GUANCHA.CN:

The data shows that last year, Russia achieved complete self-sufficiency in potatoes, and its self-sufficiency in meat and fish exceeded 100%. While these figures may seem ordinary, they carry significant meaning. Since the outbreak of the Russia-Ukraine conflict, Russia has faced comprehensive sanctions from the West. With that in mind, could you please explain how Russia has achieved food self-sufficiency since the beginning of the Russia-Ukraine conflict? What measures have been taken to reach this goal?

Dmitry Reva:

In addition to the food categories you mentioned, Russia has also achieved near-complete self-sufficiency in eggs, sugar, wheat, grains, and vegetables, while actively developing greenhouse-grown vegetables. Russia remains a global leader in the export of wheat, sunflower oil, and mineral fertilizers, which is crucial for ensuring global food security.
In terms of fertilizer production, Russia ranks second only to China, surpassing both the United States and India in recent years, with a continuous annual increase of 10%. As for meat and sugar, production has quadrupled in recent years. Russia now produces about 17 million tons of slaughtered live-weight meat annually, surpassing India and ranking fourth in the world.

Russian sugar production has a surplus in recent years. (Source: Czapp)

It’s important to note that in 1999, Russia’s production of slaughtered live-weight meat was only 4.3 million tons, with 70% of it being imported, primarily from the United States. That imported meat, known as “Bush legs,” was a direct consequence of the disintegration of the Soviet Union, the breakdown of Eastern European trade ties, and the overall economic collapse that followed.

In the 1990s, Russia’s economic contraction was even more severe than during World War II. After the ruble devaluation in 1998, agricultural production in Russia started to become profitable. With the sharp rise in oil prices at the beginning of the 21st century, Russia allocated part of its revenue to restore its agriculture. The government implemented measures such as import tariffs and import quotas (a trade restriction tool where a country sets a limit on the number of goods imported from a specific country during a certain period; once the limit is exceeded, companies in the importing country can no longer import that specific product). These measures, along with preferential financing and subsidies for target industries, helped stimulate the recovery of Russia’s agricultural sector.

The recent achievements can be attributed to the first national projects implemented in 2007 and beyond. In the meat industry alone, thousands of new enterprises were established, leading to the rise of powerful agricultural holding companies with hundreds of thousands of hectares of land and export volumes reaching billions of dollars.

After the Ukrainian crisis began in 2014, the conflict between Russia and the West became inevitable. Since then, Russia has actively pursued an import substitution policy in the food market, introducing new national support programs and measures. Over the course of eight years, Russia successfully achieved self-sufficiency in all basic food products.

Giant retailers in Russia

GUANCHA.CN:

Since the Russia-Ukraine conflict began, Western countries have accused Russia of threatening global food security. However, data shows that in the 2023/2024 season, Russia’s grain exports exceeded 89 million tons, a 21% increase compared to the previous year. Exports of wheat flour, oats, rye, buckwheat, sunflower meal, and mustard seeds also saw significant growth. What is your perspective on these Western accusations and the sanctions imposed on Russia?

Dmitry Reva:

There’s a well-known Russian proverb that says, “The one who shouts ‘stop thief’ the loudest is usually the thief.” If I remember correctly, China has a similar saying: “A thief crying to catch a thief.”
This perfectly illustrates the West’s behavior. Their media is filled with lies. We still remember how, in the early 1990s, the Soviet Union voluntarily withdrew its troops from Europe and was assured that NATO would not expand eastward. But what happened instead? Every former Warsaw Pact member has since joined NATO, and the Ukraine conflict is a direct consequence of this deception.

Over the past three years, Russia’s global grain exports have increased by 25%. Additionally, Russia’s mineral fertilizer exports have grown by 25%, making it the world’s largest fertilizer exporter, accounting for 25% of global fertilizer imports. These exports are shipped to numerous countries, including Brazil, India, and the United States.

Talking is one thing; doing business is another. The United States prioritizes sourcing from the most cost-effective suppliers, while only its European allies persist in upholding sanctions that are crippling their own economies.

Moreover, Russia is actively exporting not only raw materials but also value-added processed goods, such as meat, dairy products, and confectionery, with export volumes amounting to billions of dollars.
Clearly, the West has failed to study Russian history. When Russia is under threat, its people unite, work harder, and fight for their country, including competing in international markets.

Countries buying Russian and Ukrainian wheat in 2020 (Source: oec.world)

China-Russia Trade Cooperation to Counter the West’s Sanctions

GUANCHA.CN:

Currently, China is the largest importer of Russian agricultural products. In 2023, agricultural trade between Russia and China increased by 36%, surpassing $10 billion. Meanwhile, Russia’s agricultural exports to China grew by 52.6%, reaching $7.586 billion. In recent years, Chinese food consumption patterns have changed. Has there been a shift in the structure of Russian agricultural exports to China? What new market demands have emerged?

Dmitry Reva:

Yes, Russia’s export structure is gradually changing. Sweet exports have grown rapidly, and Russia has become China’s largest supplier of chocolate. Over 80 Russian companies now supply meat and by-products to China, and recently, Russia was authorized to export pork to China, with volumes steadily increasing.

You might be surprised to learn that Russia is China’s sole supplier of imported turkey, with an annual trade value of about $50 million. Russia is the leading turkey producer in Europe and the second-largest globally. Turkey meat is of excellent quality and a very healthy low-fat option, and we hope more Chinese consumers will come to appreciate it.

Fish exports are also steadily increasing. Russia exports nearly 1.5 million tons of fish to China, with a trade value exceeding $2 billion. These are all wild-caught fish from the ocean, not farmed ones. Notably, Kamchatka crab is considered one of the world’s finest delicacies.

In 2023, Russia sold the most aquatic products to China. (Source: General Administration of Customs of China)

Exports of traditional products such as soybeans, soybean oil, soybean meal, and flaxseed are also on the rise. All soybeans and wheat produced in Russia are non-GMO, which is a significant advantage. Unfortunately, not all Russian wheat is currently approved for export to China, but in this area, Russia has the full capacity to significantly increase supply and, if necessary, even replace Australia as a major supplier.

In addition, exports of ice cream, canned foods (such as pickles), honey, and cheese to China are also increasing, along with the growing supply of dairy products. Over the past 20 years, the rapid growth of dairy production and consumption in China has been nothing short of a miracle, with China developing globally renowned dairy brands. As a major global dairy producer, Russia also sees significant opportunities for collaboration in this sector, which holds great potential for further development.

GUANCHA.CN:

Currently, both Russia and China are facing an increasingly unfriendly market in the West. Europe has recently imposed tariffs on Chinese electric vehicles, prompting China to introduce countermeasures, including anti-dumping investigations into European pork and brandy. Will China’s demand for these agricultural products shift to the Russian market in the future? Or, in addressing Western sanctions, what areas of cooperation and mutual complementarity could Russia and China explore?

Dmitry Reva:

In niche markets such as the automotive sector, there is an excellent example of interaction between China and Russia. When all Western international manufacturers exited Russia, a gap emerged in the Russian market—an opportunity worth over $50 billion annually. Chinese truck and car manufacturers seized this opportunity, positioning themselves effectively. Together with Mexico, China has now become a global leader in automobile production.

Visitors look at a car from Chinese car brand Li Auto during the CarX exhibition forum in Moscow, Russia, on Oct. 10, 2023.

At the same time, all European car manufacturers are teetering on the brink of bankruptcy. After spending 30 years cultivating the Russian market and investing tens of billions of dollars in production and marketing, they surrendered all their achievements in just two years. This serves as an excellent example of Russia’s resilience in countering sanctions.

Now, let’s talk about pork. Russia is one of the countries with the lowest pork production costs in the world. If necessary, we could fully meet Europe’s demand for imported pork. Within three years, we could supply 1 million tons or more of pork annually.

We are fully capable of replacing Spain’s exports of 600,000 tons of pork to China (in 2023, Spain exported approximately 560,000 tons to China). However, at present, China may not be very interested in this option.

Currently, fewer than five Russian companies are authorized to export pork from Russia to China, as China is the world’s largest pork producer and aims to protect its domestic industry. However, Russian alcoholic beverages, particularly vodka, are of very high quality, and we will certainly work to supply them.

There are also great prospects for cooperation between Russia and China in areas like soybeans and corn. China has been purchasing large quantities of these crops from the United States, and in this context, a trade war is almost inevitable, as they will always find reasons for it. Therefore, we need to reach agreements in advance, with Russia to increase the acreage of these crops. However, this will take several years to implement, so we must start preparations now. Most importantly, logistics will be key. Fortunately, we don’t rely solely on maritime transport, as we share a common land border.

Russia has vast arable land, clean water resources, self-sufficient fertilizers, and powerful agricultural machinery (Rostselmash, a leading global agricultural machinery manufacturer). Additionally, Russia benefits from cheap energy, particularly natural gas. Here, we can identify areas of complementarity: we can prepare logistics channels in advance, expand logistics infrastructure, and support each other in international markets. We can discuss this in more detail later.

The Combine harvester manufactured by Rostselmash

The world is transitioning towards a multipolar structure, and the strategic partnership between China and Russia is one of mutual support. For victory, we must actively support each other and not wait to be defeated. In the 1930s and 1950s, the Soviet Union provided significant assistance to China—first in helping to fight Japan and later in aiding China’s industrialization by building factories, despite the Soviet Union itself having just come out of a tough war. Russians have always been willing to help others and never forget those who have supported them.

Broad Prospects for Far East Development and China-Russian Cooperation

GUANCHA.CN:

At the Eastern Economic Forum in September this year, Russian President Vladimir Putin emphasized the crucial role of the development of the Far East for Russia’s future, believing that its development will strengthen Russia’s global standing. From the perspective of agricultural development, what are the advantages and challenges of the Far East?

Dmitry Reva:

I also attended the plenary session of the Eastern Economic Forum. The Far East is Russia’s largest region, and its most important feature is its abundant resources. For example, in fish processing, we can build processing plants, develop aquaculture, and mariculture. The cold water here is a huge advantage, and places like Sakhalin Island, the Primorsky Krai, and Kamchatka are very suitable for fish farming. All we need to do is start investing and export the products to China. The Far East’s port infrastructure is well-developed, especially the gateway port of Vladivostok.

Agricultural land also urgently needs to be developed. For example, the Amur region, which serves as the granary of the Far East, has about 1.6 million hectares of available arable and fertile land, with three hydropower plants and a fourth under construction. The region benefits from cheap energy, fertile soil, and a favorable climate, and nearly 40% of Russia’s soybeans are produced here. It also has large processing capacities for turning soybeans into oil, and is home to leading food production companies, with their production facilities located just a few kilometers from China.

In terms of transportation, there is a bridge connecting Blagoveshchensk and Heihe, and the Primorsky Krai has good interaction in the agricultural sector. In the Transbaikal region, there is an excellent transit hub that can transfer millions of tons of agricultural products from central Russia. The area has some investments in logistics and the dairy industry, but there are no large dairy production enterprises locally.

Of course, the Far East region also has its shortcomings, such as labor shortages, harsh climate conditions, and underdeveloped infrastructure (though improvements are being made). Additionally, the region’s gasification is not yet complete. For example, we are currently looking for investors to establish a dairy farm in one area, with an annual production capacity of 25,000 to 30,000 tons of milk, and to set up a similar-scale farm in another region. We are prepared to sign contracts for at least 10 years to purchase all the milk produced at prices higher than the market rate.

In addition, there are state subsidies and the TOR (Territory of Advanced Development) preferential system, which provides certain advantages to businesses in the Far East, such as favorable tax conditions, simplified administrative procedures, and other privileges. For dairy farm construction, the Far East offers up to 50% rebate compensation, and in some areas, this figure can be even higher. For every liter of milk produced, a compensation of 8 rubles is offered, and for the first 10 years, there are virtually no taxes, along with preferential interest rates. The Far East faces a milk shortage of up to 500,000 tons, meaning that while this product is produced locally, much of the raw material still comes from imports.

There are no issues with sales, as all products will be purchased by the processing associations. We are also looking for investors to fund a poultry farm with a capacity of up to 20,000 tons. The Far East has a shortage of 200,000 tons of refrigerated poultry, and there is huge export potential (poultry farming has great room for development). Currently, the entire eastern part of Russia has only two poultry farms, which can meet less than 20% of the market demand. The remaining poultry demand has to be transported from the western part of Russia in frozen form, but what we need is fresh, refrigerated poultry.

