Beyond Socialism and Capitalism: Keyu Jin in Tirana

In a public conversation with Linda Rama, the Chinese economist traces the mechanism behind China’s divergence from the path Albania took in 1978, the costs the model has accumulated, and the limits it is now reaching.

by Rexhina Bici (Tirana)

Keyu Jin came to Tirana with a book and an argument. The book, The New China Playbook: Beyond Socialism and Capitalism, has been translated into more than a dozen languages and reads in places like a primer on a system the West has spent decades misnaming. The argument, when Jin sat down with the economist Linda Rama for a public conversation in front of students, bankers, and academics, was that the mechanism behind China’s growth is more idiosyncratic than outside analysts have been willing to recognize, and that recognizing it matters because the mechanism has not really changed.

Rama framed the conversation in terms an Albanian audience could not miss. “Once we were married with China,” she said, “but we got divorced exactly at the moment when this book starts to talk, 1978.” That year Deng Xiaoping pivoted China toward economics. Albania doubled down on ideology. The starting points were comparable. Forty seven years later they are not.

Jin, born in Beijing in the early 1980s, trained at Harvard, taught for fifteen years at the London School of Economics and now at the Hong Kong University of Science and Technology, has spent her career trying to explain how that gap opened, and why most Western frameworks miss the mechanism that produced it.

The Pragmatist’s Inheritance
Deng’s reputation in China is intact across generations, and Jin made clear why. He was not a doctrinaire reformer. He had spent time in Moscow and in Paris, spoke some French, decided he preferred the croissants to the alternative, and concluded, by Jin’s account, that the French route was more useful than the Soviet one. The economic strategy that emerged was what Chinese economists call gradualism: take a small piece of the country, try something radical, see what happens, scale only what works.

The contrast with the Eastern Bloc transitions of the early 1990s, the contrast Rama herself lived through, is hard to overstate. “Within the night things changed,” Rama said, recalling 1990. The state collapsed as the agent that had organized daily life; nothing had been built to replace it; inflation, unemployment, capital flight, and emigration arrived together. Jin acknowledged the comparison with deliberate care. Big bang reform, in her telling, has a record of producing precisely the volatility China spent forty years avoiding. “There has been no major mistakes,” she said of China’s macroeconomic trajectory, “no major collapse of the financial system for forty years, no balance of payments or exchange rate crisis.” Her summary of the result was unsentimental: China is the country that has grown fastest for the longest period of time in human history.

The Mayor Economy
The most original argument in Jin’s book, and the one she returned to throughout the evening, is that China’s growth model has never been as centralized as outside observers think. The decisions came from the top. The implementation came from local governments, and the local governments were the radicals.

Jin calls this the mayor economy, exploiting a Chinese pun: market economy is shichang jingji; mayor economy is shizhang jingji. The two phrases sound nearly identical and describe nearly opposite things. Western capitalism leans on market discipline. The Chinese model leans on local governments competing against each other to attract investment, build companies, generate GDP, and win promotions.

The example Jin offered was Zhejiang province, home to Alibaba and now to DeepSeek. Zhejiang in the early reform period was poor and mountainous. Its flat agricultural neighbor, Jiangsu, industrialized first, attracted the state owned enterprises, and pulled ahead. Zhejiang had no such option. Its local administrators responded by becoming protective of capitalist activity to a degree that would have been politically dangerous elsewhere, sometimes literally putting “red hats” on private firms to disguise them as collective enterprises. Today Zhejiang is among the three richest provinces in China and the most internationally entrepreneurial.

Multiply that local creativity by the number of Chinese cities and the result is what Jin described as “many Silicon Valleys.” Eighty cities now produce electric vehicles. Dozens specialize in different segments of the semiconductor stack. A 2005 map of solar patenting in China would show a desert; a decade later the same map shows hubs across the country generating between fifteen hundred and two thousand new patents per year per city, in solar alone. None of this happened because the market organically produced it. It happened because local administrators were competing to be the next Shenzhen.

The Costs
Jin was unusually direct about what this model has cost. “It’s very costly,” she said. “It’s not the best model at raising personal welfare.” She listed the trade offs without softening them.

Eighty cities producing EVs is a duplication of investment that no efficient allocator would design. China’s perennial under consumption problem, the gap of fifteen to twenty percentage points in consumption as a share of GDP between China and advanced economies, is in part an artifact of the same incentive structure: local governments are rewarded for cultivating supply, not for building social welfare. The example she offered was the rural pension. The average rural pension in China is roughly thirty five US dollars a month, about one fifteenth of the average urban pension.

