those in senior subordinate roles were chosen, and then the first rounds of plans were made. As with most new
leaders coming into power, there was a lot of excitement and eagerness to make big improvements. The process of
coming up with their plans included many brainstorming sessions about what policies and plans were most
appropriate. I was lucky enough to participate in a couple of these in which there were very frank conversations
about how to deal with many difficult and sensitive situations, including how to deal with corruption, excessive
debt, and other such things. It was a wonderful collaboration of people with different perspectives who wanted to
help. The frankness, open-mindedness, friendliness, and intelligence that was brought to these discussions was
wonderful. These policy makers clearly felt that economic reforms (i.e., moving to more market-driven resource
allocations that included providing less support to uneconomic state-owned enterprises and less protection to
entities that made bad loans) had to be made, corruption had to be dramatically reduced, and rule of law needed to
be increased.
Since then I have closely studied their financial and economic circumstances and have had numerous
conversations with top economic policy makers about their circumstances and policies—about their excessive debt
growth, the development and management of their shadow banking system, the development of financial markets,
the vulnerabilities in their financial system, the trade dispute with the US, other disputes and cooperations with the
United States, and other things that were going on in the world. I tried to see things through their eyes and think
about what I would do if I were in their shoes and they tried to see things through my eyes. We discussed how
things work (i.e., cause/effect relationships), how they worked throughout history, how they were working at the
moment, and we discussed principles for dealing with them well. In other words I shared with them what I saw in
much the same way that I am sharing it with you in this writing, and we discussed it, looking at the circumstances
in much the same way doctors would look at and discuss medical cases.27 As you probably know by now, I
believe that everything works like a machine with timeless and universal cause/effect relationships. Chinese
leaders do, too, so we would talk about these cases and how the timeless and universal principles of how to handle
such things would apply to the situations at hand. I found that when I gained the complete picture of all the
considerations they faced that I almost always would have pursued the same policies that they pursued because the
mechanics of the situations warranted these treatments. I of course focused most on economic and market issues,
though our discussions encompassed other issues like human nature, culture, and geopolitics as well.
As far as economics and markets are concerned, under the Xi administration China aggressively pursued
policies to reform and open up its markets and its economy, to gain control of and manage its debt growth,
to more flexibly manage its currency, to support entrepreneurship and market-oriented decision making
especially in industries that China wants to be a world leader in, to establish sensible regulations run by
well-developed regulatory organizations, to build its capabilities in technologies and industries of the future,
to broaden the economic benefits to extend to those people and those parts of the country that were lagging
the most, and to control environmental pollution. It accomplished a lot that was consistent with these
objectives. Still, many people don’t see it that way, which I suspect is because a) they are coming at the same time
that other controls are tightening up, b) the privatizations and reforms of state-owned enterprises aren’t as fast as
some people would like, c) some of the supports (like credit availability) for small- and medium-sized
organizations are not as good as they are for larger state-owned enterprises (which has more to do with the
challenges of getting money and credit to SMEs than with the government’s reduced intentions to foster the
development of SMEs), d) the government still sometimes expects banks and companies to do uneconomic lending
and directs the economy so much from the top down (because it wants to guide policy for what it believes is best
for the whole), e) China coordinates with its businesses in pursuit of national goals, f) China doesn’t let some
foreign companies operate on the same terms as Chinese companies in China, and g) China coordinates fiscal and
monetary policy to regulate the economy to meet its objectives more than is done in the major reserve currency
countries—all of which are typically unpopular with capitalist outsiders. However, the biggest reason for the
criticisms, more important than any of these, is that most people don’t understand the perspectives of those in
charge, and they don’t understand the range of circumstances that influence their decisions and how they are
weighing them. For many years I have looked at economic and financial issues in China and discussed them many
times with top Chinese economic policy makers and, from this informed perspective, can tell you that I would
have done almost the exact same things as they did if I were in their shoes. So, I think the main reason I see what
the Chinese have been doing in economics and markets more favorably than most non-Chinese observers is that I
have been lucky enough to have had the opportunity to see things through their eyes and to discuss and agree on
how the economic and market machines work.