Therefore, we are ready to sign 10-year contracts to purchase all of the above products. In addition to us, Russian chain stores like “Pyatyorochka” (part of X5 Group, the largest food retail company in Russia) are also preparing to do the same. They are equally troubled by the lack of refrigerated poultry and are ready to confirm the purchase of these products. Furthermore, the Far East also lacks greenhouse facilities, and there is considerable investment potential in this area as well. These are ready-to-go investment projects supported by governors and local governments.

Resource reserves in Russia’s Far East region (Source: GUANCHA.CN)

GUANCHA.CN:

But we also know that there are some stories circulating in both China and Russia about the “China threat” in the development of the Far East, such as concerns that Chinese immigration and technology could pose a threat to the region. Have you heard of these rumors? What is the real situation? What kind of cooperation can China and Russia have in the development of the Far East?

Dmitry Reva:

This is absolutely false. We are not concerned at all about the “threat” of investors or technology. On the contrary, we are eagerly awaiting Chinese investors to invest in ready-to-go projects that are highly profitable for them.

You are right. China has the technology and resources, including financial resources, while we have the demand and ready investment projects. I personally came to the Far East from southern Russia, but I have not seen any so-called threats.

The number of tourists traveling from Russia to China is also increasing. I believe that the people of Russia and China will always be brothers, and such rumors are baseless. However, so far, trade between Russia and China has been limited to Russia exporting raw materials (such as oil, natural gas, coal, gold, timber, fish, fertilizers, and agricultural products) to China, and Russia importing equipment, machinery, consumer goods, home appliances, etc., from China. The number of joint ventures, factories, farms, and IT projects between the two countries is still very small.

So, we are actually waiting for active investors and offering assistance in every possible way. The first investors to enter usually reap significant profits. For every project, the government almost always sends officials at the level of Deputy Prime Minister to act as guarantors.

GUANCHA.CN:

What are your ideas for the development of the Blagoveshchensk-Heihe border region?

Dmitry Reva:

Trade between Blagoveshchensk and Heihe is becoming increasingly active, with the flow of goods steadily rising. Russian companies have started leasing warehouse complexes in Heihe, including Ozon (Russia’s first e-commerce company and one of its top three e-commerce platforms). Agricultural trade is also developing rapidly, and tourism is booming. The world’s first cross-border cable car is under construction and is expected to be operational by 2025. By then, if you visit Heihe again, you can take the cable car to reach Russia, and vice versa. This experience will be truly unique in the world.

Before that, the first bridge between these two cities—and also the first bridge between China and Russia—was constructed. The banks of the Amur River (Heilong Jiang) also jointly host the “Taste Buds of the Banks” culinary cultural festival. The Amur Economic Forum, held every May, has officially become a sub-venue of the Eastern Economic Forum.

In my view, if the “Two Countries, One City” project becomes a reality, it will serve as a global model. When residents of these two cities can freely travel, shop, invest, dine, study, and seek medical care in both cities without needing a visa, it will undoubtedly become a benchmark for the entire world.

Development Plan of the Blagoveshchensk-Heihe border region (Image: Amur Region Agency for Investment Attraction)

Challenges and Future Prospects in China-Russia Agricultural Cooperation

GUANCHA.CN:

As far as I know, China and Russia have already embarked on very concrete agricultural cooperation efforts, such as exchanges of experts and techniques, joint breeding programs, and market research. Could you provide more details on these initiatives? What outcomes can we expect to see in the future?

Dmitry Reva:

Of course, both sides are actively studying each other’s markets. Additionally, several working groups have been established at regional and provincial levels to promote exports and expedite collaborative projects.
The Russian Federal Service for Veterinary and Phytosanitary Surveillance is closely working to inspect companies exporting to China, and customs authorities from both countries maintain open communication. Efforts are also being made to help Chinese entrepreneurs resolve import-export business issues more efficiently. The Russian Chamber of Commerce is performing well in facilitating these activities, while the Export Center and the border region governments are also cooperating smoothly.

I am unsure what the final outcomes will be, but I hope legislation can be coordinated more swiftly, aiming for the ideal scenario where both sides remove tariff barriers and significantly increase mutual economic investments. Of course, the primary challenge lies in payment issues, and the situation is worsening—trade volumes between the two countries have started to decline, for the U.S. secondary sanctions have scared Chinese banks, which fear repercussions, leading to problems with payment transfers in goods trade.

The common adversary has disrupted bilateral trade, but unfortunately, this is the current reality. We understand that China exports globally, and engaging in trade with Russia carries significant risks for them. However, we believe that if the Chinese business community advocates for solutions, the Chinese government will find a way to address this issue.

GUANCHA.CN:

How optimistic are you about China’s economic prospects?

Dmitry Reva:

Over the past 35 years, China has undergone tremendous changes, with its economy growing dozens of times over. In many industrial metrics, China has surpassed the United States. By purchasing power parity, China’s economy is the largest in the world, but in nominal terms, comparing a haircut priced at 40 yuan in China to one costing $1,000 in the U.S. is not an accurate comparison. Of course, China still needs to accelerate its development in areas such as semiconductors, chip manufacturing, civil aviation, and computer software.

And we, Russia, chose the path of “democracy and free markets,” rejecting planning and market regulation, believing in the deceptive narratives of the West about freedom of speech and other such ideals after 1990. The disastrous results were clear to us. Now, we are striving to restore and develop our economy, while they (the West) are trying to hinder us through wars and sanctions. Here, we have only one choice: either we achieve victory, or nuclear war erupts, leading to the end of human history.

So, China is walking on the right path.

The post “The West Ceded the Russian Market to China, We are Also Pleased to See” first appeared on China Academy.

Speaking of snooker, many people first became familiar with the sport because of Ding Junhui. Indeed, this sport might feel somewhat unfamiliar to most Chinese people.

Although as early as the 1980s, pool tables were already set up on Chinese streets for people’s entertainment, the image of shirtless men smoking cigarettes and casually playing pool is worlds apart from the refined gentlemanly air of snooker players in white shirts and black waistcoats. In snooker tournaments, every gesture exudes intelligence and skill, making it a true display of artistry and competition.

Just like this stark contrast, there is an unmissable place in the world of snooker today—Yushan County in Jiangxi Province, China. Yushan, a county under the jurisdiction of Shangrao City in Jiangxi Province, is also known as the “Billiards Capital of China” and the “World Famous City for Billiards.”

This small county not only produces 50,000 pool tables annually but also stands on par with major cities as one of the domestic venues for international snooker tournaments.

How has such a close connection been forged between a “gentleman’s sport” originating in the UK and a small county in Jiangxi, China?

From Sheffield to Yushan

In 2024, after a four-year hiatus, the Snooker World Open resumed in Yushan County, Jiangxi Province.

The changes in Yushan over the past few years have been remarkable: the arenas look more polished, the venues are well-organized, and fans and spectators can sit much closer to the action. The transformation is so significant that it’s almost hard to recognize the Yushan of today.

This year’s poster for the Snooker World Open in Yushan

World No. 1 snooker player, nicknamed “The Rocket,” Ronnie O’Sullivan, described Yushan with three consecutive “Greats.” O’Sullivan’s triple “great” was undoubtedly heartfelt.

For a player as seasoned as O’Sullivan, who has seen the biggest stages worldwide, his praise for Yushan is perhaps the best testament to the legitimacy of its title as the “World Famous City for Billiards.”

This year marks the fifth time Yushan has hosted the Snooker World Open. Before this small county in eastern Jiangxi, previous Chinese host cities for the World Open were metropolises like Beijing, Shanghai, Guangzhou, and Haikou.

In 2015, Yushan hosted its first-ever Chinese Pool World Championship, and in 2016, the Snooker World Open moved from major cities like Beijing, Shanghai, and Guangzhou to Yushan for the first time.

Suddenly, world-renowned players like Ding Junhui, Ali Carter, and Ronnie O’Sullivan flocked to this small town, putting Yushan on the map in the international billiards community.

When it comes to reputation, first-tier cities like Beijing, Shanghai, and Guangzhou have far more global prestige than this small county in Jiangxi. In terms of infrastructure and hospitality, Yushan lacked even a five-star hotel at the time, let alone an airport. Yet, this little-known county managed to host the Snooker World Open year after year.

So, what’s special about Yushan? There certainly is something. Although not widely recognized, Yushan already had significant weight in the billiards world before being discovered by international players and fans.

Yushan is the largest billiard table and slate production base in China. Each year, the county produces 50,000 billiard tables and 250,000 slates for tables, which are used in prestigious tournaments such as the UK Championship, the German Masters, and the Chinese Snooker Tour. These products are exported to over 70 countries and regions, including the UK and Italy, generating an annual output value of 1.5 billion yuan.

To put it simply, Yushan has essentially “taken over” the snooker industry, a gentleman’s sport originating in Britain. But Yushan hasn’t stopped at producing high-quality billiard tables and hosting top-tier tournaments. In 2019, the county built a sports arena specifically designed for billiards competitions.

This venue is far superior to the “old and small” venues in Europe that can only seat a few hundred spectators.

Yushan County Sports Center

That’s not all. Yushan also established an international billiards academy, which began enrolling students in 2021. Even Sheffield, the so-called “World Snooker Capital” in the UK, doesn’t have a specialized billiards academy like this.

In just over two years since its establishment, the academy has already produced students who have become professional players on the World Snooker Tour.

Data shows that Yushan, with a population of around 600,000, has over 70 billiards clubs in the urban area and more than 200 across the county. In comparison, Beijing and Shanghai—each with populations exceeding 20 million—have just over 2,000 registered billiards clubs.

In terms of the scale of its billiards industry, the level of tournaments it hosts, and its community enthusiasm for the sport, Yushan rivals even China’s top-tier cities. Clearly, Yushan’s focus is set squarely on the billiards industry.

From Bluestone to Billiard Tables

The close connection between a high-end European sport and a small, remote county in China actually began with a type of stone used for inkstones.

Yushan is known for its local specialty—bluestone. The county’s bluestone is not only of high quality but also has a resource reserve of over 3 billion cubic meters. As early as the Tang Dynasty, this stone was used to make inkstones called “Luowen Inkstones.”

In the 1970s, a local rural enterprise in Yushan began producing these inkstones. Since the stone was abundant, these inkstones were marketed as cheap and affordable.

Yushan bluestone

Fast forward to the 1980s, and billiard tables began appearing on city streets across China. Pool quickly became a trendy pastime for many young people.

However, at that time, high-end billiard tables in China were made with imported slate. The high price of these tables made them inaccessible for a sport that was growing in popularity on the streets.

In the early 1980s, a domestic company, Beijing Xingwei Sports, combined features of snooker and American pool to produce the first “Star” Chinese pool table. But to produce affordable billiard tables, finding high-quality yet low-cost slate was key.

In the 1990s, the company discovered Yushan’s bluestone. They found that the stone, previously used for inkstones, had excellent elasticity and water resistance, was moisture-proof and wear-resistant, and didn’t generate static electricity—making it a perfect substitute for expensive imported slate.

In 1996, Xingwei invested in a slate factory in Yushan’s Zhangcun town, exclusively for producing billiard table slates.

The same stone once used for inkstones began to be crafted into billiard tables in Xingwei’s workshop, forging Yushan’s connection to the billiards industry.

billiards on Chinese streets in the 1980s

If the story had continued along this path, it would have been a familiar tale: a remote area relying on resource exploitation to occupy the lowest rung of an industry’s value chain.

But Yushan didn’t stop there. Instead, it sought its own path toward development. By 2013, Star billiard tables had become the custom brand for international billiards tournaments. Meanwhile, the rise of players like Ding Junhui and Pan Xiaoting sparked a billiards craze in China.

Looking to expand production, Xingwei decided to establish a new base outside Beijing. Yushan’s unique resource advantages aligned perfectly with Xingwei’s needs. At the same time, Yushan saw the growing popularity of billiards in China as an opportunity.

By combining industry, branding, events, and cultural tourism, Yushan aimed to create a complete billiards ecosystem. The county set a goal to become the “Billiards Capital of China” and the “World Famous City for Billiards,” even adjusting its development plan to work with Xingwei in growing the billiards industry.

