself; I had a little diesel oil lamp; twenty people shared the same room and we slept on the kang, a brick bed; I negotiated with my fellow inmates and took space at one end of the kang so that I wouldn't disturb anybody else; in that corner I would spend about two hours reading something; every morning they would know I had been working that night because my nose was black; this pattern of work went on for six years; I got oil by asking the tractor driver to give me some; my family were allowed to buy books that were not political, and even some newspapers were also sent to me; I had no resources so depended on people to send things to me

41:55:00 At the end of my undergraduate course I became a tutor for three years, during which time Deng Xiaoping was reinstated as the leader of the Chinese Communist Party and the Government; he had formerly decided that education should be resumed, also the Civil Service and all the normal social mobility channels should be opened again; then universities started to recruit, not only undergraduates but post-graduates; I managed to pass National examinations to become a post-graduate, a Master's student of the Chinese Academy of Social Sciences which was the highest in China; that was a three-year course, and the subject was 'Das Kapital'; in that sense I still know from volume 1 to volume 3 what Marx wanted to say; towards the end of my study I felt that I needed either German or English simply because of the subject; I had to read a Chinese translation and felt it wasn't very accurate; I enrolled in English courses, first of all taught by Chinese but as I made progress, taught by foreigners; I met a couple from Australia and through them started to contact Eric Jones; that changed my life; La Trobe University in Melbourne offered me a place, by which time I was thirty [I did not have any trouble to leave China because my mother was overseas Chinese and her children were allow to go as they wished under Deng Xiaoping’s rule]

45:03:19 Eric Jones was a remarkable person; he decided to know Asia and he told me that the best way to do that was to recruit Chinese students; indeed, he recruited three of us in the space of three years; I was the first; I think I am the only one who stayed in the West; one didn't finish, one went to Hong Kong; our utility for Eric was to show him what China was made of, the whole spectrum of life, politics, population. culture, and we often would have private conversations on how Chinese would behave in certain situations; the training was Oxbridge; I remember he asked me to read a book every three to five days and give him a report; I was terrible, I would start from page one and move on, but could read no more than twenty pages on time in the beginning, but then managed to read a whole book in a week, but he certainly pushed me to my personal limit and in that way showed me how to become a good scholar; I was on a one plus three programme which stated with an M.Phil and then a three year Ph.D; he was my supervisor and mentor, and I am completely in debt to him for his kindness and support; he taught me how to be a scholar and a person; famously he asked me if I really trusted the Chinese Government adding that he didn't even trust his own; he was an Australian resident but always had a British passport

48:30:08 In his office and also in his home he would have cartons of cards on which he would write down everything that he felt was important - a passage, a title of article or book; how many cards, I should think around 100,000; when he started to write a book he would use cards first and then sort them in lines; I think he had a system of dividing them by subject, but when subjects overlapped he would copy a card and store it under a different subject; he didn't photocopy anything, just wrote; I have no idea what happened to all these cards; he wrote every day; he had two lines of writing, one was global history and the other was bird-watching; he was the secretary of a bird-watching club, issuing monthly reports on what sorts of birds the members had come across and what they should do about it; that was his hobby, so at weekends he would drive somewhere with his binoculars to watch birds and take notes; an interesting man; he was married with a nice wife; he decided that his professional life and family life should be different, and his wife was not part of his professional life; later on his wife actually helped me to edit my book; when I joined the L.S.E. I felt I needed someone who understood me and was a native speaker, to polish my book; by that time Eric had retired and the family had returned to Britain; incidentally, his wife had always edited his books and was his first line of protection; so I knew that well enough to think I would be in very safe hands

