Drum Tower: Xi’s doomed economic plan

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The economist. Xi Jinping gave an unusual audience to top American business leaders. Companies like Blackstone, FedEx and Qualcomm are all represented at the meeting.

The message here is that China welcomes foreign business.

This was a very important geopolitical meeting, with China trying to turn sentiments in its favor. Does that mean that U.S. china relations are looking up? One year ago, Drum Tire sat down with the Economist's editor in chief, Zanny Minton Beddoes, to talk about U.S. china relations. Zanny just been in China for the first time since the pandemic, and back then, in spring 2023, ties between America and China seemed stuck in a downward spiral.

If we manage in the coming years to avoid an outright conflict between these two countries, that for me is going to be a measure of success.

Today. There are still many sources of tension, but has that sense of acute crisis ebbed? I'm David Rennie, the Economist Beijing Bureau chief. My co host Alice is away this week, so I'll be speaking to our editor in chief, Zanny, who's just back from China. We'll hear her sense of the mood in Beijing and of China's place in the world. This is drumtime from the Economist. Zanny, welcome back to Drum Tire.

It's great to be here.

Since you spoke to us last year, Zanny, you've been podcasting and talking to a lot of people. You interviewed a Hamas leader, you went back to Ukraine and now you've Just been with us in Beijing for a week for the China Development Forum where senior Chinese politicians meet with foreign business bosses and officials.

I have, David, and I have to say that my March week in China is right up there now amongst my highlights of the year. And it's not just that the China Development Forum, which is a remarkable and absolutely kind of anthropologically fascinating gathering where you have a bunch of Western CEOs on their best behavior sitting in rows listening to long speeches by Chinese officials. So that's a really fascinating thing to watch. But perhaps even better for me is that my March visit is my kind of rennie tour of Beijing Week, which has two components. Firstly, it's a complete stamina test. I think, David, I added it up and we had about 30 meetings you'd scheduled breakfasts, lunches, coffees, dinners. I left Beijing my waistline thicker and my mind filled with an amazing sense of what's going on in China. And it was wonderful for me to get a sense of just what an extraordinary job you do there.

Well, you are too kind. And your office told me to keep you busy, so that was all I was trying to do. And I like to thank the cdf, that forum that you went to, for keeping me in my place because as a local grubby reporter I got, I think it was a purple badge, which there was a sort of series of endless humiliations of doors I couldn't go through that you could. And then I had lunch in the staff canteen in this sort of basement with a plastic tray, which actually, I have to say, pretty good. But you were off eating. I think it was abalone with the swells, I believe.

You know what, all of these gatherings, whether it's the World Economic Forum or indeed the China Development Forum, they all have various sets of badges. It's a bit like middle school, you know, you always feel that there's something more interesting going on where you are not. But I can assure you that the food was no better because I happened to go to the ordinary lunchroom and then I went to the VIP lunchroom and I found out that the food was exactly the same in both. But it is actually a pretty extraordinary gathering. First of all, the setting is amazing. This government guest house, a beautiful park like setting in northern Beijing which has an extraordinary history. It's where Henry Kissinger met Jo En Lai. It's where more recently Kim Jong Un stayed when he came on his train from a couple of years ago. The blossom is just coming out. There are a number of ornamental lakes. You walk around and it feels very, very tranquil and rather beautiful. And at the same time, that's the backdrop to this. And it's off the record, so we can't discuss the details of what were in there. But you have a sense of just how Chinese policymaking is presented. You have a sense of sort of how it works, which I know you have all the time, but for me is very powerful. Where you have all of the officials, there are the ubiquitous references to Xi Jinping, there's the deliberate use of the same phrases. This year everyone was saying new quality, productive forces, high quality, innovation. These are all phrases that we're going to be talking about in this show. But there was a sort of an interesting part of the discussion. There is the sort of Kremlinology amongst the Western attendees. Has anybody said even half a phrase differently? And what can one read into this? And then there's an equally interesting theater from watching the Western CEOs who are there, who are extremely high level. They're giving statements that you can just tell their PR departments have been sweating over for days just how much flattery to give, just how to phrase things. And so for me, just anthropologically, it's an amazing window into what it is like to do business in China and how Chinese policymaking is presented to the world and indeed to a Chinese audience.

