this post was submitted on 30 Jun 2025
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If you can understand Mandarin Chinese, this 3 hour debate between Justin Lin Yifu (neoclassical) and Zhang Weiying (Austrian school) from 2016 - widely popularized as China’s Keynes vs Hayek Great Debate - is everything you need to know about China’s industrial policy for the past decade.
Many prominent economists also voice their views quite openly. You just have to read the economy/finance section of Chinese newspapers to keep up.
How is the Austrian school still a thing? They openly say that their view of economics isn't experimental, i.e. it doesn't apply to the real world and is anti-scientific by definition. How do these people not get mocked out of any institution or debate?!
A large segment of rich people love them and thereby fund endless thinktanks to propagandize for them.
Xiao, is your line of thinking right in line with Wang Hui or are there differences between the two of you as it stands in 2025?
I don’t know who that is.
That's surprising to me. He is a scholar of Chinese political philosophy at Tsinghua who has been critical of the turn toward neoliberal tendencies. I've read some of his translated works but they are incredibly dense (but fascinating!). In 2020 the Monthly Review did an entire issue about China, and most of the articles were written by "Wang Hui-ites".
I think you would find some value in his work. If you look into it (even at a surface/wikipedia/LLM level), I'd be curious to know your thoughts.
could you link some of his stuff please? thank you
The books I've read (some of, hurts my brain after a couple chapters) are "China: From Empire to Nation State" and "The End of the Revolution" which I believe is a collection of articles.
Here is the link to the MR edition I mentioned, with the articles available to read online.
An excerpt from the "Notes from the editors" article:
thank you so much comrade!
If you're a fan of Red Sails I think MR is a nice complement (maybe you're already familiar)
Maybe from the excerpt I posted you can tell why I'm surprised comrade xhs isn't familiar with Wang's work! Hope we get to hear from them at some point
i read MR on occasion yeah, usually when i get reminded about it when someone posts it in the news mega lol
Subscribe! It's nice to get a hard copy of theory every month!
(Or don't idc, but I make a post encouraging people once a year or so)
i pay for as little stuff online as possible lol
so probably will not sorry
It seems depressing but also probably about right for the debate to be between a neoclassical and Austrian economist. Well, hopefully neo-Keynesianism has some pull relative to its more reactionary relatives.
Thanks! Seems like a good motivator for me to learn Chinese
. Are more Marxist voices less prominent in these debates?
There are no Marxist voices in the mainstream today. All the distinguished Marxist economists have long been banished to the humanities and social science departments long ago. They do write books, sometimes articles/blogs on the internet, and newspaper columns, but they have very little influence on policymaking. The mainstream is full on dominated by Western economists these days.
If you actually listen to the debate, both sides are openly making fun of the Mao era central planners for being inefficient lol.
Also FYI the correct term for Marxist economics in China is “political economy” (政治经济学). Nobody uses the word Marxist economics. Similarly, neoclassical economics is called “Western economics” (西方经济学). If you don’t know the correct terminology in Chinese, it can be very difficult to search for the relevant information you want.
Serious question, asking in good faith here as a non-mandarin speaking westerner:
If mainstream, policy-guiding economics is so overwhelmingly western (neoclassical), why is China on such a wildly different economic trajectory compared to the contradictory hellscape of the west? Is it the applications of these horribly unmarxist economics? Is it the remnants of mao-era policies? I’m very ignorant on this, but i’d love to learn more
You’re comparing two different things.
Western neoliberal countries have been infested with finance capitalists that want to maximize rentier profit. These countries, especially America, have had enough dealing with trade unions in the 20th century so they chose to de-industrialize to crush the workers movements at home, while allowing the rentier class (finance, insurance, real estate) to flourish. Using their “high income” status and favorable exchange rate, they extract surplus from the Global South to maintain an elevated living standards for its population. In both America and Europe, some critical industries were still retained although they are increasingly hollowed out by private equities etc.
The developing world is different. In the 1980s and 1990s, they sent their best students to attend Western universities to learn their economics, who returned to hold important policymaking positions and introducing neoclassical economics to their countries. China’s policy since joining the WTO in 2001 has been, for the most part, a perfect adherence to the IMF export-led growth strategy. China’s budget deficit almost never went above 3%, except for one year during Covid and I think they are going to increase to 4% this year due to the deflation issue.