52:49:05 The man I met in Australia who was a particular influence on me was Mark Elvin; he was at A.N.U. and I travelled regularly from Melbourne to Canberra to meet him; in the beginning I wanted to borrow books from his library, then I became quite close to him because we were both interested in Chinese history and economic growth; at that time we had a very small group at the A.N.U. of Chinese studying growth and development, and I was part of that, to the extent that people often thought that he was my Ph.D. supervisor; I owe him much; he is fifteen years older than me, so now eighty; he was more talkative than Eric Jones for certain, and he is very knowledgeable; I think there is a button and if you push it he won't stop talking; the button is his understanding of Chinese history; he would say that this is my understanding and you are probably wrong; he is a very interesting man in terms of his knowledge of Chinese history; he told me once that because he had decided to take on Chinese history he got less return than if he had concentrated on Latin or any European language history; in that sense he recognised how tough his subject matter has really become; the more you learn the less you know; he published 'The Pattern of the Chinese Past' during this time; the book certainly marks a turning point where he challenged the early versions of Chinese history; his new view was that China was not poor, China was just not flexible enough; his high-level equilibrium trap captures in such an ingenious way that all the Euro-centric views about China misinterpret Chinese achievements; we shouldn't judge China by a European benchmark of industrialization, modernization, urbanization or even individualism, rather we should judge China by ordinary people's material life; that is really revolutionary; so I can see the link between Mark's high-level equilibrium trap and Kenneth Pomeranz's "great divergence", there is a quite close link between the two although they are thirty years apart; this undercurrent of viewing China differently goes on even today

58:23:20 I was at La Trobe for four years and got a Ph.D. on the subject of the social value and function of the Chinese literati in the technical history of China; I had spent a year wasting time before I found this subject; I had followed the history of merchants and long-distance traders and after reading many books and articles found I had nothing to say; by sheer chance I came across a lot of agricultural treatises written by Chinese literati, then I realized these works were very important in keeping up best-practise in farming in China especially during crises such as in the Yuan Mongol period; this [the Mongol rule of China] lasted about eighty years but they produced more books per head indicating that the Chinese did not know how to farm; my question was why?, this is what intrigued me; then I traced back 1000 years and forward 500 years, looking at books done by these literati and realized there was a pattern; in the beginning they introduced dry-farming technology among their peers and ordinary farmers; then in the Tang dynasty they introduced paddy farming and in the Mongol period, they introduced both again, why? because the Mongols killed too many Chinese; in some regions 80% of Chinese were slaughtered; the economic effect was devastating to the point that they had to introduce farming technology from Central Asia to back up the economy; it was the Chinese literati who did this; this was the moment of my sense of belonging and my contribution; my dissertation won a major prize in the Association of the Economic History of the World in 1990, two years after I graduated; that was a double insurance of what I had been doing was right; after this period I had on-off teaching jobs, mainly in pure economics; I taught micro-economics for four years during and after my Ph.D.; I then got an offer of a job in Adelaide at Flinders University for three years to teach economic history; that was the moment that I realized there was a market; I thought I would become an economist rather than a historian for the rest of my life simply because I couldn't find a job [in economic history]; during that period I got an offer from the Victoria University of Wellington, New Zealand, where I got tenure and promotion as a senior lecturer; so I was very comfortable, I was paid well and I liked New Zealand; then out of the blue a fellow Ph.D. student sent me an advertisement from London, from the L.S.E., looking for someone who knew about China; I sent in my application which was a week after the deadline but I felt I had nothing to lose; at that time in 1994 we did not use email, but they sent me a letter three months later to say that they wanted to interview me; I took a 34 hour flight via Singapore to London; I got my dates wrong and found when I reached my hotel that I had only two hours before my interview, before a panel of twelve people; I was told the interview would be half an hour followed by a forty-minute research seminar, and I survived; at the end of the day the panel decided to offer me the job as a lecturer rather than senior lecturer; that was the price I had to pay and I decided to take the job

