China had a much smaller state in terms of the physical capacity as compared with Europe during that comparable period of time. Today, if you look at the tax revenue relative to GDP, even China today is not an excessively high ratio. So I would argue that Chinese state in the 19th century did not derive all its power from taxation. But say when China needs to fight Britain in the Opium Wars, or come the 1920s, is that lack of fiscal capacity what's holding back China?
Yasheng Huang has written two of Tyler’s favorite books on China: Capitalism with Chinese Characteristics, which contrasts an entrepreneurial rural China and a state-controlled urban China, and The Rise and Fall of the EAST, which argues that Keju—China’s civil service exam system—played a key role in the growth and expanding power of the Chinese state.
Yasheng joined Tyler to discuss China’s lackluster technological innovation, why declining foreign investment is more of a concern than a declining population, why Chinese literacy stagnated in the 19th century, how he believes the imperial exam system deprived China of a thriving civil society, why Chinese succession has been so stable, why the Six Dynasties is his favorite period in Chinese history, why there were so few female emperors, why Chinese and Chinese Americans have done less well becoming top CEOs of American companies compared to Indians and Indian Americans, where he’d send someone on a two week trip to China, what he learned from János Kornai, and more.
Read a full transcript enhanced with helpful links, or watch the full video.
Recorded January 17th, 2023
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Photo credit: MIT Sloan School