This has been possible because China has been able to leverage its huge labor pool to undercut all the other exporting countries and dominate the export sector, selling cheap goods for Western consumers to enjoy in exchange for foreign currencies. It is the huge surplus of these foreign currencies that allowed China to keep its budget deficit to 3% of its GDP. This is precisely what the IMF intended - developing countries should send cheap goods to the high income countries, and only then, can they use those revenues to invest in their own countries. It is designed to benefit Western imperialist countries. There is nothing that says you have to accumulate a trillion dollar trade surplus each year, since you are utilizing precious labor and resources to send goods to other “wealthier” countries. You should export to earn enough foreign currencies to import essential goods and commodities and services, but the accumulation of trade surplus is the prescription of the IMF.
I can't adequately answer the positive side of this question, but on the negative side it's worth noting that a lot of western economic policy, especially in the US, is notoriously bad and out of step with Keynesianism and its relatives, with the whole thing being steered by financiers who don't actually care about the generally economy running well.
On the positive side, I am way less qualified than our Mandarin-speaking friend, but I think a lot of what China gets right is either similar to what you also see the more rational capitalist states get right, or it is politically capable of doing things those other states can't because of the necessity of the state maintaining a degree of control over private power for national sovereignty reasons. I don't think it has much to do with Mao other than China being sovereign in the first place. It's really more of a nationalist thing than anything.
do you have any ideas of if/when this will change?
God damnit. For real?
Oh, we have “Marxists”.
Meng Xiaosu (孟晓苏), the father of property market in China, was famous for saying that “the end goal for Marx‘s ideal is not the maximization of public ownership, but the maximization of personal ownership” and used the argument to support the creation of housing market that ultimately causes reckless speculation and further wealth inequality.
There are many “Marxists” throughout history who would dig into famous works to find quotations to “legitimize” their policies.
For example, back in 1980, when trying to circumvent the national law that forbids land sale to private owners, Luo Jinxing (骆锦星) who was the Deputy Chief o the Shenzhen Property Management Bureau at the time, dug into Chapter 4 of Lenin’s State and Revolution, in which Lenin quoted Engels’s The Housing Question (1872) to justify that land sale is actually permitted during a “transitional period”:
When Luo reported this to the Municipal Council Secretary Zhang Xunfu (张勋甫), the latter added a quote from the Communist Manifesto to support their claims:
With the nodding approval of Marx, Engels and Lenin, it is now justifiable for the government to sell land to private owners lol.
We have this kind of “Marxists”. In fact, many such cases.
the kind Vladimir Ilyich would have shot everbody
If you look at Xi’s career history, he’s always been a moderate.
Back in 2007, when the Party Secretary of Shanghai, Chen Liangyu was opposing the central government’s order (Hu-Wen administration) to curb spending, there was a call to rebel with the Southeast Five Provinces. Xi (who was Party Secretary of Zhejiang at the time) chose the moderate stance of maintaining neutrality with both sides.
After Chen was toppled, Han Zheng became the acting party chief for a few months before the position of the Party Secretary of Shanghai went to Xi. That’s how Xi’s moderate stance got him the Shanghai position, a very important position before being promoted to the national leadership role.
By the way, Han Zheng was the one who attended Trump’s inauguration this year and led the negotiations with the US lol.
Also, Bo Xilai - who was initially groomed to be the party successor - was a lot more left than Xi, until the scandal that also toppled him and paved the way for Xi’s ascent to party leadership.
Is that true relative to where the party was before he took over?
Also, are there any indications about Xi's successor? Obviously he's got time in the role still to go, but he's also quite old. Is that sort of thing obvious, opaque, too hard to determine in advance?
As always, appreciate your insight into the CPC's operations.
Well, Xi intended to curb private capital and I have given him the credit and defended him many times.
However, he is also responsible for some of the biggest misallocation of capital in the world’s history. The Monetization of Shantytown Redevelopment in 2015 (棚改货币化) will go down in history as the culprit for perhaps the most frenzied speculation in property market, where so much wealth were sucked into the real estate sector and would never be recovered. It is one of the reasons why the local governments are so heavily indebted at the moment, and why we have a potentially serious deflation problem that if not resolved, could easily spread to various other sectors.