1:07:15:20 Mark Elvin was one of my referees and the second was Raymond Myers [of Stanford]; both were well-known; when I told Mark that I had got the job he said he would write to Patrick O'Brien, who was an old friend of his, and I should get in contact with him; the second person he introduced me to was Pierre-Etienn Will in Paris; I got a reply almost immediately from Patrick but never got a reply from Pierre which showed the difference between British and French attitudes; within three months Patrick called me into his Historical Research Institute, and I remember having just a sandwich in his office and we started to get to know each other over lunch; so from the very beginning of my career at the L.S.E. I started to know Patrick; he has been a great supporter of my work, and through that I started to know the British side of global history; although Patrick and I have very different backgrounds, what actually made us click was the role of the state; we both realized there was something quite remarkable in the growth and development in the West and the lack of growth in China which was the role of the state; we increasingly realized, other things being equal, the role of the state separated these two civilizations from each other; in the Chinese case the state established an alliance with the peasantry then through that route you have a persistent physiocracy protecting agriculture at all costs, whereas in Britain or Western Europe you have the tendency of mercantilism through the alliance between the state and the merchant class and artisan class, and the bourgeoisie where the money really was; in China where the land was would be the interest of the state while in the West it was the money; that was the early channel of communication between Patrick and I, then through the years we have collaborated on projects but that was the background of our understanding; the efficient method of taxation in the British state contrasted very strongly with the inability of the Chinese state to raise money through taxes; until the Qing Dynasty the state simply decided to withdraw from governing, so I call it a withering state; in that sense China led the world in basically abandoning the state, as Karl Marx suggested we all should do; the term conservatism is a very Euro-centric view or judgement towards the Chinese literati; if you look at their role of keeping the Empire in one piece and also keeping the society tranquil, they certainly did their job; China's system, unlike Western Europe was not feudal; it was through the literati's contribution as the balance between all interest groups, and their support of the State bureaucracy through their individual members, played a central role; also remember farming is by far the most sustainable practice of economic activity so far, so in that sense keeping the economy going, keeping the Empire peaceful should be enough to justify what they did in history; if you judge China by the European standard it was certainly not progressing enough; it was an economy of a Smithian growth type instead of Schumpeterian growth type; it is largely a closed economy, farming would be the main occupation of the population; food was important and trade was not; if you have all these conditions set up I think China did quite a good job

1:16:04:12 The "California School", Bin Wong and Pomeranz, whom I've known for about twenty years, waged a war against Euro-centrism, so against my former teacher, E.L. Jones, and earlier belief; remember that I started my career by studying Das Kapital; I was completely convinced that the European way must be the only way and that China didn't have a space in human history, but gradually I changed through my own research and also my reading of other's work; the "California School" didn't happen overnight but was a sort of time-bomb waiting to happen, simply because if you take the basic quantitative measures in history, you just wouldn't add it up; for example, India and China once counted for 60-70% of total humanity in the whole world, were considered exceptions; these two societies were not exceptions but they were the mainstream; so the basic mathematics tells us that the European judgement cannot be right, plus as I teach the developmental courses, among all Western European societies Britain was exceptional; other societies although they share a lot of similarities, such as the Protestant ethic and the scientific revolution, military revolution, navigation revolution, etc.; why and how Britain only had an industrial revolution seems to me to be how humanity hit the jackpot; it happened only occasionally, and it's not guaranteed, so Britain was lucky; it was not the norm; the norm rather should be in the East; so that is how I view the rise of the Great Divergence debate because they get the basic quantities right; China and India put together were the Smithian norm globally, then we need to explain this; so this is the Eureka moment for all economic historians; of course now the California School has been attacked and criticised by different voices, but even so nobody can change the basic fact that a majority of people living in Asia were doing something Europeans do not usually agree with or appreciate; that is my understanding; therefore I certainly follow all the arguments and debates surrounding the Great Divergence issues; do I agree with Pomeranz and Bin Wong? yes and no; from the view that Asia was the norm and Western Europe a freak, to quote Pomeranz, certainly yes; but in terms of their methodologies and their interpretations of Asia I do not necessarily agree with them; for example, was the lack of coal and colonies responsible for China's underdevelopment? that was certainly not proven to be the case; for example in the Yellow River region we have basically coal deposits everywhere, so you can't say that China lacked coal or cheap fuel; secondly, on colonies, do we count Manchuria or Taiwan as a colony? if we do, China certainly made efforts to conquer non-Chinese lands; so it's a matter of time; also, remember we had a lot of overseas Chinese; my Mother's family lived outside China for three generations in sort of China’s unofficial colonies in South East Asia; so in that sense I take Pomeranz's argument with a pinch of salt; in terms of Bin Wong I agree even less with him because his interpretation of a Chinese State is too idealistic, and the behaviour he portrays is something I cannot recognise; a very clean, efficient state, also running a welfare state looking after every single citizen, that is certainly not what the Qing state would do, rather the Qing state did very little towards social welfare; even for national security, the Qing state gave up ruling China which was disastrous

