Nicholas Borst, Vice President at Seafarer Capital Partners, discusses his insightful book, exploring China's economic contradictions. He delves into the Communist Party's balancing act between state control and market reform, and how this tension impacts Xi Jinping's policies. Borst breaks down the complexities of capital allocation, revealing the government's favoritism towards large, state-sanctioned projects at the expense of small businesses. He also addresses China's quest for economic self-reliance, particularly in the electric vehicle market, highlighting the interplay between innovation and regulatory challenges.
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insights INSIGHT
China's Reform Balances Market and Control
China's reforms aim to balance market-driven growth with maintaining Party control over key economic sectors.
This dual approach explains the persistent tensions and economic challenges China faces today.
insights INSIGHT
1990s Reforms Save Big SOEs
The 1990s reforms favored strengthening large state-owned enterprises (SOEs) while letting smaller, less crucial ones decline.
Private sector growth filled gaps but wasn't intended to replace SOEs in commanding industries.
insights INSIGHT
Reformers Embrace Markets with Limits
Zhu Rongji and other reformers believed in market power but not full privatization.
Market tools were used to boost efficiency while retaining Party control over vital enterprises.
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The Bird in the Cage, China's Economic Contradictions
The Bird in the Cage, China's Economic Contradictions
China's Economic Contradictions
Nicholas Borst
Nicholas Borst's "The Bird in the Cage" offers a nuanced analysis of China's economic development since the reform era. The book challenges conventional narratives by highlighting the consistent tension between market forces and state control. Borst meticulously examines the strategies employed by the Chinese Communist Party to leverage market mechanisms while maintaining its grip on key economic sectors. He argues that this approach, while fostering growth, has also created inherent contradictions and vulnerabilities. The book provides valuable insights into the complexities of China's economic trajectory and its implications for global trade.
The Chinese Communist Party’s complex and contradictory embrace of capitalism has played a pivotal role in shaping China’s economic reforms since the late 1970s. The Bird and the Cage: China's Economic Contradictions (Palgrave MacMillan, 2025) explores the persistent tensions between state control and market forces in China. It shows how these tensions provide a framework to understand Xi Jinping’s recent efforts to tighten control over the Chinese economy. It also evaluates the broader implications of these policies for China’s economic trajectory and its global trade relationships.
Nicholas Borst is vice president and director of China research at Seafarer Capital Partners, and a member of the seventh cohort of the Public Intellectuals Program of the National Committee on US-China Relations. Prior to joining Seafarer, he was a senior analyst at the Federal Reserve Bank of San Francisco covering financial and economic developments in Greater China. Previously, Mr. Borst was the China program manager and a research associate at the Peterson Institute for International Economics. He also worked as an analyst at the World Bank, reviewing Chinese overseas investment projects. He was the founder and editor of the Peterson Institute’s China Economic Watch blog, the co-founder of the Federal Reserve’s Pacific Exchanges blog and podcast, and the founder of Seafarer’s Prevailing Winds blog.
His research and commentary have been featured in the Financial Times, The Wall Street Journal, The Economist, Bloomberg, The Wire China, and South China Morning Post. He has testified before the U.S.-China Economic and Security Review Commission on two occasions.
Mr. Borst holds a B.A. in political science and international studies from the University of Arizona. He holds a certificate in Chinese studies from The Johns Hopkins University – Nanjing University Center and a master’s degree in international relations and economics from the Johns Hopkins University School of Advanced International Studies. He is a CFA charterholder and a member of the CFA Institute.
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