So, Zani, I remember how struck you were by your visit last year at the cdf. It was just the end of the pandemic, China was reopening and with each meeting you seemed more concerned about the level of tensions that you were hearing between China and the us.

Yeah, you're right. I was very struck last year and really quite depressed by it. And I think for me, the moment that was the sort of apogee of that was when a longstanding Chinese acquaintance of mine said to me, and I think in all seriousness, he said it was time to reread Barbara Tuchman's Guns of August.

Wow. About the ride to the First World War.

Yeah. And I remember telling you about that. Remember, it was just after the shooting down of the spy balloon over the US balloon gate. There was not just a sense that relations were spiraling downwards. It was also that there was no communication, there had been no formal communication of any sort for quite a while between the US side and the Chinese side. And it felt very much as though there was a huge anger in Beijing. And I'd just been in Washington before that, and there was a huge anger in Washington. It was when actually rather ironic given that what was happening with TikTok a year later. But it was just when the CEO of TikTok was being hauled in front of Congress and a whole load of frankly, rather racist comments were made by American senators. So there was a palpable sense both of anger, but of spiraling downward, of relations a year ago.

So if I make the comparison between how you sounded a year ago, that real sense of doom, and your mood as we drove to the airport this time, you did seem that things felt substantially different. So now you're back in the uk, what's your reflection on what you saw and heard in Beijing?

So I think it is certainly true that tactically, the relationship between the US and China is more stable and better than it was a year ago. And I also got a sense that there was a huge effort being made to communicate that and to give a sense that after Xi Jinping met President Joe Biden in San Francisco, both sides, I think, kind of looked over the abyss and decided, right, we have to manage this relationship. We don't want some kind of accidental catastrophe. And that management is now occurring. Don't get me wrong, I don't think the fundamental sense of a real conflictual relationship has gone. That is still there, but it is just being better managed. That was the good news. There's no longer a sense that the relationship between the US and China is spiraling downwards, and that's the only thing that everyone's focused on. But unfortunately, there's quite a lot of bad news, which is that relative to last year, there is a much more pervasive sense of gloom about the Chinese economy than I had anticipated. Now, obviously, I've seen what you and all of our colleagues have been writing for the past year, and I know that the Chinese economy is in trouble. There's lots of evidence of loss of confidence from investors, but I was really struck, actually, by how pervasive that was, how pretty much everyone I talked to talked about lack of confidence, talked about the sense that the government's plan, which we'll talk about, fell short of what was needed and probably wouldn't work. And so I left, I guess, more upbeat that we are not on a path to imminent war, but really quite gloomy about the sort of prospects for the Chinese economy.

So, Zani, to focus on that good news, of the sense of a real dangerous confrontation being slightly less acute. If you're saying it's a tactical decision, essentially, by both governments to kind of lower the danger level. Did you hear in Beijing about specific concrete bits of cooperation that kind of add up to Proof of a desire to engage.

Yes. I think there was a very clear sense on both sides to focus on what had come out of the San Francisco meeting of the two presidents, and that there were now working groups being set up to look at everything from artificial intelligence to the export of narcotics and fentanyl precursors. And there was also a lot of focus on concrete evidence of communications being started again. We heard, for example, that there were 300 flights a week between the US and China before the pandemic. Then it was down to 12 a week last year. Now it's back up to 100. Still far less, but a big improvement on last year. There are now more American students in China. Last year I think it was something stunningly low, like 350. Now it's more than double going up again. And even actually, amongst the attendees at the cdf, amongst the business executives, there were a lot more Americans there this year than there were last year. You know, these are straws in the wind. But I think the absence in the official speeches of complaints about the US China relationship was itself quite telling. And then there are sort of anecdotal but clear bits of evidence that communications are increasing, that the two sides are talking. You know, just after I left this week, there was a phone call between President Biden and President Xi. Janet Yellen, the US Treasury Secretary, is doing a trip to China. So the contacts are there, the conversation is there. And frankly, things have got so bad last year that that's actually a big, big step forward. It's not solving the problem. But you are, I think, at the very least, going to have a lower risk of some accidental catastrophe if the two sides are talking to each other.