1:23:37:05 I consider my 1999 book, 'The Political Economy of Pre-Modern China' [The Premodern Chinese Economy], in which I try to establish a system to link all key factors together, to be my most important; the philosophy behind it is not historical materialism or neo-liberalism, it's not classical economics or Max Weber, it is the Chinese "Tien", Heaven and human society working side by side, because the Chinese State needed a heaven to get it's mandate and the general public, including all the bureaucrats and also the Head of State, were subject to the rule of that heaven; Heaven controls all the secrets of human desire, human relations, and every time, unlike the Absolute Monarchy in Europe, even the Emperor will show humility and consult with Heaven to see whether he is still doing well enough to rule China; the problem really is this, Heaven won't answer directly to the Emperor but will send signs such as a natural disaster, drought, flood, tsunami, earthquake, disease, to tell the Emperor that he was doing something wrong, and the interpretation of the behaviour of Heaven was the privilege of the literati; so in that sense, who controls the Head of the Chinese State? it was not Heaven but the literati collectively; so it's a very clever sort of relationship, unlike the European system where you have a dialogue with God and a Bible to follow; the Chinese didn't have a Bible as such, but collectively the literati through the thing called Heaven indirectly controlled the Monarch; so this was a very clever system because it was so elastic and malleable, and so convincing as well; nothing is written down but everything is open for people to interpret; so the most powerful Emperor on earth has been checked by the will of the literati; it is also the Confucian and the Daoist idea that Heaven is so important in the Chinese system, to keep the system working and in balance; so every time you had an earthquake the Emperor would criticise himself for doing something wrong, and would promise his bureaucracy and his people that he would change; what happened after 1949 was that Heaven under the control of the literati was removed and replaced by Marxism which has far more clearly written rules; then the literati lost the space for manipulating the will of Heaven; that actually caused a lot of trouble because Mao could have a dialogue with Marxism (or Heaven) directly, bypassing all his literati; you shouldn't do that; so by doing so Mao really became similar to the European Absolute Monarch; that was certainly not desirable