Bringing in industry was only the first step. Yushan then set its sights on hosting tournaments. But without fame or infrastructure, how could a small county compete with major cities like Beijing, Shanghai, or Guangzhou? The answer: sincerity.

They worked overtime to transform the county high school gymnasium into a competition venue, set up a reception station in Shanghai to escort players to Yushan by high-speed rail, and even brought in chefs from Beijing to compensate for the lack of five-star hotels.
In 2015, Yushan successfully hosted its first Chinese Pool World Championship.

Building on this momentum, the county secured the hosting rights for the Snooker World Open the following year, signing a four-year contract.

Riding the wave of these events, Yushan launched its international billiards cultural industry in 2017. A billiards industrial park, the Yushan Sports Center, the World Billiards Museum and Hall of Fame, and the International Billiards Training School all became part of the Yushan International Billiards Cultural Center. This is what prompted O’Sullivan’s triple “great.”

Today, Yushan has become a shining star in the billiards world, integrating billiards manufacturing, event hosting, and cultural tourism into one cohesive brand.

From the Billiards Industry to Billiards Culture

To put it bluntly, Yushan’s resources are not unique or irreplaceable.

However, by leveraging the growth of a single company and expanding from the small niche of slate production, Yushan has successfully drawn the billiards industry to its doorstep—and now aims to create its own billiards culture.

Let’s start with the industry. In 2012, the Snooker World Open was held in Haikou, China, for the first time, marking a shift in the global focus of billiards toward China.

In 2014 and 2015, Ding Junhui reached the world number one ranking twice, sparking a massive billiards craze across the country.

Data also supports this trend. In 2019, the billiards market in China reached a scale of 21.3 billion yuan. The downstream market for the billiards industry is even more impressive. According to the 2022 Billiards Consumption Report, the market for billiards halls in China was valued at 600–700 billion yuan in 2022.

Another rapidly growing market is billiards education. In 2023, the global market for billiards training services was worth approximately $208 million, and this figure is projected to grow to $287 million by 2030.

Recognizing these trends, Yushan signed a strategic partnership agreement with Xingpai Group in 2013, transferring all resources, including tournaments, to Yushan. The goal of this collaboration was to build a global billiards industry and cultural center by introducing top-tier tournaments.

Yushan Billiards Academy, where students practice their skills

Now let’s talk about creating billiards culture.

This sport, originating in Britain, has long been dominated by the West—even in the face of China, the largest market for its promotion. Take the World Snooker Championship, for example. It is snooker’s most prestigious event, in terms of influence, prize money, and professional rankings. However, the championship, which has been held in the Crucible Theatre in Sheffield, UK, for over 40 years, has never been hosted in China.

As early as 2012, during the World Championship, snooker legend Stephen Hendry predicted that moving the championship to China would be inevitable in the future. However, Barry Hearn, then-chairman of the World Snooker Association, firmly rejected the idea, declaring, “It won’t happen as long as I’m alive. Don’t even think about moving the World Championship elsewhere, especially to China.”

By the 2022 World Championship, several renowned players expressed their hope for the event to move out of the outdated and cramped Crucible Theatre. Ronnie O’Sullivan even specifically stated that only China could elevate the World Championship into a Grand Slam-level event comparable to tennis or golf.

But the possibility of hosting the championship in China remains slim. When asked why the World Championship couldn’t be held in China, Barry Hearn bluntly responded, “Because China can only create its own brands, not take over established ones like the World Championship or the Masters.”

On one hand, China has been investing heavily in promoting snooker, while on the other, Chinese players must travel thousands of miles to the UK to compete.

What feels even more unfair is that tournaments held in China are always overshadowed by the UK’s “Triple Crown,” regarded as second-tier competitions.

Top players appreciate China for the higher rewards and better treatment they receive, but the World Snooker Association’s reluctance to move the championship to China is rooted in a simple fear: while they want to profit from the Chinese market, they also worry that snooker might grow too large in China, causing them to lose control of the sport—just as they did with table tennis and badminton.

people watching billiards matches on large screens in the streets, showcasing Yushan’s strong billiards culture

Instead of waiting for the World Snooker Association to “show mercy,” China might as well focus on building its own snooker tournaments. The good news is that in the latest world rankings released on November 11, four Chinese snooker players are now in the top 16—a record high.

Yushan currently has over 200 youth billiards training bases and clubs, and 80% of its primary and secondary schools have billiards activity rooms. Students from Yushan’s Billiards Academy are already appearing on the list of professional players in the World Snooker Tour.

It is foreseeable that more Chinese players will make it into the world rankings, and the influence of Chinese snooker tournaments will continue to grow.

For Yushan to truly become the world’s billiards capital and a renowned billiards city, it’s likely just a matter of time.

The post A British Aristocratic Sport Becomes a Chinese County’s Pastime first appeared on China Academy.

Intrigued, I decided to watch it. This documentary series consists of 20 episodes, mainly focusing on major criminal cases that occurred in Sichuan Province around the early 2000s. It was indeed very realistic, even including direct footage of crime scenes and bodies.

Of note, while depicting the process of public security officers solving criminal cases, this documentary also reflects many aspects of China from 20 years ago, evoking memories of the past for me. I felt compelled to jot down some of my reflections.

The various details throughout the series gave me the impression that despite only 23 years passing since its release, China seems to have transitioned through an entire era. It’s astonishing how the China portrayed in the documentary feels like a completely different country from the China of today.

In the past, the population in counties and townships was thriving, filled with young people everywhere.

The documentary mentioned a series of cases of anesthesia robbery, which occurred in various towns. The robbers would specifically drug the hostesses in karaoke bars in these towns and proceed to rob them of cash, phones, gold necklaces, rings, and other valuables. It is noteworthy that these incidents took place in different towns within one county in Sichuan Province, showing the abundant population in each township, as evidenced by the existence of over 40 karaoke bars. Furthermore, these hostesses were quite young.

There was a criminal case in Yilong County, Sichuan Province, where a young unidentified female corpse was found in the mountains. The police deduced from her attire that she worked in the entertainment industry. Consequently, the police summoned over 150 nightclub owners in Yilong County to the police station for identification, but none of them recognized the woman.

The fact that a single county had over 150 entertainment venues reflects the prosperity of the population in the county and the resultant industrial distribution at that time. However, fast forward twenty years, due to declining birth rates and the continuous migration of people to large cities, the once bustling counties and townships are gradually becoming a thing of the past. Even when returning to one’s hometown now, finding young people in their twenties working in the county is not as easy as before, reflecting a significant aging population.

The impact of massive layoffs in the late 1990s on public security, as well as the rise of mobile internet, have transformed China.

Some of the masterminds behind crimes came from families affected by layoffs. In one case of anesthesia robbery, the main culprit was a woman who collaborated with her lover to drug and rob hostesses.

She had a husband who worked in a coke plant, while she worked in a silk factory. Their relationship was reportedly good before the large-scale layoffs in 1998. However, after her husband left the factory to start his own business and her factory went bankrupt, their relationship soured. Her husband started seeing escorts, and the woman blamed the escorts for ruining her family. Faced with financial difficulties, she resorted to crime with her lover.

Today, with the rise of new industries like food delivery, courier services, ride-hailing, and live streaming, finding employment is much easier than before, addressing basic survival needs.

In 2010, the Foxconn suicides made headlines across China. At the time, discussions among educated colleagues revolved around the limited options for these workers if they were not at Foxconn, as it was considered a relatively good factory.

Later, with the rise of mobile internet, new forms of employment emerged. Take the example of courier services: in 2010, the volume of courier services was 2.34 billion, while in 2023, it reached 132.07 billion, a staggering increase of five to six times. Even considering efficiency improvements, this growth has significantly expanded the scale of employment.

The State Post Bureau once stated that by the end of 2010, there were 542,000 employees in China’s express delivery industry, accounting for 0.2% of the total number of employees in the tertiary industry. The employment opportunities provided by the express delivery industry were already growing rapidly at that time. In 2010, the number of employees in the express delivery industry increased by as much as 35%, far exceeding the national employment growth rate of 1.5% that year.

In August 2024, CCTV News reported that China had 870,000 postal workers and 4.5 million couriers. Clearly, the addition of these 4.5 million couriers from 2010’s 542,000 employees has created approximately 4 million new job positions, a ninefold increase from the previous year.

As for food delivery riders and ride-hailing drivers, these job opportunities were virtually nonexistent a decade ago. In February 2023, the All-China Federation of Trade Unions released the results of the ninth national survey on the status of the workforce: there were around 402 million workers in the country, with a staggering 84 million engaged in new forms of employment (primarily truck drivers, ride-hailing drivers, couriers, food delivery personnel, mainly consisting of male adults), accounting for over one-fifth of the workforce.

I would like to express my viewpoint here. While we have always emphasized the importance of the manufacturing industry and its core role, the service industry represented by the mobile internet plays an irreplaceable role in driving employment. Over the past decade, with the continuous improvement of China’s manufacturing capabilities, the value added by the manufacturing industry has been steadily increasing. However, the overall number of employees in the manufacturing industry has been declining, and industrial robots are increasingly being applied in manufacturing.

The flourishing development of the mobile internet has brought about tens of millions of new forms of employment, playing a crucial role in changing the social landscape of China and reducing social crimes.

The Third Front Construction

Note:
The Third Front Construction was a Chinese government campaign to develop industrial and military facilities in the country’s interior.

In a case that occurred in Sichuan Province, featured in this documentary, the criminals, police officers, and civilians all speak Sichuanese dialect.

However, in a case that took place in Panzhihua, Sichuan, although most people still speak Sichuanese, many individuals who appear, including the female criminal and her husband, the deputy captain of the police station, and a female worker being interviewed, speak Mandarin.

Interestingly, a roadside individual entrepreneur (shown below) surprisingly speaks with a distinct Northeastern Chinese accent. Panzhihua is a newly built industrial city in western China, established during the Third Front construction of that era.

In the present day, a new round of Third Front construction is already underway, especially with the release of guidelines at the end of September for the orderly transfer of funds, technology, and labor-intensive industries from the eastern regions to the central and western regions. This has sparked significant discussions.

Compared to over 20 years ago, a notable difference lies in the rise of the Chuan-Chong region, which now boasts a more comprehensive industrial backup, proving the feasibility of industrial relocation.

Display Panels: BOE has factories in Mianyang, Chengdu, and Chongqing;
Automotive Industry: Apart from Geely’s Chengdu factory, Volvo’s Chengdu factory, and Changan Automobile in Chongqing, Chongqing’s Siles electric vehicles are on the rise;
Aerospace Industry: Chengdu Aircraft Industry Group has put into mass production the J-10 and J-20 fighter jets;
Battery Industry: CATL has a large power battery base in Yibin, Sichuan, while BYD has a large blade power battery base in Chongqing. Chongqing is also the initial launch site for BYD’s blade batteries;
Electronics Industry (Computers): Chongqing is one of the world’s largest laptop manufacturing centers. In 2023, Chongqing produced 70.63 million laptops, accounting for over 40% of global production (official sources from Chongqing claim it’s close to 50%, and I’ve checked global laptop shipments in 2023 were 167 million units);

Meanwhile, Chengdu stands as the global leader in Apple iPad manufacturing. In August 2023, the World Display Industry Conference held in Chengdu revealed that two-thirds of Apple’s iPads are manufactured in Chengdu. From January to July 2024, Sichuan Province ranked first in tablet computer exports nationwide;
Electronics Industry (Smartphones): Chongqing hosts factories for companies like OPPO and VIVO. In 2023, Chongqing produced 76.9364 million smartphones, with an 11.2% year-on-year growth. Sichuan also produces a large number of smartphones；
ICT Industry: Huawei has a research institute in Chengdu, serving as one of its major research centers in China. ZTE also has a research institute in Chengdu；
Military Aerospace Nuclear Weapons Industry: The Chuan-Chong region hosts numerous military factories, including the Xichang Satellite Launch Center.

Beyond industrial manufacturing, Chengdu ranks as the nation’s fourth-largest internet industry base, following Beijing, Shanghai, and Shenzhen. Major internet giants such as Tencent, ByteDance, Alibaba, and Baidu have research and development centers in Chengdu.

Overall, the central and western regions extend beyond the Chengdu-Chongqing area to include about twenty provinces and cities. Chengdu does not represent the entirety of Sichuan, and I believe the next wave of growth will come from further narrowing the development gap between regions.