Yeah. I think the big shift that you hear is that China for so long resisted the idea that you could describe the relationship as a competition. They had this whole sort of talking point that it was outrageous to call it a competition. And now the Chinese are starting to sort of adopt that American Biden administration language about they have a duty as two nuclear arms superpowers to manage this competition responsibly. So that, I guess, is a big relief. But, Danny, there is a consensus still that America is bent on holding China down.

Yes, there still is that consensus. And the word that I heard from several Chinese interlocutors was bashing America is bashing China. And it is bashing China because it is determined to hold it down. The other argument that one hears a lot is the double standards of America. America talks about being a upholder of the international economic system. And then it just does what it likes and bashes China. So the underlying anger is absolutely still there. But I think a year ago there was a sense amongst the Chinese officials we talked to that speaking to or engaging with America was itself somehow a sign of weakness. And I think that is now gone. And there is a recognition that actually communication is a good idea. I don't know if you sensed that, but I felt last year when we talked to people, there was very much a view that there was not just no point in talking to the Americans, but it was somehow a sign of weakness to engage with them. The lack of communication was very much came from the Chinese side last year.

Yeah. And they wanted to be paid for kind of returning to the table with concessions that were just not very realistic. But you were also having some very interesting conversations. Obviously they were all off the record, so we had to be careful. But you met some very smart foreign policy people. I think we can say that you talked to them about Ukraine because you had just been in Ukraine. How does China's worldview, when they look at this chaotic global scene with the conflict in Ukraine, the conflict in Gaza, how does that fit into that sort of framework of a US China confrontation, competition?

Well, the interesting thing is that pretty much everything falls, as far as I can see, at least in my conversations with Chinese interlocutors, fits into this US China prism. I mean, I spoke at a foreign policy conference this year, as I did last year, about Ukraine, and I was struck by whether it is a conversation about Ukraine or whether it's a conversation about the Middle East. From the Chinese scholar's perspective, it's pretty much always seen through the prism of the U.S. china. So the outcome of Ukraine, China's view on it is determined by what is good or bad for China, which in turn is determined by what, what this means for the US China relationship. I mean, I'm kind of exaggerating only a little bit, but it seems to me sometimes when you're in Beijing that there's actually no other country that matters. You know, certainly Ukraine has no agency in Chinese eyes. And I'm not sure that they really think Europe has a huge amount of agency. And if it does have agency, it's only as a vehicle to be brought on side or not to try and make headway in the US China relationship. So it's very, very striking to me, at least coming to China irregularly, that the world from Beijing is a world that has kind of Washington and not much else.

That's exactly the complaint that you Hear. I mean, if you talk to foreign ambassadors based in Beijing, their life is spent basically having these meetings where the Chinese just kind of vent about America and they're like, you know, we do have some agency. We don't only act because the Americans tell us to do things.

They.

But given this obsession with kind of pushing America out of the way because China is trying to catch up and become a peer and maybe the world's most powerful country, how does that fit into the rhetoric that I think you also heard in your week in Beijing about China as this kind of global peacemaker, the country with a plan for kind of a way to run the world more peacefully, whether it's in Ukraine or the Middle East. Did you come away convinced that China is becoming a constructive great power when it comes to the balancing of major power interests and the bringing of peace?