The lack of central planning was palpable. They always wait until the last minute before taking action, and often times it is too little too late. It is very clear that the central government has lost the ability to curb the authority and recklessness of the local/provincial/municipal governments. Just look at how Shanghai openly defied Zero Covid and allowed three years of national effort to be wasted.
Which is why I always laugh when people say China has some super long-term plan to achieve this or that. The opposite is true! China has some truly incredible crisis management skills that have so far prevented a deep crisis from erupting, and this is truly impressive if you understand what they did. However, without resolving the fundamental issues, it is simply kicking the can down the road. A complete revamp of the system is required and no amount of macro/micromanagement policy adjustments can allow you to escape that.
By the way, the promise to curb private capital has been overturned recently. I am VERY neutral about Xi right now. All I can see are the libs in charge these days.
To me he sounds opportunist with his continual references to expanding the "socialist" market economy (which walks and talks like capitalist commodity production). If he is a Marxist, why is he not openly criticizing these bourgeois economists in China that @xiaohongshu@hexbear.net mentioned and emphasizing a return to broader study of Marxist political economy?
On the Governance of China, p. 87 of the English Translation
Ibid., p. 134
Ibid., p. 149
(I credit this essay with making me aware of these statements: Against Dengism by The Red Spectre.)
This article's pretty garbo. It relies entirely on quotes from Lenin and Stalin rather than any actual materialist, data-driven analysis. The argumentation is pathetic across the board and simply dismisses any positions it doesn't like as "non-Marxist". Statements like this:
This is pure idealism. Capital is not god, it does not exist above reality, it does not wield infinite power - it too is subject to the rules and dynamics of the society it exists within.
It is not a revelation that China uses capitalist systems. A tiny number of decontextualized quotes from Xi hardly proves anything. The Governance of China is filled with quotes advocating for the long struggle to communism, against revisionist and reformist tendencies within the party, and demands for ideological struggle within the party ala Combat Liberalism against bad party cadre derailing the project. You should actually give it a read and you'll see a a comrade with a deep, practical understanding of Marxism. Here's an example:
And here's Xi on Stalin and the USSR:
But again, those are just quotes from a guy. We are dialectical materialists, and therefore we must look at material conditions and systems in practice.
It does neither of those things. The results of the Chinese economic system since reform and opening up are unlike the achievements of any capitalist country or economy in history. The CPC continues in their five year plans and other plans to lay out a slow, sensible path in building socialism and, with great consistency, meets and exceeds the goals of those plans in objective, measurable terms. While your article above argues that planning is impossible with the existence of private capital, China has successfully carried out almost every single effort of its plans through the domination of private capital by the CPC and state economy.
Your article simply says that the poverty reduction is irrelevant, that it doesn't matter, who cares. Again, idealism - the objective of socialism is the elimination of deprivation and exploitation through the construction of a commonly held, democratic economy. China has made obvious objective progress towards that outcome. The #1 desire of the Chinese people was the alleviation of their wretched poverty. This has been achieved in one sense, the absolute sense, but many Chinese still live in relative poverty - their basic needs are secured, but the opportunity to live comfortable, leisurely lives does not yet exist across the board. For a country of such gargantuan scale, that is a long, arduous process. The dismissal of its necessity is ultraleftist/anarchist impatience and idealism.
It is exactly when this enormous project of absolute poverty elimination was completed that we see the start of a decline in capitalist power within China. See this: https://www.piie.com/research/piie-charts/2024/chinas-private-sector-has-lost-ground-state-sector-has-gained-share-among.
well now i feel obligated to link Ian Wright's essay Marx on Capital as a Real God lol. regardless i dont think they are wrong here actually, i agree that given enough time that capital will eventually crush the CPC if they dont destroy it first sometime in the future, but they also put forth no argument about how long this proccess takes and from what i remember of that article nothing truly convincing was ever given aside from rent section
sounds like dooming to me
I found a YouTube link in your comment. Here are links to the same video on alternative frontends that protect your privacy: