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ABOUT THIS EPISODE

From the very beginning, the West was certain that China would not pull off its economic experiment. That certainty came from a set of assumptions about how societies function and political freedoms emerge. But those assumptions were wrong — and China became stronger than ever. Guest: Philip P. Pan, the Asia editor for The New York Times, spoke with us from Beijing. For more information on today’s episode, visit nytimes.com/thedaily.

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United States
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TRANSCRIPT

00:00:05In the fall of nineteen eighty for a group of economics students and economists from across china gathered for a conference and a mountain retreat called morgan sean outside of shanghai They met for seven days seven nights and they were there to really answer One question How could china
00:00:22catch up to the west The overwhelming impression of china today remains that of backwardness Horse and human power still do the chores Machines would do better China was basically in champions Mild a dung had died only a few years earlier and he had devastated the country with his
00:00:39political campaigns More than a million people have been killed or persecuted and still about three quarters of the population was living in extreme poverty The government decided what every factory made how much everything cost The economy wasn't really functioning For the average worker the most sought after consumer
00:01:02items are a major investment A good locally made television at three hundred dollars is nearly half a year's salary So as they were emerging from this isolation and this devastation they looked out on the rest of the world and they saw that they were far far behind right
00:01:21it's morning again in america today more men and women will go to work than ever before in our country's history the united states was the world's largest economy Nearly two thousand families today will buy new homes Ronald reagan was declaring morning in america again Under the leadership of
00:01:39president reagan country is probably and stronger and better Democracy Capitalism seemed to be working while communism authoritarianism had failed in china So what these students are a two is a major undertaking No it was a huge challenge They faced political opposition bureaucratic opposition What they were talking about
00:02:10would have gotten them thrown in jail just a few years earlier Probably no communist country had successfully done what they were proposing to do And what were they proposing to dio So these economists these students they batted around a lot of ideas There was very intense debate often
00:02:29late into the night and one of the issues they've been debating was what to do about the factories which we're following orders from the state Some of them said that the factories had to meet these quotas Otherwise the planned economy would fall apart and others said the only
00:02:44way to get the economy to grow again was the let the factories make what they wanted And late one night they came up with a quietly radical idea Me The factors would meet the state quotas but they would begin producing other material and selling it at any price
00:03:08they wanted So little of the idea was factories would meet all their obligations under a very restrictive communist economy And once they had done that they could tiptoe into the world of capitalism kind of on the side That's right They were basically sneaking in capitalism while continuing to
00:03:26call themselves communist without giving up any of their authoritarian control over politics Western observers think the dismantling of price controls after more than thirty years of communist rule could be politically explosive so the west thought that this would never work The prevailing assumption wass that capitalism would not
00:03:46function properly without political freedom The idea was that these bureaucrats in the authoritarian system they would defend their control of the economy They would block change They would crush market forces On the other hand experts are urging caution about all this The chinese may be planning to much
00:04:03too soon as people got wealthier as capitalism began to take hold people were expected to demand more from their government They were demand political rights and the government would eventually have to open up Basically the west saw this as a fundamental mismatch You can't have capitalism and authoritarianism
00:04:22working together that the chinese experiment was basically going to fail Either the economy would fail or the authoritarian system would fail but of course they were dead wrong From the new york times on michael barbaro This is the daily from the very beginning the west was certain that
00:04:47china would not pull this experiment on that certainty came from a set of assumptions about how societies function and why democracy wins out We were wrong about those assumptions And as my colleague phil pan reports from beijing china is stronger than ever It's tuesday december for Assumption Number
00:05:15one government controlled economies stifle growth so take us back to this group of economic students They come up with this idea and then what happens Well somebody wrote up a report It was delivered to the leadership and to everyone's surprise the leadership adopted it almost immediately Sweeping changes
00:05:42were approved by a meeting of china's top communists and the supreme leader done child being wants them working in three to five years They were just desperate enough that they jumped on it And that really kicked off The whole period of economic reform that allows china to take
00:05:59off market forces will be allowed to operate in many areas They began sending officials overseas Tto learn how markets work The emphasis is on creating a new educated elite dedicated to modernizing china getting rid of a system that gives men the same wages regardless of how much they
00:06:17produced They opened up the economy to allow foreign investment foreign ideas in including from some of their old enemies such as the united states japan and taiwan It is china's policy open up to the whole world with no discrimination against any China's vice premier deng xiaoping who spent
00:06:42most of today in houston arrived in seattle tonight where he'll spend the final two days of his american tour before returning to peking monday During this entire period the united states and much of the west was heavily invested in china success Tomorrow he tours the boeing plant which
00:06:58makes the plane's china is buying to expand its national airlines They became china's largest trading partner They were one of if not the biggest source of foreign investment inside china The chinese now hope the americans will help further develop china's oil especially by selling technology for offshore deepwater
00:07:17drilling If it weren't for american investment in american trade it's quite possible china would not have ended up this way Deng who had earlier visited the nasa space center later remarked It wasn't often that a chinese could become an astronaut and a cowboy In one day the idea
00:07:33was that trade with china would change china What actually happened was that trade with china strengthened the party but it brought political change to the united states and to communities around the world China grew so fast and it's manufacturing sector was so successful that factories around the world
00:07:53shut down And in the united states the economists say at least two million jobs were lost due just to the rise of the chinese manufacturing Basically china's timing was perfect They were opening up just as globalization was sweeping the world and they were perfectly positioned to basically become
00:08:12the factory to the rest of the world So if the chinese government is supporting this what's its role in it Well all around the economic growth was state control They continue to control key sectors of the economy This was a one party state no elections no freedom of
00:08:32speech no freedom of assembly no freedom of religion There were no labor movements People began to push back against this early on In nineteen eighty nine with the tiananmen square movement hundreds of thousands of students and workers and other hopeful chinese citizens had been seeking a peaceful dialogue
00:08:50with the leaders of this vast nation received instead the harshest of responses So their demands for reform and freedom Last night an estimated thirty thousand chinese army troops were sent into the capital to crush what the government called a small band of hooligans and gangsters and the government
00:09:10completely set that down with the massacre Some lost their lives when armored personnel carriers and troop truck simply ran over there Others were gunned down as they tried to resist the savage show of course It is difficult not to use the word massacres to describe what happened So
00:09:34that sent a signal that there was this line that the party would never cross They would allow enough freedom to grow the economy but they would never allow people to challenge their control of the government So bring us up to speed on china's economic status today Well china
00:09:48now is the world's second largest economy Here comes china the country overtaking japan Now as the number two economy in the world it's on track to surpass the united states very soon Experts say that china could even pass the u S and grab the top spot by twenty
00:10:04thirty As a result it's the leader and social mobility It has lifted a hundred million people out of poverty That's twice as many as even live in the united states If you're an eighteen year old in china your prospects for sort of rising both in terms of social
00:10:22class and in income level are much higher than your affair An eighteen year old in the united states polls show that seventy five percent of chinese millennials they are optimistic about the future They think their country's going to run the world In the united states Millennials It's about
00:10:39twenty five percent think that So at a time when the american dream in the united states feels like it's slipping away something like the american dream has really captivated the chinese population and the chinese president now she jumping even caused this the chinese dream So in that sense
00:11:05the u S and the west we're quite wrong You could have all this economic growth without any major political reform That's right There was basically a bargain The party delivered a better life for people and they stayed out of politics Assumption number to the internet cannot be tamed
00:11:36on will lead to political freedom So about fifteen years after that meeting of economists in the mountains china had become an economic force Thank you very much doesn't vote And then came the internet and people thought this would be it We know how much the internet has changed
00:11:55america and we're already an open society Imagine how much it could change time that it was just so much pressure on the communist party that the party would have to open up Now There's no question china has been trying to crack down on the internet Good luck I
