Mr. Wang, what is the biggest misunderstanding about China in the West?

The West often paints China as an expansionist power, a revisionist actor seeking to overthrow the international order. This is simply not true. China has benefitted tremendously from globalization and has no interest in disrupting a system that has fueled its economic rise. Beijing seeks to improve and amend the current system, particularly in areas like increasing the representation and influence of developing countries within existing international institutions, such as the World Bank and the IMF, not dismantling them. China’s engagement with the world is primarily commercial. Its growing economic and military strength is a natural consequence of its development, not a sign of aggressive intent.

Donald Trump will come back to the White House. Is he easier or harder to deal with than other US presidents?

The differing narratives about Trump – the unpredictable wildcard versus the pragmatic dealmaker – hold some truth. While his deal-making approach might offer opportunities for negotiation, his unpredictability is deeply concerning, especially for a relationship as complex as the US-China one. Even if Trump is a dealmaker, it remains to be seen if China can strike a deal when even close US allies have struggled. His past actions, such as imposing tariffs on both China and Washington’s allies in Europe, raise serious doubts.

China’s political system seems opaque to outsiders. Can you shed some light on the internal dynamics?

While less transparent than Western parliamentary systems, there is substantive policy discourse within China. Take the current debate around economic stimulus. Many see a discrepancy in the intensity of expansionary policies, between the People’s Bank of China, having adopted significant monetary policy relaxation, and the Ministry of Finance, which seems hesitant on fiscal stimulus. This kind of bureaucratic power play, including the interplay between central and local governments, is a key feature of the Chinese system just as in other countries, though it often goes unnoticed in Western media. I argue against Orientalism, or «othering» China as not a normal country.

China’s cabinet, the State Council, called in September for a more proactive fiscal policy, yet the Ministry of Finance’s response has been underwhelming. What explains this discrepancy?

The State Council issues broad directives, but the specific planning and implementation details fall to individual ministries. The Ministry of Finance has significant leeway in advising – and, in effect, deciding the «how» of a proactive fiscal policy. While the central government might desire a particular outcome, the specifics, such as whether to prioritize direct subsidies to citizens or more traditional infrastructure spending, are subject to internal debate and bureaucratic processes. Beyond the recently announced central-local debt swap to boost local government finances, the Ministry of Finance appears to be taking a more conservative, by-the-book approach, prioritizing a healthy budget over aggressive stimulus. This contrasts with the actions of many Western governments during the Covid-19 crisis, which took on significant debt.

There’s a perception that China is resistant to building a robust welfare state. How strong is this sentiment?

It’s a deeply held belief, rooted in both the Communist Party’s ideology and traditional Confucian values. There’s a strong emphasis on hard work and personal responsibility, and a suspicion of «subsidizing laziness.» This aligns, surprisingly, with some fiscally conservative viewpoints in the West. However, there’s ongoing debate about providing direct subsidies, particularly to encourage higher birth rates, suggesting this stance isn’t absolute. Calls are growing to strengthen state-run pension and medical insurance systems.

Does the performance of the stock market influence government policy in China?

While the Chinese stock market’s long-term performance hasn’t been strongly correlated with the real economy, significant declines do impact public sentiment and consumer confidence. Given the large number of retail investors in China, stock market fluctuations have a more direct impact on households than in the West, where institutional investors dominate. This makes it a factor in policy decisions, as evidenced by recent measures aimed at stabilizing the market.

How does declining consumer confidence and the real estate slump affect China’s economic outlook?

The sharp drop in consumer confidence, exacerbated by the downturn in the real estate market, presents a serious challenge. While there are bright spots in sectors like electric vehicles and renewable energy, these are still relatively small compared to the massive real estate sector. The government’s focus on supply-side policies, such as investing in new technologies, must be balanced with walking its talk on demand-side issues to reignite growth.

What key factors should we watch in regard to the Taiwan situation?

The historical context is crucial. Both sides have long acknowledged, at least formally, the «One China» principle. However, public opinion in Taiwan has shifted towards maintaining the status quo. The key to avoiding conflict lies in discouraging any moves toward formal Taiwanese independence and promoting dialogue based on the «1992 Consensus,» which allows for differing interpretations of «One China.» The US and its allies should avoid sending mixed signals that could embolden pro-independence factions in Taiwan. Restraint and a focus on pragmatic solutions are essential to maintaining peace and stability in the Taiwan Strait.