1:30:18:24 China's take-off needs to be understood in two ways, the first was China's recovery, it redeemed itself from the damage caused by Mao's mismanagement, so that shouldn't be counted as growth; after that we had thirty years of quite fast growth, 8% per year for twenty years and then 6-7% for ten years; this was real growth; China certainly had a lot of advantages by being relatively backward as Alexander Gerschenkron says; if you are backward you have more options; you can just keep going or leap over; China did the second; much credit should go to Deng Xiaoping; when he returned to the political centre he visited the United States and Singapore; those two places really changed his mind; also during his youth he spent six years in France and that made his mindset very different from Mao, for example; he thought that the way to rescue China and also the legitimacy of the Chinese Communist Party after all the mismanagement, from the "100 flowers bloom" movement to the Cultural Revolution, endless purges, endless political movements, was to change the priority of the State from political correctness to economic correctness, which was to allow people to leave to eat and live; so he set up the goal that by the year 2000 China's per capital GDP should be $1,000 per head; that goal was achieved in 2001 so he was one year behind his goal; to do that he realized China could not run a closed economy any more, so opening up was the way to go; he actually asked overseas Chinese, like my Mother's family and relatives, to help China by investing in China's Special Economic Zones and selling Chinese products worldwide; in the first ten years the main donors of technology and investment came from that group, oversees Chinese, and this is what Russia was lacking; you don't have overseas Russians coming back to help Russia; you do have a lot of overseas Chinese still having the idea of supporting the Motherland; my cousins came back from the Philippines and the United States and invested in various projects in Fujian Province, my maternal ancestral province; so they did their part and got their reward from the Government - profit plus fancy titles; that went well; then China was ready to go all the way like the other Asian Tigers, to take orders from all over the world, especially the G7 countries, manufacturing things and selling them back, so export-oriented industrialization; this was a proven effective formula and China just followed it; so it would be very surprising if China didn't do it properly; so China took-off; the reason why China achieved that much was the major change from China's closed economy to an open, export, economy; with this you have problems because China has depended too much on exports; also the internal situation at the moment is such that you have a polarization of population in terms of status (the hukou) and income, so the internal situation is not as equal or as desirable as when Deng Xiaoping took over; so you have two Chinas - rich, coastal China, with a lot of millionaires, a posh modern part of China, then you have inland China which is still struggling; if not as poor as Africa they are certainly not G7 equivalent though coastal China is close to that; inland China is between Africa and the Middle East, so there is a huge gap between social classes, and we don't have a clear idea of how such problems can be solved; so we do have fast growth but also it's down-side; do we call it success? in terms of total GDP, yes, but in terms of social justice and social welfare, there are a lot of losers which is not very desirable unfortunately

1:39:25:24 Thinking of how China will develop in the next ten years, this is a major challenge for the Government, the ruling party, and also the Paramount Leader Xi Jinping; China has two possible choices: the first is to keep going, the current investment-driven growth may well last for another ten years, then you will reach the upper limit with a disastrous outcome; for example, you will have a housing bubble, stock market bubble, probably problems with China's foreign exchange, foreign reserves, and also sustainability of employment; that route is so clearly laid out for the decision makers; will China go on all the way to that extreme? I would think, yes, there is a 50% chance that China will just blindly go on that way; another way is reform, to scale down China's exports and investments overseas, especially China's outbound investment, and try to make the economy more sustainable by restructuring it, closing a lot of the state-owned enterprises which are dinosaurs, very inefficient, and unfairly financed by the State - a lot of them should actually go bankrupt straight away - and to promote a green economy, for example, more environmentally friendly and sustainable, rather than producing more iron, more steel, more cement, more rolling-stock, more ocean tankers, burn more fossil fuels, all of which makes the whole ecosystem less sustainable; this way China will truly contribute both domestically and globally to humanity; China has a 50% chance to go that way in the next ten years; but this will undermine some power of the Party State because if you close down SOE's the ruling base of the Party will be weakened, and this is something the Party would not like to see; so there is a political price for China to take a more sensible, more environmentally friendly approach; I am hoping that China will do the latter, simply close all the inefficient, over-consuming sectors, stop Belt and Road, and turn inwards; for example, currently China exports 30% of GDP and 70% is geared towards export, which is too open; why does China have to do that? because the internal purchasing power of the public isn't big enough; why isn't is big enough? because China's total wage bill now counts for about 17% of it's GDP; in G7 countries that figure is 70%, so the gap is three-fold; this means that the Chinese middle-class and waged-workers are poorly paid; if we pay them better China's economy can depend on itself internally rather than exporting; so this requires a lot of changes as mentioned earlier, closing down a lot of companies which are exporting unnecessarily to the rest of the world and paying their workers and technicians badly; this will certainly be a challenge to the legitimacy and the resource and position of the Party, so this requires some political changes in the system, not just the exporting sector; so everything is linked up together unfortunately; there is no easy way out