00:12:18sort of like trying to nail jell o to the wall And of course it didn't work out that way The west was completely wrong How so Well in the beginning it was quite free There were only a few websites that were blocked Information was spreading much faster than
00:12:35the communist party was used to And then as social media developed there was a platform called way ball And in two thousand eleven there was a crisis On saturday july the twenty third forty people were killed and nearly two hundred injured after a high speed train crashed into
00:12:52a stole train in china's eastern zhejiang province It seemed like the government's worst nightmares are coming true Chinese railway authorities are being hit by an outpour of public anger Millions of messages critical of the government's call for a media blackout and their response to the crash itself have
00:13:10appeared online People finally had a way to organize and express their discontent with the communist party Now ninety four percent in a scene away bill pole say that they're satisfied with the government's role and that they're not showing respect for human life will take They thought about shutting
00:13:28down the platform completely Instead they decided to just invest more in control They hired hundreds mohr sensors They required companies to do the same they upgraded the technology they use to sort of filter information on the internet And they've managed to write out the threat that the internet
00:13:51post So what does censorship on the chinese internet look like Well when you go online you wouldn't even be able to tell right away that censorship is going on Yeah yeah yeah yeah yeah yeah It's a very vibrant world there just like it is in the united states
00:14:12Crazy means cat videos People play pranks Yes you are a lot of live video blogging nowadays Man But if you type in tiananmen square on their search engine by do you see no results about the massacre If you type in a message about democracy over human rights on
00:14:42the main chat platform we chat You may eventually be arrested if you are a live blogger a video blogger and you're doing a show Recently one of these women sang the national anthem in a funny way way you could be visited by the state security when warned if
00:15:03not detained all of the censorship seems like it would require vast resources and time cost I wonder if it would be easier for china to have kept the internet at bay and to have essentially rejected it rather than to go to all this trouble Yeah there's no doubt
00:15:20it's really expensive what they're doing But overall this was a big gamble by the party and it's really paid off The internet is one of the most vibrant sectors of the economy Now It's created billions and billions of dollars of economic value So the cost of censorship while
00:15:36significant really kills in comparison to the overall value of the internet to the chinese economy and that has some of the most valuable internet companies in the world right now In fact on lee american companies can sort of rival the chinese ones They've got ali baba which is
00:15:52their answer to amazon Ali baba has just filed for what may be one of the largest i pose in history It is now i think worth over four hundred billion dollars There's a company called ten cent More than two thirds of the population used ten cents to messaging
00:16:08app We chat and q q They have a search engine similar to guru called baidu and one analyst described by deuce there is earning So merriam asked destroying expectations It solves the government's problems because it doesn't produce any of the sort of problematic material But has the internet
00:16:25served to empower the people and weaken the government the way that we assumed it would Well i think it really has opened up more space for speech More space for criticism of the government is still the most free media platform out there in china something that didn't exist
00:16:42before But i think what we didn't anticipate was how useful a tool it would become for the government as well The government uses it to monitor public opinion The government uses it to surveil its own citizens and the government uses it very effectively to sort of get its
00:16:59own message out It floods the internet with the positive message that the party is good for china in some ways like china seas What's happened in the united states and it just shakes its head It's like they went down the wrong road within that we did it the
00:17:19right way We don't have any of those problems having so much freedom of speech on the internet now some people say it's contributed tio political division It's allowed the flourishing of fake news and political interference by other countries China doesn't have to worry about any of that Basically
00:17:35bill clinton was wrong China found a way to live with the internet and tow harness it for its own purposes No Tomorrow Teo The united states didn't just misunderstand how china would respond to economic growth The us misunderstood how it would respond to china Yeah We'll be right
00:18:23back Companies to share secret technology as a condition of doing business there I think president shed therefore is being candid and truthful Level of details important way heard things we'd never heard before But the times reports that the ninety day truce involves no concrete commitments raising fears that
00:20:28nothing will meaningful change and that a trade war could resume Color me hopeful please again You know we'll see But i will say this They cannot slow walk this stall this meander this their word immediately So i expect to see let's say confirming results That's it I'm michael

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