It's really interesting, and I've thought about that. Well, you and I had conversations about that, too. Certainly that's what the rhetoric suggests. But it's not clear to me that there is much behind this other than, firstly, a complaint. The complaint of the world today is a world where America is bashing China. America has double standards, but it's a sort of nihilistic complaint. China wants a world where America has less clout, but it doesn't necessarily want a world where China has. Has a greater and more responsible role, at least, certainly not for the common good. I mean, I was very struck by several conversations. We talked about what was going on in the Middle east and particularly in the Red Sea. China should really care about the fact that the Houthis are lobbing missiles at international ships, because those ships, by and large, are carrying Chinese goods to Europe. They're actually not carrying any goods to America. And yet China's really not stepped up. It hasn't joined the international group. It's done virtually nothing except try and get some sort of side deal with the Houthis, that they won't attack Chinese ships. So that struck me as being a fairly vivid example of what I think is really going on, which is some grand rhetoric, any excuse to blame America or complain about America, but no real willingness to play a significant role of its own in any kind of constructive sense. And what worries me from that is what does that mean for areas like global health, climate change, all of the areas, the sort of, you know, boilerplate areas that people talk about as being ones of cooperation. I don't see the evidence that China wants to do something over and beyond protect its narrow interests and push against America.

Yeah. And, you know, if we're talking about a Chinese debate that is essentially obsessed with America, which I think is a fair word to use, it's also pretty obsessed about the elections in America in November, right?

No, it's not the only place that's obsessed about that. I mean, every single place I go and every single person I talk to, wherever within about 30 seconds, you start talking about the American election. For good reason. Right. The American election matters enormously, not just to the United States, but to everybody on the planet. But what was interesting to me was how much division there was amongst our Chinese interlocutors about what the election's outcome would mean. And I think, to sort of put it simplistically, there's one argument that Biden carried on with the Trump tariffs has probably had a more organized push against China. But at least with Biden, we know what we're getting. With Trump, he may be more transactional. He likes a deal that might be good, but he might also be a madman. So those Chinese who thought that Trump would be transactional thought that would be better for China. Those who worried about what he might end up doing and his unpredictability thought that actually a Biden second term would be better. And I suspect. I mean, I think the preponderance of views we heard was probably that Biden would be better. But tell me if you disagree with that.

It's kind of a sort of nihilism test. Right. There's this Chinese view that, you know, well, the good thing about Trump is that he would make democracy look terrible and damage alliances and do tremendous harm to the Western traditional order. And that would be pleasing in some way, and for some, that's enough. That's a win. And then others would say, well, hang on, we make all of our economic profits from a reasonably stable trading order. And even if the Biden administration, they're no free traders, they're not planning to kind of blow up the trading order in the way that you could imagine some versions of a Trump second term, essentially just slapping 60% tariffs on everyone and blowing up the world. And that would be a sort of empty victory for China. So for me, it was a kind of test of just how bleakly cynical the people we were talking to were, whether they were willing to take blowing up the world as the kind of price for making the west look bad.

I think that's right, David. It's probably true that actually the outcome for China is less dramatically bifurcated than many other parts of the world. I mean, I Think when you're sitting here in Europe, it's pretty clear that the range of outcomes is even more dramatic. Whereas actually, oddly, the, the range of outcomes on China might be less dramatic than for other parts of the world.

Yeah. As you heard so many times in Beijing, their number one complaint about the Biden administration is they call themselves kind of normal, responsible American administrators and yet all of the Trump tariffs remain in place and actually we keep getting new restraints on trade. And so, yeah, they probably are in a unique position there. But if we're going to call this the good news bit of this episode, because we did say that you did say last year that you thought it would be a big achievement if in 10 years time America and China avoided conflict. And that was a pretty worrying thought. Do you still think that that's the kind of test of success in 10 years, or are you slightly calmer?

No, I still think that's the test of success in 10 years. I absolutely do. Because fundamentally, the tensions in this relationship and the conflictual nature of it are still there. I think we've had a year where tactically the relations have improved, they've been well managed. That bodes, one hopes, well. But it's only one year and who knows what happens in November. And the underlying problems are really still there and they're as big as ever. So, no, I stand by my view that in nine years time now, if we've avoided conflict, it will be a tremendous achievement.

Okay, so that's the good news. I got a brace now for the bad news. So what are your reasons for concern?