After all, simply relocating high-income positions from coastal areas to inland regions can significantly elevate the national standard of living.

In conclusion, upon watching this documentary, one’s impression of China goes beyond the physical transformation of cities and infrastructure. The most profound change seems to be the increase in a sense of security.

Increased Sense of Security: The documentary gave me the impression that society back then was truly unsafe. Any case from that time, if brought to today, would still make headlines as a major incident. It could even lead to internet paralysis, and public opinion would never tolerate such a long time to solve cases. Nowadays, the speed of solving major cases is quite rapid.

Increased Economic Security: Being laid off 20 years ago made finding a job incredibly challenging. Today, as long as one is not too picky, it’s still possible to make a living by finding new forms of employment.

Another aspect not covered in the documentary is the increase in national defense psychological security. Back in the day, there was a feeling that fighting the United States was impossible. It was all about J-8 versus F-22, modern-day Sunburn missiles sinking American aircraft carriers, and such. Now, with early warning aircraft, J-20, J-16, anti-ship ballistic missiles, aircraft carriers, J-15 carrier-based aircraft, Type 055 destroyers, and more countering American carrier battle groups… one feels much more psychologically secure than before.

Of course, compared to 20 years ago, rural areas have visibly aged significantly, with fewer people around. The youthful scenes that were once common are no longer present, and I believe this is a major issue that needs attention. After all, the urban-rural gap, as well as the gap between cities, county towns, and rural areas, still exists and is not insignificant. If in the future, there are no people left in county towns or rural areas, how can development continue?

Some people say they miss the early 2000s, while others reminisce about the 80s and 90s, and there are even those who long for the time before the reform and opening up. I believe this nostalgia stems from dissatisfaction with the present, leading people to glorify the past and forget its hardships.

However, when comparing just 20 years ago to the present, the country was weaker, the people were poorer, security was lacking, finding a job was difficult, and even walking on the streets could result in being checked for residency permits. Having a child could lead to fines, dismissal, or even forced abortions. Personally, I would never want to go back to those times.

The post How China Became the Safest in the World in Just Two Decades？ first appeared on China Academy.

Daron Acemoglu, a highly prolific economist, just won the Nobel Prize, but this award seems to have revealed the ideological biases and non-scientific nature underlying the Nobel Prize in Economics.

The winners of the 2024 Nobel Prize in Economics, Daron Acemoglu is on the left.

Acemoglu and his collaborators argue that in their famous 2001 paper, the success of North American economies compared to Latin American ones stems from geographic factors, primarily malaria. They assert that the inhospitable environment in Latin America discouraged white colonizers from bringing their “superior” institutions, resulting in the failure of today’s Latin American countries. In contrast, the favorable geography of North America encouraged colonizers to transplant their institutions, leading to its development into a prosperous region.

We should consider how Indigenous peoples in the Americas view this issue. Today, in the vast populations of North America (the United States and Canada), there are very few Indigenous people, whether pure Indigenous or mixed with European ancestry. In contrast, in Central and South America (Latin America), Indigenous people of mixed European and Indigenous descent have historically made up a large part of the population. For example, in Mexico, mixed Indigenous and European ancestry individuals account for 93% of the total population.

Recent genetic mapping studies of Latin American populations reveal that the predominant mixed-race group, known as mestizos, primarily inherits its paternal genetic lineage from European men, while the maternal lineage mostly comes from Indigenous women.

This indicates that in Latin America, white colonizers not only settled but also extensively interbred with Indigenous women, leading to the replacement of Indigenous male genes. This form of genetic replacement raises questions about whether it is exploitative or inclusive. It can be seen as a cruel form of genocide. What’s more, North American colonizers were even more brutal, systematically exterminating Indigenous populations, resulting in the complete disappearance of Indigenous genes from today’s North American gene pool.

According to Jared Diamond’s “Guns, Germs, and Steel,” Indigenous populations were largely decimated due to their lack of immunity to the diseases brought by European colonizers. However, Indigenous women appeared to possess strong immunity, as they survived and their genes persisted. Furthermore, the mixed-race populations in Latin America seem to have immunity comparable to that of pure European settlers in North America. This raises questions about the genetic adaptability and resilience of Indigenous women, as well as the differing demographic impacts of colonization in these regions.

From the perspective of Indigenous peoples, isn’t the North American colonizers’ “zero tolerance” approach to Indigenous genes less “inclusive”? Could the colonizers’ acceptance of Indigenous women in Latin America indicate that they were less able to establish permanent roots there? Did the intermingling of Latin American colonizers with local Indigenous populations hinder their efforts to instill their home country’s “superior” systems in the Americas?

A colored engraving from 1899 depicting American cavalry pursuing Native Americans.

It’s no surprise that Deirdre N. McCloskey, a prominent American economic historian, commented on Daron Acemoglu’s series of articles by saying:

Acemoglu in short has gotten the story embarrassingly wrong in every important fact.

The significance of the Chinese economic model and the value of New Structural Economics have been seriously underestimated.

After years of rapid growth, China has achieved remarkable success without adopting the colonial models of Europe and Japan, yet this is still severely underestimated by Acemoglu’s New Institutional Economics. I believe that apart from some exceptional elites and politicians in the U.S., the entire West significantly underestimates the significance and value of China’s economic model. Only with the passage of time will the world fully grasp the extent of this underestimation.

I believe that the contributions of Professor Lin Yifu and the ideas of New Structural Economics are still severely underestimated in the global economic community, including among Chinese economists. However, the academic value of Western Economics, especially Daron Acemoglu’s New Institutional Economics, is significantly overestimated in the field of economics.

John Dunn, a renowned historian and political scientist from Cambridge University, once stated:

“In my view, the belief that the economic prosperity of Western countries stems from a particular political system is wrong.”

Lin Yifu is one of the early Chinese economists to criticize the views of Daron Acemoglu and his collaborators after their 2001 article and the book “Why Nations Fail.” I have also long criticized New Institutional Economics.

Lin Yifu was born in Taiwan in 1952 and served as a captain in the army under the island’s authority. In 1979, he swam across the Taiwan Strait to join mainland China, where he later became a renowned economist and established New Structural Economics.

The main issue with New Institutional Economics is its misinterpretation of history, as it distorts the causal link between institutions and economic development in the context of European industrialization. This theory wields considerable influence in China, largely because many Chinese economists overlook the industrial history of the West. Western historians, when forced to engage with Acemoglu’s arguments, would likely contend that he has misunderstood historical narratives. However, the Western economic community now almost unanimously praises Daron Acemoglu, as many economists have stopped studying history, particularly the history of Western industrialization, leading to this issue.

For the same reasons, the market reforms in the former Soviet Union failed under the guidance of top American economists, as these economists lacked an understanding of how Western capitalist market economies evolved under the dominance of state power. Lin Yifu pointed out:

“Prominent economists involved in the reforms of the former Soviet Union and Eastern Europe, such as Jeffry Sachs, Stanley Fisher, Oliver Blanchard, Andrei Shleifer, Robert Vishny, Rudiger Dornbusch, Paul Krugman, Richard Layard, and Lawrence Summers, all professors from Harvard and MIT, are considered masters who developed many cutting-edge theories. But why were they unable to predict or explain the challenges of implementing ‘shock therapy’? And why did they have a dim view of China’s economic transformation?”

These masters, including Acemoglu, have significant blind spots and misconceptions about how industrial economies operate in the real world, yet they are idolized by Chinese academic community. Lin Yifu also pointed out:

“Beyond these economists’ insufficient understanding of the history of former socialist countries, the causes of planned economies, and the essential issues of economic system transformation, there are also inherent flaws in Neoclassical Economics when analyzing transformation issues.”

Lin Yifu was the first to identify the inherent flaws in Neoclassical Economics. His background as a Chicago-trained economist demonstrates that he truly possessed a critical spirit during his studies of Western economics.

From Lin Yifu’s books and articles, I have summarized the following three questions:

First, why are the countries that successfully transitioned from developing to developed status, such as the Four Asian Tigers, including Taiwan, Singapore, and South Korea, which were once in a period of rapid growth, long been criticized by the West for allegedly breaching market economic rules?

Second, why did those countries recognized as “model students” of market economy by international organizations fail? Examples include Ukraine, Yugoslavia, and Russia, along with many countries in Latin America and Africa.

Third, why has China, which has faced daily criticism from mainstream economists since the beginning of its Reform and Opening-up, achieved such tremendous success?

So far, have any prominent economists attempted to address these questions? Few have focused their efforts here, but I believe these are the types of questions that truly deserve a Nobel Prize.

Acemoglu and his collaborators excel in mathematical and econometric techniques, but they lack major original ideas. Much of their valuable content has already been articulated by predecessors, including Douglass North and Karl Marx. For instance, Marx highlighted the crucial role of the bourgeoisie’s rise in the West’s development into an industrialized nation, suggesting that the West’s acceptance of the bourgeoisie was key to its success:

“The discovery of gold and silver in America, the extirpation, enslavement, and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production.”

“The barbarities and desperate outrages of the so-called Christian race, throughout every region of the world, and upon every people they have been able to subdue, are not to be paralleled by those of any other race, however fierce, however untaught, and however reckless of mercy and of shame, in any age of the earth.”

American historian Stephen Brown once said:

“From the early 1600s to the late 1800s, militarized monopoly trading companies served as the vanguard and tools of European colonial expansion. They occupied and controlled vast lands and local populations. Behind their commercial success and enormous profits lay various state military and governmental functions and powers. Granting these merchants and companies monopoly control over colonial trade, including military authority, was a cost-effective way to cover the astronomical deficits from colonial ventures and wars.”

However, where Acemoglu attempts to innovate is, as McCloskey points out, filled with errors and misinterpretations of history. Why does the mainstream economics community idolize Acemoglu? Because they do not study Western history, especially the history of modern industrialization. Instead, they simply follow Western economic textbooks and media narratives, which is a significant problem.

The Industrial Revolution in Britain was not due to any outstanding political system.

Acemoglu argues that the British Empire’s economic prosperity stemmed from its establishment of superior political institutions. However, Harvard historian Sven Beckert counters this claim by stating:

“The first industrial nation, Great Britain, was hardly a liberal, lean state with dependable but impartial institutions as it is often portrayed. Instead it was an imperial nation characterized by enormous military expenditures, a nearly constant state of war, a powerful and interventionist bureaucracy, high taxes, skyrocketing government debt, and protectionist tariffs—and it was certainly not democratic.”

The idea that inclusive democratic institutions foster economic prosperity is not something Adam Smith emphasized; it was actually proposed by American scholars after World War II to mislead other nations.

Smith’s concepts of the “invisible hand” and “free trade” were not the reasons behind Britain’s Industrial Revolution. Instead, these were used by the British Empire, which rose to prominence through protectionist trade policies and industrial strategies after supplanting the Netherlands as a manufacturing leader, to deceive less developed countries. The U.S. and Germany were not fooled at that time (as seen in Hamilton’s American manufacturing plan). Although Britain led the way in the Industrial Revolution, it was far from being a free, democratic, or rule-of-law state.

The arguments of renowned American economic historian Joel Mokyr also support this point:

“During the early stages of the Industrial Revolution, British society had little legal order to protect industrial property and human rights. It was rife with theft, robbery, and local uprisings fueled by economic or political grievances… Britain lacked professional police forces until established in 1830, and the court system was cumbersome, expensive, and fraught with uncertainty and injustice. With no official law enforcement mechanisms, the country relied on the deterrent effects of brutal private punishment to maintain order. Over 80% of criminal penalties were executed by the victims themselves.”

A painting depicting gang violence in 19th-century Britain.

Britain initiated its industrialization under such a poor institutional framework, rather than the ideal inclusive system described by Acemoglu in “Why Nations Fail.” Therefore, it is essential to study the real history of Western industrialization, rather than the imagined and portrayed “history” by textbook economists like Acemoglu.

Economics should not only be used to explain the world but also to change it.

The British economist Ronald Coase made an important statement before passing:

“If Chinese economists avoid rigid, preconceived methods in studying economic theory and the practices of market economy in China, they will have a unique opportunity to contribute to the development of economic theory. This task and challenge have become more pressing since the 2008 financial crisis and global economic downturn, to the extent that the next Adam Smith may very well be a Chinese person.”