Well, first of all, it's a different category. Right. Obviously the most important thing is to avoid conflict. And so that is a different scale of concern than what I'm about to get to. But the area that I'm more pessimistic about than I guess I had expected to be is the economy, for three reasons. Firstly, the economy really is sort of fundamentally has deep, deep problems. But the second reason is that to the degree that there is a sort of new plan for solving those problems, it is a plan that issues what you might call best practice for how to deal with the property bust and focuses instead on doubling down on high end manufacturing, which I think is a plan that is desperately unlikely to work. And thirdly, there seems to be a pervasive sense in Beijing that most technocrats and economists know this, and I thought this was for me one of the most remarkable things. There was a willingness to grumble privately and to be quite critical of the direction that the government is going in carefully and privately. And yet a sort of sense of resignation that policymaking is really dependent on one man and that man has set a course, is not interested in listening and ultimately really doesn't care about economics nearly as much as he cares about security. And so to summarize, the reason I'm gloomy is not that I think there's going to be a sort of imminent collapse of the Chinese economy. It's not that it's all going to end up in a total catastrophe, but it doesn't have the ingredients for real recovery and strong growth. To the extent that there is a plan, I think it's not going to work. And there isn't a willingness to listen and to course correct. And that willingness for the last 30 years has been an important hallmark of China's success. The leadership has always been willing to listen to technocrats and to course correct when necessary. And that just seems to not be present at the moment. So I was left with a sense of resignation about the economy and some sense sort of depressed at the lost potential because there's huge potential in the Chinese economy. It's an enormous country with incredibly innovative, hard working people that has been a huge engine of global growth that could be a huge engine of innovation and growth and all of that. And my sense is that some of that is going to be squandered foreign.

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So Zani, even if perhaps some of the people at that big gathering that you were at didn't hear exactly the kind of the reassurance that they were expecting, you know, they didn't hear a promise to have a kind of giant stimulus to start pouring concrete again that we'd seen for so many years from China to get the economy roaring we did hear lots of the new Xi Jinping slogans, the phrases that add up to that plan that you described as perhaps not really getting us there. And I guess number one phrase, if you were on buzzword bingo in Beijing when you were there, was new productive forces. Did you leave with a very clear sense of what that actually means and how new it is?

It was indeed new buzzword bingo. You could literally not listen to a Chinese official for more than a minute without hearing the phrase new productive forces. I do have a reasonable sense of what this means now, but I have it thanks to our excellent colleague Simon Cox, who has, in this week' view of the Economist, got, I think, the best explanation of this term and what it means. It's a sort of fantastically Marxist sounding term, but actually it's all about the application of science and technology to production. And in some sense the simple way of explaining it is that it's massive government led investment to boost high end manufacturing. And the idea of this is that it ensures that China has technological self reliance in a dangerous world where America may try and deny it technology and will also make China even more of a manufacturing powerhouse than it already is. And this is quite striking. I mean, you've mentioned that it's not the recipe most other countries would have used to deal with a property bust, but it's really worth dwelling on this. Most countries with China's current economic problems would do some combination of a big cleanup of the property crisis and a boosting of domestic demand, particularly since domestic spending is relatively weak, particularly consumer spending is relatively weak in China. At the same time, most countries at China's level of development would pivot more towards services away from manufacturing. That's what's tended to happen. But China is doubling down on manufacturing high end production and the idea is sort of threefold. Firstly, that it's going to use the massive arm of government to replace the kind of chokehold technologies that it's worried the rest of the world will deny it. Semiconductors, all of those kinds of cutting edge things. Secondly, and this is the ambitious bit, it's going to invent technologies that the rest of the world has yet to create. And you hear things like brain computer interfaces, I kid you not, that is one of the future technologies on the Ministry of Science and Technology's list. And then the third element is that the leadership plans to use massive subsidies and investment to upgrade existing industries. And the scale of ambition is really quite striking. In this week's cover story on this, as you know, our colleagues have done Some sums. And the annual investment in this quote, new quality productive forces, we reckon is something on the order of 1.6 trillion yuan, which is 20% of all investment, or the equivalent of about 40 plus percent of business investment in the US last year. So it's industrial policy on total steroids at a time when China is already under huge fire for exporting its surplus manufacturing onto the rest of the world.