Lin Yifu has had debates with some prominent liberal economists in China, such as Professors Yang Xiaokai and Zhang Weiying. Lin’s views appear to be more robust in today’s context despite sharp contrast with theirs.

For instance, Yang Xiaokai emphasizes the disadvantages of late development. He argues that developing countries, due to their late start, often need to imitate the West—both in terms of institutions and technology. While technological imitation is relatively easier, institutional imitation poses greater challenges. Consequently, these countries may prioritize technological imitation, which can yield short-term gains but may create long-term vulnerabilities, potentially jeopardizing sustained development. This concept reflects the notion of “latecomer disadvantage.”

In contrast, Professor Lin emphasizes the advantages of late development. He believes that developing countries can leverage their income levels, technological gaps, and industrial structures compared to developed nations. By capitalizing on these technological differences and their comparative advantages, they can accelerate economic growth and technological transformation through participation in the global market and the attraction of foreign investment. This process can, in turn, drive the endogenous development of institutions and management practices that are suitable for the specific conditions of latecomer countries, leading to faster economic progress.

Professor Yang argues that Britain’s success was rooted in the success of its constitutional systems. He points to Japan’s rise as an industrial power through its earnest adoption of capitalist institutions, suggesting that for China to leverage its latecomer advantage, it should promote “institutional development.” Implicitly, this means that developing countries should replicate Western political systems to unlock economic prosperity.

I have just cited numerous historians who argue that Britain did not initiate the Industrial Revolution due to its political system, strong rule of law, or property rights protection. Instead, it was the factors identified by Marx —often overlooked—that gave rise to an economic miracle.

What have we overlooked? The renowned German economist Friedrich List, who extensively studied the secrets of Britain’s industrialization in the nineteenth century, believed that the key to Britain’s rise lay in the industrial policies that it had long formulated and implemented:

“Some believe that Britain’s remarkable rise and continual progress are fundamentally due to the constitutional freedoms enjoyed by its people. However, they might consider how Henry VIII and Elizabeth treated their parliaments. Under the Tudor monarchy, where was Britain’s constitutional freedom? At that time, various cities in Germany and Italy enjoyed far more personal liberties than England.”

“The commercial treaties signed by the British are always oriented towards expanding the market for their industrial products in all countries with which they have treaty relations, while superficially offering benefits in agricultural products and raw materials. What they seek in these countries is to destroy local industries through cheap goods and long-term loans.”

“Once Britain has mastered any industrial sector, it perseveres in nurturing it for centuries like a tender seedling, and then opens its national gate to crush its competitors.”

Lin Yifu argues that institutions are endogenous, meaning that countries must create them based on their historical traditions, economic development levels, and social conditions. He also emphasizes the importance of industrial policy, stating that no developed country has achieved success without relying on it, even though not all industrial policies are correct.

Even though China’s practice has already demonstrated that Lin Yifu’s views are more accurate, he remains a minority voice in the academic community. Despite the widespread promotion of New Structural Economics, he is still seen as a minority figure. The economic community continues to underestimate Lin’s theories, just as the world, especially the West, underestimates China’s economic model.

Lin Yifu often quotes a saying from Marx:

“The philosophers have only interpreted the world in various ways, the point however is to change it.”

This quote was inscribed on Marx’s headstone.

His New Structural Economics is essentially “Economic Engineering”—a discipline that can only be learned through practical experience.

He believes that a good economic theory should not only offer a different way to explain the world but, more importantly, possess the capacity to transform it. The reason so many leaders from African countries seek advice from Lin Yifu instead of others is that they recognize his theories on industrial policy can help them alleviate poverty, while the Washington Consensus and Western liberal economics have failed to lift them out of it.

The New Institutional Economics of Acemoglu and the Neoliberalism of Friedman both offer alternative explanations of the world. However, Lin Yifu argues that while their theories may appear logically consistent and can be formulated into mathematical models, they lack the ability to change the world. When imposed on developing countries, these theories often lead to developmental failures and stagnation.

The post The Nobel Prize’s Undermining Its Own Value for Underestimating China first appeared on China Academy.

After 14 years of competition between China and South Korea, a historic moment has finally arrived. China’s shipbuilding industry is now surpassing South Korea.

From the era of “Three Kingdoms” to the “Dual Dragon Summit”

The global shipbuilding industry has undergone a century of turbulence. In the 1960s, Japan challenged the century-long dominance of Europe and the United States, at one point holding half of the global market share. By the 1980s, South Korea and China began to catch up, marking the start of the “Three Kingdoms” era in global shipbuilding.

In 2000, South Korea officially surpassed Japan with a 40% market share, claiming the top spot globally. China, at that time, only held a modest 4% market share. Over the following decade, the dynamics among the three nations shifted. China surpassed South Korea for the first time, Japan declined, and the “Three Kingdoms” era transformed into the “Dual Dragon Summit.”

Changes in Global Shipbuilding Market Share

The year 2010 was a crucial turning point for China’s shipbuilding industry, signaling its entry into the ranks of top global players. However, China’s position as “global number one” was not yet secure. Over the next decade, China and South Korea engaged in numerous battles, with victories and defeats on both sides. It was not until 2021 that China truly surpassed South Korea. In the following years, China further widened the gap with South Korea.

Shipbuilding is assessed by three key indicators: completed tonnage, order backlog, and new orders, which collectively measure a country’s shipbuilding capabilities from the past, present, and future. The Ministry of Industry and Information Technology’s data for China’s shipbuilding industry in the first three quarters of 2024 show that China leads globally in all three indicators, accounting for 55.1%, 61.4%, and 74.7% of the global total in terms of tonnage, order backlog, and new orders, respectively.

New order volume is crucial for the future and is considered a key indicator of the shipbuilding industry’s direction, marking the focal point of intense competition between China and South Korea. In the first three quarters of this year, China held the top position for seven months, while South Korea led for two months. A highlight was the fierce competition in July and September. In July, South Korea secured 40% of the orders, taking the lead. However, in September, China made a strong comeback, reclaiming the top spot with an impressive 90% market share.

The competition is intense. In terms of ship types, South Korea leads in LNG transport ships, while in container transport ships, China and South Korea stand side by side. In the tanker sector, China has surpassed South Korea. Although China has surpassed South Korea in terms of volume, it has yet to establish an absolute advantage in the industry.

From chasing to leading

So why do we say that China’s shipbuilding industry has started to crush South Korea? It’s because China has found a new track – green ships.

Green ships, also known as low-carbon ships, refer to vessels that reduce pollution and greenhouse gas emissions. There are two directions for greening ships: One is optimizing ship propulsion systems, adding new technologies such as desulfurization systems, and the other is using green new fuels as ship power. Using new fuels is the most direct and effective way for the shipping industry to reduce carbon emissions and has become the mainstream for the future.

New fuels for ships include liquefied natural gas (LNG), liquefied petroleum gas (LPG), biofuels, methanol fuel, ammonia fuel, and more. Taking LNG as an example, compared to the heavy oil fuel traditionally used by large vessels, it can reduce nitrogen oxide emissions by 85%, carbon dioxide emissions by 20%, and sulfur and particulate emissions by 100%. In the field of green ships, China is outperforming South Korea.

Firstly, in terms of market share. Clarkson’s data shows that China has taken on over 70% of global green ship orders. In contrast, South Korea has only secured 22% of orders. Secondly, in full coverage. Various types of ships such as LNG dual-fuel, methanol dual-fuel, ammonia dual-fuel ships, battery hybrid power, and more have achieved full coverage of mainstream ship types and new fuels. In contrast, South Korea’s orders are all for LNG dual-fuel ships.Thirdly, in technical strength. China has achieved several global firsts or largest in green ship manufacturing, such as:

The world’s first VLCC (Very Large Crude Carrier) powered by LNG
The world’s first ammonia-powered ship
The world’s largest and most environmentally friendly dual-fuel car carrier
The world’s largest 700 TEU (Twenty-foot Equivalent Unit) pure electric container ship launched

The world’s largest and most environmentally friendly dual-fuel-powered car transport ship.

In comparison, in the green ship race, China has a larger market share, more types, and stronger technology than South Korea, showing a trend of dominance. If in LNG carriers and container ships, China is catching up, then in the field of green ships, China is leading.

Moreover, the advantage in green low-carbon technology will help China achieve “overtaking on a curve” in other types of vessels. Maritime transport accounts for 90% of global trade transportation, and the environmental pollution issues it brings have received high attention from the international community.

In July last year, the International Maritime Organization adopted a new strategy for reducing greenhouse gas emissions from ships, proposing a vision to achieve net-zero greenhouse gas emissions from international shipping around 2050. In recent years, the proportion of green ships in new ship orders has been steadily increasing, from 8.2% in 2016 to 41% this year. Experts predict that by 2035, ships will achieve 100% greenization. The power revolution triggered by green and low-carbon technology will reshape the global shipbuilding industry landscape.

China has taken the lead in green ship technology and will inevitably spread throughout the entire shipbuilding industry, ultimately overshadowing South Korea.

Riding the tide to move forward

In May of this year, a South Korean industrial research institution released a report stating, ‘China’s comprehensive competitiveness in the shipbuilding industry surpassed South Korea for the first time last year.’ Where does the comprehensive competitiveness of our shipbuilding industry come from?

Recently, I saw a piece of news that the first domestically-built large cruise ship, the ‘Aida Modu,’ has completed 64 voyages and carried over 250,000 passengers since its maiden voyage on New Year’s Day this year.

Domestic Large Cruise Ship “Aida Mordor”

The localization of cruise ships is a microcosm of technological breakthroughs in China’s shipbuilding industry and one of the core competitive advantages of our shipbuilding industry. In addition to technology, let’s consider a few more dimensions of observation.

Firstly, economies of scale advantage. China has the world’s largest shipbuilding capacity, and this scale advantage brings cost advantages. Data shows that Chinese shipbuilding prices are about 10% to 15% cheaper than South Korean shipbuilding prices. In September of this year, China Shipbuilding Industry Corporation and China State Shipbuilding Corporation announced their merger, further amplifying the economies of scale advantage. Jingjiang City in Taizhou, Jiangsu Province, is the largest private shipbuilding base in the country, accounting for 10% of the global shipbuilding completion volume. Looking at the county level to represent the whole country, the vast scale of China’s shipbuilding industry is evident.

Secondly, abundant labor force. Shipbuilding is a complex and comprehensive industry, requiring a high level of capital, technology, and labor intensity. South Korea faces a relative shortage of labor. In order to alleviate the labor pressure on shipbuilding companies, the South Korean Ministry of Trade, Industry, and Energy, in conjunction with the Ministry of Justice, opened a ‘green channel’ in 2023, allowing South Korean shipbuilding companies to increase the proportion of foreign labor from 20% to 30%. In addition, frequent strikes and labor disputes have also affected the production efficiency of South Korean shipbuilding companies and increased operating costs. Comparatively, Chinese shipbuilding companies face much less pressure in terms of labor.

Thirdly, strong demand. According to Clarkson data, in August 2023, China surpassed Greece to become the world’s largest ship-owning country in terms of total tonnage, with a fleet size of 249.2 million total tons and a fleet value of $180 billion. The large number of ships in China’s fleet helps to absorb domestic shipbuilding capacity.South Korea’s fleet size is only 60 million total tons, which has a smaller impact on domestic shipbuilding demand.

From a higher perspective, China is the world’s largest manufacturing country, driving significant export demand, leading to China becoming the world’s largest trading country, which in turn fuels substantial maritime demand, contributing to China becoming the world’s largest ship-owning country and leading to significant shipbuilding demand, ultimately establishing China as the world’s largest shipbuilding country.

It can be seen that the industrial chain of China’s manufacturing-foreign trade-shipping-shipbuilding has already taken shape. Leveraging scale to drive scale, achieving the greatest with the largest.

China’s shipbuilding industry is riding the tide to move forward, starting to outperform South Korea.”

The post China’s Shipbuilding Empire Conquers the Globe first appeared on China Academy.

Wenhua Zongheng: Your previously published book “Immersed in the Matter” provides a detailed and insightful analysis of the role played by the Chinese government (especially local governments) in economic development over the past few decades and the resulting impact. It tells a unique story that diverges significantly from mainstream economics. Why does the entire framework of this book differ so greatly from that of mainstream economics?

Lanxiaohuan: This is quite natural. If you spend more time in China, you will realize that it is different from the United States. Whether you are studying economics, politics, or society, as long as you don’t stick to textbooks and have a bit of common sense, you will understand that China can never become the United States; their genes are just not the same species. You are an eagle, I am a tiger, each with its own strengths and weaknesses, but I can never become you, as we each have completely different ways.

I established this framework quite early. In 2017 and 2018, I traveled around various regions in China for two years, providing consultancy services to local governments for investment promotion. Our task was to attract large enterprises to Hubei Province through equity investment. Due to the substantial investment amount, I had the opportunity to meet many top investors, entrepreneurs, and work on significant projects. I also had deep interactions with local governments and various departments. These two years brought about a profound change in my perspectives. Previously, as a researcher, you might only get superficial information from various departments, but being on the client side is entirely different. You need to conduct thorough due diligence, have in-depth discussions with people from different departments, and deal with real and valuable information. In the end, you will understand how things are really done.

Essentially, the worldview presented in this book was shaped during these two years. While the content remains quite academic, the perspective has moved away from the Western economic view. Later, when designing a course at Fudan University, I wanted to share with senior students what the outside world is like. After teaching for two years, the pandemic hit, prompting me to write this book.

The most important aspect of this book is changing the perspective on how we view the world. You will come to realize that there is more than one way to do things. The Chinese government deeply involves itself in the economy. Although the Chinese government strongly supports enterprises and exhibits some commercial characteristics, fundamentally it is not a business entity but deeply involved in economic activities. This approach has proven successful as evidenced by the economic growth. If you travel around the world, you will discover that this is an economic miracle.

Wenhua Zongheng: “Immersed in the Matter” actually discusses some successful aspects of Chinese government involvement and promotion of economic development over the past few decades, such as land finance, land revenue, and the competition among local governments for investment attraction. However, in recent years, with changes in domestic and international conditions, including the observed slowing down of China’s economic growth, many people feel that the previous methods of driving economic growth through exports, urbanization, and infrastructure investments may have reached their limits. Therefore, there is a consensus forming that China’s economy needs to undergo a transformation and upgrade, focusing more on domestic demand and innovation to sustain growth. This may imply a necessary transformation in the ways local governments participate in economic development. Therefore, how should governments at different levels adjust their roles in economic development in the future, what challenges might they encounter during this adjustment process, and what issues need to be addressed?

Lanxiaohuan: The term “transformation” is actually a result seen in hindsight, but in reality, the world is a continuous process. In reality, those who are involved in practical operations certainly prefer to keep doing what they used to do, but it’s becoming increasingly difficult now. For example, the methods like land finance and various urban investment companies used to work smoothly before, with established frameworks and business models in place. However, it’s now suddenly discovered that this model is no longer viable. Yet, those directly involved in practical operations cannot suddenly change; they can only explore within the existing framework. This is what we refer to as the process of transformation. Perhaps in 10 or 20 years, people will realize that around 2015-2016, there was a transformation in the Chinese economy. But today, it continues to rely on past practices, although everyone is well aware that it’s challenging to move forward. This issue is not just a concern for local governments; it also pertains to the real estate industry that these practices rely on, which may no longer be sustainable. Therefore, everyone is currently exploring new directions.

In abstract terms, expanding domestic demand and technological progress cannot be achieved simply by switching gears. Ultimately, expanding domestic demand boils down to the issue of increasing the income of ordinary people. This is not something that can be achieved by implementing a single policy; it involves changes in the entire economic structure, distribution methods, and so on. The government may be more concerned with how to increase the income of individuals earning around twenty to thirty thousand a year, which is the lower-income group, to reach fifty to sixty thousand, rather than focusing on raising the income of those already earning over a hundred thousand. Different policy approaches are needed for the bottom 50%, the middle 40% of the middle class, and the top 10%.

For most people, it’s still a matter of increasing income. It may also involve how people in smaller areas in the northwest and northeast can increase their income. Without a source of growth, no matter what one does in those areas, income will not increase. People can only seek opportunities in big cities like Beijing and Shanghai or provincial capitals to potentially increase their income. However, this mobility involves various policies, at least the household registration system needs reform, and various social security measures such as the five social insurances and one housing fund must be in place. Additionally, the hometown should not be too destitute; if it collapses, what will happen to the elderly parents who remain there? Currently, the policy is a dual approach: on one hand, promoting various household registration reforms, with many provincial capitals having a zero threshold since 2020, removing previous restrictions based on education and points-based household registration. For instance, cities like Nanchang and Jinan have almost zero thresholds, except for some very large cities that still have restrictions. On the other hand, developing backward regions, revitalizing rural areas, improving the quality of life for those unable to leave, and allowing those who wish to migrate to do so with peace of mind. The outcomes of these efforts remain unknown, but I believe the direction is on the right track.

In the process of transformation, it’s crucial to avoid a sudden collapse of the old model and refrain from radical reforms, as this could lead to risks of debt defaults. Some local governments are facing financial difficulties during this transition. How can this be addressed? Of course, the central government provides support, but local governments also need to leverage their own assets. For example, while land finance and land finance are no longer as feasible, besides land, local governments also have state-owned enterprises (SOEs), and SOE reforms have been progressing rapidly in recent years. In the past, land was the most convenient asset to use since it required little technical expertise and served as excellent collateral for loans. On the other hand, managing SOEs posed more challenges, involving specific operational issues and complexities. Consequently, substantive progress in SOE reform was relatively slow for many years. However, in recent years, progress has been accelerating. The overarching goal is to improve SOE efficiency, divest non-performing assets, and transform previously stagnant assets into liquid and standardized forms for greater mobility.

Yellow pylons work at a construction site in China.

Various initiatives have been undertaken in recent years, such as establishing alternative platforms between the State-Owned Assets Supervision and Administration Commission (SASAC) and SOEs, such as state-owned capital investment platforms and state-owned capital operation platforms. Previously, SASAC directly managed SOEs, but now it oversees these platforms, allowing for more modern governance through board structures. However, the success of these endeavors and their effects will likely vary significantly across regions. There have also been numerous mergers and reorganizations among provincial state-owned enterprises. In the past few years, many regions have consolidated and restructured their urban investment platforms. Previously, to borrow more funds, a region might have multiple urban investment platforms simultaneously: one for infrastructure investment, one for transportation, one for industrial parks and real estate development, and another for cultural tourism. Now, these are being merged into larger entities to leverage the strengths of the successful platforms to support the less successful ones. With increased asset scale, more substantial funds can be mobilized. In summary, everyone is gradually exploring new paths, with different regions adopting varying approaches, and central SOEs and local state-owned enterprises pursuing distinct strategies.

Currently, those studying SOEs are questioning whether SASAC is undergoing self-reform. Previously, there was a group overseeing each SOE, with SASAC managing the group and the group overseeing the subsidiaries. The goal of current SOE reforms is to restructure these group-like entities into capital operation platforms (state-owned capital investment platforms and state-owned capital operation platforms), with SASAC evaluating these platforms rather than directly managing and assessing the SOEs themselves. However, the timing of implementation and effectiveness of these reforms remain to be seen. Running an enterprise is a highly complex endeavor, and I believe that results may not be visible within just one or two years. While there have been some cases in recent years, the overall progress will likely require a lengthy process, as it fundamentally involves the nature of public capital within the country. This is a significant issue, and the SOE reform attempts mentioned earlier indicate that the country is beginning to address this matter, but progress will only be visible step by step.

Wenhua Zongheng: Could you please elaborate on the issue of how public capital should exist in our country?

Lan Xiaohuan: When it comes to public capital, it’s not necessary to calculate its proportion in the entire national economy. Of course, we can calculate the percentage of public capital in all enterprises. However, this calculation seriously underestimates public capital. After abstracting away specific manifestations, there are four production factors in economics: land, labor (people), capital, and data. Looking at our country’s situation, mines and land are publicly owned; the capital market and a significant portion of the financial system are controlled by the Ministry of Finance. In China, it’s challenging to separate finance from the government, unlike in Europe and the United States. While people are not publicly owned, the four major conditions that enable people to become production factors—housing, education, healthcare, and retirement—are closely related to state ownership. Education, healthcare, and retirement are mainly provided by public institutions, not to mention that land is also state-owned in terms of housing. In other words, a thorough economic analysis should not only focus on the amount of capital but also consider the attributes and operating methods behind each production factor.

Data is the most crucial production resource for the future. China may become the “Saudi Arabia” of the data realm because in future technologies, data is the fundamental input. Major platforms treat data as private property in a disconnected state, but sooner or later, this isolation will end. Our data will eventually be interconnected because true scale and network effects only arise when data is interconnected. Over the past two years, we have seen strong regulatory measures on internet platforms, with a significant portion related to data security and monopolies.

How we view our socialist economic system with Chinese characteristics partly depends on how the world will change in the future. What is crystal clear now is that the ideology of capitalism and free markets that prevailed over the past 40 years has lost its allure. Even the United States has had many reflections. However, the future form will depend entirely on how future productivity develops. This wave of productivity improvement and technological progress will likely replace many people entirely, and the ultimate economic challenge may be a distribution issue: many people may not have jobs and will rely on the government for a universal basic income. This future may arrive sooner than we imagine. Concepts like universal basic income, which seemed implausible when first proposed in the 1980s, are now being taken very seriously by many countries in recent years.

Moreover, to implement universal basic income, a viable method is needed, and digital currency is a feasible option because it bypasses any intermediaries. You don’t need a bank account or social security contributions; each person has a digital renminbi account, and the central bank can directly provide funds. In fact, in terms of digital currency, we are the earliest among all major countries.

China’s official app for digital yuan is seen on a mobile phone next to 100-yuan banknotes.

Wenhua Zongheng: Speaking of which, data is a relatively new production factor that has emerged in recent years. Indeed, over the past decade, the Chinese government has not been heavily involved in the development of the internet. In the future, if the government intends to control this factor, how should it balance its regulatory objectives with the vitality of businesses and economic efficiency from an economic perspective?

Lan Xiaohuan: We can no longer approach data regulation with traditional thinking. Once all data is interconnected, the shape of businesses, regulatory objectives, and efficiency may be entirely different under new technologies. I am not certain about the future, but I am sure it will not be the same as it was in the past. The final form may involve taxing robots, AI, and algorithms, then using the proceeds to support those who have been replaced; or perhaps another approach, where robots and data are state-owned. The rationale behind both scenarios is the same: to achieve redistribution. In the midst of this explosion in productivity, the most critical issue is no longer about incentive mechanisms. Previously, the core of all social security and welfare system designs revolved around incentive mechanisms to prevent idleness, as society cannot sustain a large population of idle individuals. The fundamental philosophy of future public policies will be about redistribution, discarding the concept of idleness because the production process no longer requires your participation. This represents a profound transformation. Amid this technological and societal shift, the system that can sustain without collapsing will have a significant advantage. Countries that can effectively manage data and algorithms, handle unemployment, and have the foundational concepts, institutional framework, and technological infrastructure for redistribution will experience a relatively stable transition during this societal transformation. Certain Western scholars speculate that China may hold institutional advantages in the technological revolution of the 21st century based on these considerations, and there is some merit to this viewpoint.

Wenhua Zongheng: This is actually a relatively long-term perspective. In the short term, since the end of 2020, our country has been continuously strengthening supervision over internet companies. Initially, many people thought this was the right approach because everyone was fed up with the expansion of these internet platforms and their comprehensive penetration and influence on people’s lives. However, as time goes on, voices from the economics field, including the political field, will also emerge questioning whether excessive regulation or restriction will affect the competitiveness of Chinese internet companies internationally.

Lan Xiaohuan: Regarding the regulation of these technology and internet companies, I think it may exceed the current cognitive framework of academia. Some still treat internet companies as ordinary businesses and then think about operational and incentive issues. This may not be fundamental. From a data perspective, if China wants to become the Saudi Arabia of the data world, it may need to think more about the public and resource attributes of data. How to construct the regulatory model for these companies is an exploratory process and a continuous interaction between the government and businesses. It may start off strict, causing some negative effects, then as time goes on, both companies and the government will adjust. It can only be said that the so-called “barbaric growth” state of the past decade will definitely not continue. Recently, the National Development and Reform Commission issued a notice seeking opinions on the “data basic system view,” listing a plethora of viewpoints on the data basic system which everyone can take a look at, as it is very interesting.