So we've got to get away from that idea that a China shock is container ships loaded with boxes full of T shirts or China at home pouring concrete and building high speed train lines. This is China determined to occupy the commanding heights of 21st century technology with these kind of massive, massive bets on industrial upgrading. But as you say, Zanny, it's also a bet on exports. Right. When you were talking to people in Beijing, are they engaging with how the rest of the world is going to accept that wave of Chinese high tech stuff?

No, actually, I mean, just as there was remarkably little focus on the lack of domestic demand in China and what to do about it, so there was a sense that this manufacturing led approach had worked before and would work again. And you get an interesting sort of inversion of trade rhetoric in Beijing now. You hear Chinese interlocutors say, well, we are believers in free trade, we want a level playing field. A fair open world is what we're looking for. And the Americans are creating this protectionist environment and we are championing a free trade system. But I think it's both breathtakingly duplicitous and naive. It's duplicitous in the sense that it was clearly the mercantilism inherent in China Manufacturing 1.0, which in part led to the world we are in now, which is a world where everybody is turning protectionist and believing in industrial policy at the same time. A sort of naivety that doubling down on that will be somehow politically sustainable. And you already see in Europe huge concern about European industries, particularly from the onslaught of Chinese electric vehicles. But there'll be more of that to come. And I suspect, and this hasn't yet happened too much, but to the degree that China hopes to export a lot of new high end manufacturing goods to the emerging world, there may down the road be protectionist pressures too. You know, you can have a debate about whether this Chinese strategy sort of would have made sense in a world where you were genuinely in a free trade world, but in the world we're already in now of ubiquitous industrial policy, state subsidies, tariffs and huge fear of China. The notion that doubling down on this approach is geopolitically sustainable seems to me somewhat implausible. And I think we're going to end up quite, quite quickly in a world of even higher tariffs, tit for tat, retaliation, trade wars. And that's a really dangerous world to be in because it gets us back to where we started our conversation because it makes a more tense overall geopolitical relationship much more likely.

And obviously China's long record of playing divide and rule came up again. When you were in Beijing, we heard lots of Chinese voices saying, oh, the problem is the Europeans or the problem is the French. They're opposed to free trade, but actually we still have tremendously profitable trading relationships with, for example, the global South. So there's this whole kind of line of argument that you heard that, well, if the rich world is going to erect protectionist barriers under Donald Trump or Europe, well, we've still got all these kind of booming, booming exports with the global South. But are they right? Do you think that if in a decade or so China's dominance of global manufacturing is such that actually that starts to affect the chances of countries in Africa or South Asia to climb up the industrial kind of value chain, does that start to create headwinds for China too?

I mean, politically, I'm pretty sure it does. And you and I have debated this at some length in the back of taxis in Beijing because I'm a free trader to my core. And I think a lot of the concern in Europe or the United States is overblown. I actually think that if you want to have the fastest possible transition to a green economy, then getting cheap electric vehicles from China, or indeed cheap solar power panels is an important part of that. That said, I'm not politically naive, and it is clearly in a world where China is not just an economic competitor, but a kind of geopolitical adversary, the balance between what is safe for national security reasons and what is dangerous reliance on a potential adversary is a very difficult one. Which is why, you know, the United States developed this notion, as now infamously put by Jake Sullivan, the national security adviser, of a small yard and a high fence. We are in a world of yards and fences where countries are determined to protect themselves against adversaries, but also against others, because protectionism is in. And so whether or not free traders like the economists like this world, this is the world we're in. And so just as a matter of sort of realpolitik, it seems an odd decision to double down on a mercantilist, government subsidy driven drive into manufacturing and indeed manufacturing that in the absence of domestic demand will be export led manufacturing at this time. It just seems an odd policy choice for China to do that. And so it's a long answer to your question, but I find the sort of geopolitics of this, at least in the medium term, quite hard to understand.

That's fascinating. I think one of the sort of the neatest summaries we heard was one of our hosts said at one point, you know, China has had a very permissive, rich world for a long time and that helped China grow. And they're sort of testing their luck really.

You spend a lot more time studying the Chinese leadership than I do. But to draw that conclusion seems so strikingly naive, which makes me wonder whether or not it is actually driven by something slightly different, which is the overwhelming focus on domestic security and building up capabilities of home, never mind what the economic consequences are. Xi Jinping cares much more about having domestic industries that allow China to have access to cutting edge technologies. And so it's therefore a security strategy more than it is an economic development strategy.

100%. You know, one of the things I try and do in Beijing is make sure I talk to diplomats who've just had leaders in town talking to Xi Jinping, because I don't get to beat Xi Jinping. But he had a meeting recently with some Western political leaders and he sort of cited as an example the moment in the Cold War when the Soviet Union and China fell out, when Mao just kind of alarmed the Soviets too much and the Soviet technicians took all of their technology with them almost overnight, including all of the nuclear technology they were transferring to China. And Xi Jinping cited this and said, well, it forced us to invent our own nuclear bombs. It forced us to be entirely self reliant and it was ultimately good for us. And if the Americans cut off our access to high technology, the same constructive moment of hardship will be sort of witnessed again. And so he is a man so steeped in that idea of kind of fortress China in a dangerous world that survived the Cold War, that survived the pressure of the 50s and the 60s and can do it again. I think you're right. There is a very powerful element of domestic politics at work here. So Zani, I guess you know, all of the meetings I tried to set up and the meetings you had at the cdf, you had the Chinese officials, that's one group. Then you had foreigners. But I was so struck by some of the meetings with Chinese business people, Chinese professionals, Chinese scholars, Chinese perhaps, who used to work in the system. You know, they are seeing this as Chinese people do. And I don't know, I think that that sense of a lack of confidence came out very, very loudly from that group too. Right. This year. I mean, was that a change from a year before?

Yes, absolutely. And some of these people were people who, thanks to you, I had met last year. And sometimes when you meet someone for the second and third time, there's a kind of level of, I guess, trust and familiarity. So I'm trying to kind of account for that. But I was very struck by two things. Firstly, yeah, a sense of loss of confidence in the direction of the domestic economy. It was not that people thought the whole thing is about to fall apart, but there was a real sense that wasn't clear when or how consumer confidence was going to strengthen. It wasn't clear how entrepreneurial animal spirits were going to be brought back. And the sense of resignation that came with that, that, yeah, this is the path we're on, and a sort of, you know, sotto voce, that's what he wants. It really is a little bit like Voldemort, the man whose name must not be said. But it was very clear from everyone that there was a view that one person set the economy's direction or policy direction, and that there was no interest in hearing alternative views, no consultation. What was very clear is that people who had been involved in Chinese economic policy for a long time, or retired officials, or people who looked at this economy for a long time, felt that this current environment was very different. This is not an environment where technocratic experts debate the best course forward. And at the end of that debate, a course is set. The course is set by one person who's never questioned and whose priorities, I think, are ultimately not economic. They are, as we've discussed, about China's security. And so from a kind of economic development perspective, there's a general sense of gloom. It's not collapse, but it's gloom. It's stasis, and it is enormous opportunity cost. I guess if last year my worry was a US China relationship spiraling out of control, this year I leave with a worry of a China that is not getting to grips with the real nature of its challenges, and that is, if anything, moving in a direction that ultimately, at least from an economic perspective won't work. So I left. I mean, not so scared as last year and not depressed. It's hard to be too depressed in Beijing because it's an extraordinary country with extraordinary people, and I'm always stunned by that. But there is a sense to me in which I worry that in too many ways the country's on the wrong.

Track right now and that those extraordinary people that we met, people aren't making the best use of them.

Absolutely. It's a generation that will not have the opportunity to achieve what their parents did.

Zanny, thank you so much for joining us on Drumtower.

Thank you. And thank you, David, for organizing the most extraordinarily fascinating week.

Thank you for listening to Drumtower and thank you especially to Marie, a French student who listens while taking breaks from her studies. She told us that listening to our show is the one thing that helps her relax. We love reading your emails. Please keep sending us more@drumconomist.com Our editor is Poppy Seabag. Montefiore, Alize, Jean Baptiste and Jeha Chen produced this episode. Sound design is by Tingley Lim and Drum Towers. Music was composed by Jocelyn Tan. The executive producer is Hannah Mar.