Wenhua Zongheng: Based on the reports and documents issued by the central government in recent years, apart from data, what adjustments and reforms will be made to the other three production factors in the future?

Lan Xiaohuan: Let’s talk about land first. Land is originally in the hands of the government. For the government, what needs to be done in the future is to activate it, that is, to use land more efficiently. In recent years, there has been an attempt to conduct cross-provincial transactions of construction land indicators. People from the northwest have all moved out, so why do they need so many land indicators? Although Shanghai still has land, it lacks construction land indicators, which led to the cross-provincial transaction of construction land indicators. For example, Shanghai seems to have bought 30,000 mu of construction land indicators from Yunnan. With these indicators, Shanghai can develop another 30,000 mu of construction land, and correspondingly, Yunnan will have to open up 30,000 mu of arable land. Currently, the trading method is that the buyer’s local government applies for indicators from the State Council, the buyer transfers the money to the national treasury, and then the national treasury transfers it to the selling local government, mainly for local poverty alleviation and maintaining farmland. Not every place can be a seller right now; the current regulations are the “Three Zones and Three States”: Tibet Autonomous Region, Tibetan areas in Qinghai, Sichuan, Gansu, Yunnan, the four provinces, southern Xinjiang, Liangshan in Sichuan, Nujiang in Yunnan, and Linxia in Gansu.

The reform ideas for these four factors, such as land and household registration, are aimed at enabling the flow of land and labor nationwide, which is the so-called marketization of factors. Of course, the ownership of these production factors has not changed, but it is hoped that they will flow in a more market-oriented manner. If they do not flow, how can they be marketized? People must move to have market value; there is also a lot of stagnant capital that cannot move, but once state assets become capital, they become standardized and can move. Data is similar; previously, the data of various internet platforms were not interconnected, but now platforms are required to open up external links.

In conclusion, on one hand, the country emphasizes its own leadership, and on the other hand, it promotes marketization. This is how China has reformed in the past. Specific products were marketized first, and the dual-track system was pushed forward; when product market competition became fierce and pricing became more market-oriented, the marketization and property rights reform of factors were promoted; with product competition enhancing efficiency, there was international market competition and competition among various regions within the country. When product markets were liberalized in terms of pricing and competition, it was discovered that the quality and prices of products from state-owned enterprises were not as good as those from private or foreign enterprises, and they could not even be exported; to become more efficient, the ownership of state-owned enterprises should also be reformed, leading to the establishment of a corporate system and shareholding system. This is the experience of China’s gradual reform. The Soviet Union, on the other hand, attempted property rights reform without first setting up product markets, which resulted in economic collapse and oligarchic plunder. Later, China also carried out many property rights reforms, especially in separating ownership and usage rights.

Wenhua Zongheng: Over the past few decades, China’s economic rise can be attributed not only to government participation but also to its accession to the WTO and international markets. However, with the rise of European and American protectionism and the new trend of China-US trade friction, the external conditions that propelled China’s economic growth in the past have changed. How do you think these new trends will challenge the ways in which the Chinese government engages in the economy?

Lan Xiaohuan: First, in terms of who closes their doors first, they will be the first to suffer. If the United States closes its doors, the United States will suffer. The economies of scale in the market are even more significant than technology, so in the end, there will definitely be only one global market, not two. Those who attempt to fragment the market will be the first to perish. The Soviet Union ultimately perished due to its isolation. It is impossible to stifle technological progress, but it is possible to stifle market access. If technological suppression were successful, we might still be in the era of the British Empire, with no Germany, United States, or Japan. Technological catch-up is only a matter of time; latecomers will inevitably catch up because scientific knowledge cannot be blocked. Latecomers simply lack knowledge of how to develop technology and processes. The logic of chip design is very clear, known to industry professionals, but it is challenging to execute in reality due to insufficient time spent and knowledge acquired.

If the West wishes to fragment its market, it is a very challenging task, entirely different from the Soviet Union. The Soviet Union managed to isolate itself from the international market because it was driven by extreme political ideology, harboring animosity towards capitalists, which enabled it to prohibit profit-seeking by capitalists. This is impossible for capitalist countries because their politics are meant to serve capitalists. The essence of capital lies not in technology but in the market. It may be feasible to divide Russia’s market as its economic scale is relatively small. However, with the vast size of the Chinese market, how likely is it to be divided in the United States?

Secondly, China’s stance on openness has been consistent. Despite frictions, the signal over the past three years has been very clear: the doors of openness will continue to widen, never closing.

Thirdly, there are 8 billion people in this world. Instead of focusing solely on the 1 billion people in Europe, North America, Japan, and South Korea who have a better standard of living than us, we should also consider the five to six billion people whose living standards are lower than ours. Do they not have needs? These are the growth points of the future economy. Those who isolate themselves from this global market will undoubtedly decline.

The post Why China is Winning the AI Race? first appeared on China Academy.

The post US Fed Cuts, US Debt, and Their Butterfly Effects on Us. first appeared on China Academy.

In recent years, there has been a surprising decline in enrollment for civil engineering, with the field losing its former allure. It has become almost routine for civil engineering programs to struggle to attract students.

The Rise of Smart Construction

With the decline of civil engineering, some other civil-related professions have added prefixes like “smart” and “intelligent,” embracing a strong sense of technology, quietly rising in prominence.

For instance, the introduction of the Smart Construction major in 2017 at Tongji University marked the beginning of a trend. Since then, more universities have followed suit, with the number of institutions offering Smart Construction programs increasing steadily each year.

As of now, 153 universities have been approved to add new Smart Construction programs, compared to just 70 universities three years ago. Following this trend, there has been a surge in enrollment. According to a document released by the Ministry of Housing and Urban-Rural Development, in 2022, there were 3,562 students enrolled in Smart Construction programs nationwide, which increased to 5,539 students in 2023. Amidst this trend, there has been confusion about what exactly Smart Construction entails.

While it is categorized under civil engineering, the absence of the term “civil” in its name raises suspicions that it may simply be a rebranding of traditional civil engineering. Some even suggest that it is merely a marketing ploy to capitalize on the popularity of computer-related fields. In reality, after analyzing 55 universities offering Smart Construction programs, it is clear that these programs are often established within existing civil engineering departments, without renaming or discontinuing the original civil engineering programs.

Among them, 96.4% of universities have placed Smart Construction within the colleges of Civil Engineering, with only Jilin University of Architecture categorizing it under the College of Modern Industries, sharing a department with the Geomatics program of Remote Sensing Science and Technology.

Not only are the colleges the same, but the course catalogs of the two programs also intertwine.

We sampled six universities that offer both Smart Construction and Civil Engineering programs, and after comparing their curriculum plans, we found that from prestigious universities to regular institutions, Smart Construction includes traditional civil engineering courses such as Structural Mechanics, Soil Mechanics, and Engineering Materials, but also incorporates content on computing, machinery, and economic management, truly embracing the “smart” aspect.

The Cooling Trend of Once Popular Majors

Despite the current backlash against Civil Engineering, if we turn the clock back to a decade or so ago, the ancestors of Civil Engineering also once flourished.

From 2006 to 2015, it was hailed as the “Golden Decade of Architecture and Civil Engineering.” During that bustling period of infrastructure development, not only did skyscrapers rise from the ground, but it also nurtured the glorious peak of the Civil Engineering profession. The number of colleges offering Civil Engineering programs surged from 392 in 2008 to 572 in 2022.

Civil Engineering was riding high on a wave of success, attracting top talents, with a promising future ahead. However, all good things must come to an end.

The nationwide push for massive construction projects under the slogan “To get rich, build roads first” led to a significant increase in urbanization rates from 36.09% in 2000 to 63.89% in 2020. With the pains of transitioning the national development model and the uncertainties in the real estate sector, the soaring urbanization rate signaled a decline in the Civil Engineering industry.

The past glory of Civil Engineering, like a mirage, was overshadowed by the reality of severe supply-demand imbalances caused by the expansion of enrollment to meet the high demand. The emergence of the “Civil Engineering Exodus” was inevitable.

According to Michael’s “2024 China Undergraduate Employment Report,” the proportion of graduates entering the field of construction engineering has been decreasing year by year, with a 46% decrease in this ratio over the past five years, ranking first among 46 occupational categories.

The enthusiasm of young people for the Civil Engineering industry has been waning, leading to discouragement not only among students but also in university admissions, where cutoff scores have been consistently lowered.

Taking the highly competitive Hebei Province as an example, in recent years, among the influential “Top 8 Architecture Schools,” except for a slight rise in the lowest admission rank of Tsinghua University’s Civil Engineering program, most other schools have experienced a decline in admission rankings.

In contrast to previous years, the lowest admission rank of South China University of Technology in Hebei dropped by nearly 7,000 in 2024, while Xi’an University of Architecture and Technology plummeted by over 10,000.

The newly transformed Smart Construction field also fails to stand out. For instance, the Smart Construction program at Shenyang University of Architecture saw a decrease in the natural science admission rank in Liaoning from 41,461 in 2022 to 43,893 in 2024. Although this drop is not as significant as the three-digit drop in Civil Engineering during the same period, the struggle is evident.

To revive declining enrollments, universities are resorting to various tactics, such as including Civil Engineering in early admissions and admissions for students from impoverished backgrounds, merging it with other disciplines for broad admissions… These bewildering enrollment strategies may not be fraudulent, but they certainly give that impression. As for career choices, whether students succeed in “automation” or fail in “Civil Engineering” depends on individual circumstances.

The once prestigious Civil Engineering field, once filled with high-achieving students who had studied hard for years, is now crowded with disgruntled students looking to change majors. The shift from “entrance for high scorers” to “avoid at all costs” is both brief and glorious: missing out on the industry’s prosperity and instead encountering exorbitant housing prices, property market turbulence, and the challenges of Civil Engineering, tasting the bitter fruits of the times.

（Note：Despite the downturn in the infrastructure industry’s market environment, this is not the complete narrative. There is a young man in China, whom we have previously featured, who has chosen a different path. Cao Fengze, a graduate of China’s top university with a degree in Civil Engineering, faced employment obstacles and a sense of unfulfillment. He made the decision to travel to Tanzania to work on building hydropower plants. Three years later, he shared his experiences on Chinese internet platforms.）

Chinese Universities Adapt Majors to Changing Landscape

Not only Civil Engineering has become awkward, but according to statistics, as of July 31st this year, 19 universities in China have issued announcements to revoke or suspend admissions for a total of 99 majors. Among the disciplines that have been removed, Engineering ranks the highest, with the most number of majors being discontinued, followed by Management and Science.

With the continuous adjustment of social and economic structures, there is a noticeable increase in the number of Engineering majors being withdrawn. Similarly, Management majors are also influenced by changes in market demand. With the rapid development of emerging industries such as artificial intelligence, big data, cloud computing, and the Internet of Things, many traditional engineering majors are being phased out, while the trend of establishing new majors combining “Smart +” with traditional engineering is emerging.

The Chinese Ministry of Education has explicitly stated that by 2025, around 20% of university disciplines will be optimized and adjusted. Meanwhile, a new batch of disciplines that adapt to new technologies, industries, formats, and models will be established, while outdated disciplines that do not align with economic and social development will be eliminated.

The post How Did China’s Top Major Become the Worst? first appeared on China Academy.

The post From 1949 to 2024: What Secrets Lie Behind China’s Economic Miracle? first appeared on China Academy.

Theoretically, economic growth and productivity development in a country are essentially a process of gradual accumulation of economic surplus. There are generally four pathways:

Continuous Factor Input: This involves increasing capital investment, labor force, and natural resource utilization to generate surplus and accumulation.

International Economic Cooperation: This includes achieving net exports or attracting foreign investment through international trade to stimulate economic growth.

External Force: This involves seizing resources and wealth from other countries through military conquest or colonization.

Technological Advancement and Optimization: This involves improving total factor productivity through technological progress and optimized resource allocation, thereby driving economic growth.

The first pathway historically propelled economic development in many parts of the world, but also led to resource depletion, environmental damage, and inequality. China’s past economic growth largely benefited from this factor-driven growth model. However, in recent years, as the prices of factors such as capital, land, and labor have continued to rise, its comparative advantage has become less pronounced. Moreover, the long-standing growth model primarily driven by investment in real estate, infrastructure, and debt has become increasingly unsustainable.

In 1980, China had a population of 1 billion people and a per capita GDP of $200, making it a country with a total GDP of roughly $200 billion, accounting for only 1% of global GDP, equivalent to the economic scale of a small European country like the Netherlands. After 40 years of reform and opening up, GDP reached $18 trillion in 2020, a 90-fold increase compared to 1980. For China, during this great 40-year journey, through large-scale infrastructure construction, industrial investment, urban real estate development, and economic development in various other aspects, China has become the world’s second-largest economy. This is undoubtedly a significant historical leap and a remarkable achievement that has attracted global attention.

This development benefited from three major dividends. First, China had a population of 1 billion, providing a comparative advantage in low-cost labor, known as the demographic dividend. Second, China’s fundamental institutional supply during its reform and opening up created a reform dividend. Third, China’s integration into globalization brought a globalization dividend. These three dividends propelled China’s rapid and accelerated development. On the other hand, from the perspective of input of production factors, this is also the result of China’s massive resource input, capital investment, and labor input over the past 40 years. With the current situation, can China continue to drive high-speed or sustained development in the next few decades by relying on the same large-scale resource input, capital investment, or labor input as in the past 40 years? Clearly, three unsustainability issues have emerged.

In terms of resource input, China’s GDP in 2023 was 126 trillion yuan, consuming roughly 50% of the earth’s various resources. Out of over 190 countries worldwide, China extracts various mineral raw materials from the earth, such as iron ore, coal, oil, natural gas, limestone for cement production, and various other ores. In total, the world currently extracts about 24 billion tons of various mineral resources annually. China uses about 12 billion tons, roughly 50% of global resources. China’s GDP is about 20% of the global total, and its industrial scale and import-export trade are about 30% of the global total. In short, China consumes 50% of the world’s underground resources with 20-30% of the world’s output. If China continues at this rate, and its GDP doubles in the next 20 years, will it end up using all of the earth’s resources? Doubling GDP would require doubling resources, which is clearly impossible.

For China’s economy, industrial production source reduction, reducing resource consumption from the source; energy conservation and emission reduction, reducing the intensity of unit energy consumption and carbon emissions from the source, are crucial and essential. It is the only way for China to achieve sustainable development. This is fully reflected in China’s 14th Five-Year Plan and the 2035 Vision Goals. The central government has clearly stated that by 2035, China’s GDP per unit of energy consumption should decrease from 150% of the current global average to the global average. Currently, China’s energy consumption per unit of GDP is twice that of developed countries. By 2050, it should be reduced to the average energy consumption per unit of GDP of developed countries. In short, we need source reduction and energy conservation and emission reduction. If we continue to advance with the input methods of the past 40 years, it will be unsustainable.

In terms of capital input, China’s economy was a planned economy before 1980. Compared to a market economy, the amount of currency in circulation in a planned economy is relatively low. A market economy requires an increase in currency circulation to act as a lubricant, promoting the optimal allocation of various resources. China’s M2 money supply has grown dramatically in recent decades. By the end of 2023 or the beginning of 2024, the total amount of M2 money supply has exceeded 300 trillion yuan. Since China began issuing the renminbi in the late 1940s, it took 63 years to reach 100 trillion yuan in M2 by 2013. The second 100 trillion yuan took about 7 years, and the third 100 trillion yuan took about 4 years, from 2020 to the present. China’s money issuance is getting faster and faster, and the amount of capital accumulated is enormous.

In short, a decade ago, if China increased M2 by a few hundred billion yuan per year, the annual economic growth rate might increase by two or three percentage points, and there would be fluctuations in prices, house prices, or stock prices. In the past two years, China has increased M2 by 20 trillion yuan per year, but the stock market hasn’t moved much, house prices haven’t risen, and commodity prices don’t seem to be sensitive. Commercial banks have a huge amount of funds. Is this massive amount of M2 causing inflation? Looking at the amount of money, it seems like it should be inflation, but the market doesn’t react. Instead, it feels like deflation. Currently, this capital is not sensitive to the market. It’s all sitting in banks, not circulating. It’s not going into the stock market, not into the real estate market, and not into the pockets of ordinary people for consumption. In this sense, if China continues to rely on increasing the money supply to stimulate economic development as it did in the past 10 years, it will no longer be sustainable. The marginal effect of money supply and the sensitivity of regulation have significantly decreased.

In terms of labor input, China had a population of 600 million in 1950. After 30 years, in 1980, the population reached 1 billion. In the past 40 years, China’s population has increased by 400 million, reaching 1.4 billion. The average annual birth rate was 17.8 million in the 1950s, 24 million in the 1960s, 18 million in the 2000s, 16 million in the 2010s, and it dropped to 12 million in 2020. In 2023, only 9.02 million babies were born, demonstrating a clear and rapid decline in birth rates. People born in the 1950s had mostly retired by the 2010s. Those born in the 1960s began retiring in 2020. Currently, the new generation of young people entering the workforce are mainly born after 1990 and 2000. The number of people entering and leaving the workforce will decrease by millions each year, indicating that China’s comparative advantage of an unlimited supply of low-cost labor has reached a turning point.

China’s population base is also at a turning point. China currently has a total population of slightly over 1.4 billion. In 30 years, after 2050, it is entirely possible that the population will decrease to 1.2 billion or 1.15 billion. The population size is declining. The entire population is also heading towards deep aging. Currently, people over 60 years old account for 20% of the total population. I remember it was 18% five years ago, and now it has reached 20%. In a few decades, people over 60 will account for over 30%, creating a deeply aged society.

In short, the possibility of relying on unlimited labor input to drive rapid economic growth has diminished. Therefore, I say that the first path of global economic development, relying on massive resource, capital, and labor input for accelerated development, has passed. The development model of the past 40 years is no longer sustainable and cannot be replicated in the future.

Regarding the second path, a country engages in trade and investment with other countries, exchanging resources in various aspects. Through international trade and investment, economic openness creates complementary advantages, optimizes resource allocation, and leverages strengths while mitigating weaknesses. This process generates additional accumulation and promotes faster and better economic development. We recently said that China’s economy has entered a new pattern of dual circulation, with domestic circulation as the main body and domestic and international circulation promoting each other. Why is it called a new pattern? Because for decades, China’s economy has been mainly driven by external circulation, with large imports and exports, while also having domestic circulation. So, it was a dual circulation pattern with external circulation as the main body. Now, it has shifted to domestic circulation as the main body, which is undoubtedly a new pattern.

Here, we need to clarify what external circulation and domestic circulation mean. For a country, the volume of import and export trade, including goods trade and service trade, combined, is considered external circulation if it accounts for over 60% of GDP. 60% is a significant proportion, leaving 40% for domestic circulation. If import and export trade volume accounts for less than 40% of GDP, then that country or society is primarily driven by domestic circulation.

From 1950 to 1980, China’s import and export trade accounted for about 10% of GDP. In 1980, China’s total GDP was over $200 billion, and import and export trade was $200 billion, or 10%. Therefore, that era was a period dominated by domestic circulation. After the reform and opening up in 1980, China leveraged international resources, capital, and markets to drive economic development. With large imports and exports, processing trade, and processing with supplied materials, various forms of openness, massive foreign investment, and foreign investment bringing large investments and exports, all of these led China’s economy towards external circulation as the main driver. After China joined the WTO, external circulation reached its highest proportion in 2006. In 2006, China’s import and export trade accounted for about 71% of GDP. I mentioned earlier that if import and export trade accounts for over 60% of GDP, it is considered external circulation as the main driver. When it reaches over 70%, it is a system with a higher proportion of external circulation as the main driver. In that 71%, goods trade accounted for 64% of GDP, and service trade accounted for 7%, totaling 71%.

So, what is China’s current situation? China is now mainly driven by domestic circulation, with both domestic and international circulation. The proportion of external circulation is 38%. For example, in 2023, China’s GDP was 126 trillion yuan. China’s import and export of goods trade was over $6 trillion, and service trade was over $800 billion, totaling less than $69 trillion, which translates to about 48 trillion yuan. Compared to 126 trillion yuan, it accounts for about 38%. In 2022, 2021, and 2020, it was also 38%, less than 40%, which means it’s within the 40% range of external circulation. Therefore, China has entered a stage where domestic circulation is the main driver, with both domestic and international circulation. You might wonder, why did China’s external circulation, which used to be over 60% and even reached 70%, suddenly drop to 38% in the past decade? You might naturally think it’s because the US is waging a trade war against China, imposing tariffs, decoupling, withdrawing investments, and imposing technological blockades, implementing a whole set of geopolitical and trade protectionist measures. You might think that China is being forced to shift from external circulation to domestic circulation due to the US trade war. This judgment is wrong. Some people might also think that the COVID-19 pandemic in the past three years has fragmented China’s export supply chain and value chain, making it difficult to export and import goods, leading to a contraction in import and export trade. This judgment is also incorrect because China’s import and export trade entered a stage dominated by domestic circulation in 2016, when Obama was still president of the US, and Trump had not yet taken office, so the recent six or seven years of US-China trade war had not yet occurred.

So, what I’m trying to convey is that the era of relying on open trade flows, with external circulation as the main driver, accounting for over 70% or 80% of GDP, to drive China’s economic development is over. For China to become a major economic power in the world, it must shift to a pattern where domestic circulation is the main driver, with a trade flow that accounts for less than 40%, and is less reliant on comprehensive foreign investment or trade volume as the main driver. In this sense, the second path for China has also undergone a change in boundary conditions. Moreover, since the 2009 global financial crisis, net exports have contributed negatively to economic growth in most years. Although China’s opening up has brought about technological progress and optimized resource allocation, making a significant contribution to economic growth, in recent years, due to the US trade war and suppression against China, it will become increasingly difficult to boost economic growth through international economic cooperation.

Regarding the third path, historically, some countries have achieved primitive capital accumulation through colonialization and military conquest, which is disgraceful and increasingly rejected by the global trend of peaceful development. The 20th National Congress of the Communist Party of China clearly stated that China’s modernization is a modernization that follows the path of peaceful development and does not follow the old path of some countries that achieved modernization through war, colonization, and plunder.

Of the three paths, China cannot take the third path. The first and second paths are becoming increasingly difficult to follow. However, for China to achieve basic modernization for its 1.4 billion people and reach the level of per capita GDP of medium-developed countries by around 2035, it must ensure that economic growth remains around 5%. Taking the fourth path, that is, improving total factor productivity, is imperative. Currently, China’s total factor productivity growth rate is only 40%-60% of that of developed countries like the US and Europe, leaving considerable room for improvement. However, without the support of a technological revolution, simply relying on internal quantitative changes in the economy will be difficult to achieve significant improvement. Fortunately, China is on the eve of the fourth industrial revolution. The new technological revolution, represented by intelligent technology, provides conditions for the emergence of new quality productivity. In the face of such a significant historical opportunity, developing new quality productivity and fully unleashing the growth dividends brought by the new technological revolution will not only help improve China’s total factor productivity, reduce factor costs, and increase factor input, but also help leverage China’s new advantages in international economic cooperation. In the short term, we need to develop new quality productivity to create new growth engines and maintain economic growth momentum. In the long term, developing new quality productivity is the only way and inevitable choice to support the realization of Chinese-style modernization for 1.4 billion people.

This analysis shows that China’s 40 years of reform and opening up have left China with a growth space, namely, the huge potential of total factor productivity growth. In this sense, high-quality development in the next few decades, and becoming a major economic power in the world in the next few decades, must be driven by the development of total factor productivity. The essence of total factor productivity development is to make new quality productivity the most crucial link in China’s high-quality development.

The concept of “new quality productivity” is being put forward at this stage because it is the inherent choice, inevitable choice, and only choice for China’s high-quality economic development. Current development cannot rely entirely on resource input, capital input, and labor input, as these are unsustainable. The most important thing is to rely on technological input, input into the division of labor and cooperation in the production process, and input into fundamental institutions and production relations closely related to productivity, as well as social system reforms. In other words, through technological innovation, division of labor and cooperation, the evolution of industrial chain organization, etc., and by promoting the formation of new quality productivity and production relations that are compatible with it, China can achieve sustainable and high-quality development.

This article is the first part of Huang Qifan’s speech, and viewers interested in more content can follow our website or leave comments in the website’s comment section.

Dabate

The post What’s Behind Xi Jinping’s Push to Revolve China’s Economy? first appeared on China Academy.