The financial system represents a separate set of pathologies. Jin reminded the audience of a paradox that Western readers usually miss. From 1997 to 2017, during the period of China’s most explosive economic growth, the Chinese A share market underperformed the Nikkei. A diversified portfolio of mainland stocks held over those two decades returned, in real terms, roughly the original investment. The country with the best economy in the world ran the worst major stock market.

Jin attributed this to two forces. The first is that capital allocation in China runs through state banks, which account for roughly eighty percent of total social credit. In the United States the inverse holds, with capital markets accounting for around eighty five percent. State banks lend where they are directed to lend, which until recently meant state owned enterprises, infrastructure, and property, not the private firms that needed financing most. Jin was unguarded about what that means strategically: had China’s financial system been better, she said, its innovation would be even further ahead, and the depth, liquidity, and breadth of US capital markets remain the single most underestimated American advantage.

The second force is paternalism. “I want to protect you for your own good” is, in Jin’s reading, a structural feature of Chinese governance that cuts across parents and children, teachers and students, the state and its citizens. When stock markets fall, the state intervenes. When they rise too high, the state cools them. Retail investors, who dominate trading, are spared losses but never accumulate the scar tissue that produces a mature market.

The Pivot
The latest five year plan, the fifteenth, signals a deliberate redirection. Wealth accumulation in Chinese households has historically been concentrated in residential property; that channel is now exhausted, and the plan opens explicit space for capital markets to take its place. Market capitalization to GDP in China sits near eighty five percent against roughly one hundred and twenty five percent in the United States. The gap is the policy target.

The more substantive shift, in Jin’s reading, is that the leadership has begun asking different questions. “What is all this growth for?” she said, summarizing the internal debate of the past decade. “Is everything about efficiency? Is that socially optimal?” The vocabulary that has emerged from this reckoning, common prosperity, balanced regional development, environmental and social objectives layered on top of GDP, has been read in Western capitals as a turn against private enterprise. Jin pushed back. The ambition, in her view, has been misidentified rather than rejected. Beijing has not found the answer, but it has begun asking the question, and a generation of Chinese policymakers now treat housing prices, demographic collapse, and the social costs of the 2008 financial crisis as evidence that pure efficiency was never socially optimal in the first place.

The Long Calibration
The thesis that drew the most attention in Tirana was Jin’s argument that China’s strategic time horizon has been radically misunderstood abroad. The pivot toward leading edge technology, the push into electric vehicles, semiconductors, and AI, did not begin in 2018 in response to the first Trump tariffs. It began in 2005, accelerated in the mid 2010s, and was largely in place before the 2016 election.

“China has been preparing for Trump ten years even before Trump won the election,” Jin said. The framing was provocative, but it sat on a structural argument. The political system permits long horizons that are difficult to sustain in democracies. Jin was honest about the trade off: there are no guarantees against derailment, and a system without political resistance can also fail spectacularly. But on the empirical question, she was firm. None of the thirteen countries that have escaped the middle income trap, she noted, did so as democracies; they grew first and democratized later. And on the specific question of why China entered the second Trump term with native semiconductor design firms, EV champions, and a domestic AI ecosystem capable of producing DeepSeek, the answer is that the preparation began long before the threat materialized.

Security as Norm
Jin closed with an observation that economists, herself included, find painful. The thirty year period of hyper globalization that ran from the 1980s to the 2008 financial crisis may turn out to be the anomaly rather than the rule. Throughout history, when countries become deeply interdependent, their vulnerabilities become visible, and the response is the construction of what Jin called “anti chokepoint architecture.” Britain weaponized cotton infrastructure against the United States in the nineteenth century; America responded by building its own internal economy. China, watching ports, payment systems, energy routes, and semiconductor supply chains being weaponized in the present, is now building parallel infrastructure at a pace few outside observers have absorbed.

The implication for the Albanian audience was left for Rama to draw. Hyper globalization made small open economies viable in ways that the emerging order may not. Security concerns, which had become invisible during the Pax Americana, are returning to the center of strategic calculation. The objective function is no longer pure economic efficiency. None of the analytical tools most economists were trained on, Jin acknowledged, were built for this.

What Rama and Jin did not quite say, but kept circling, was that the divergence between Albania and China after 1978 was not only a divergence of policy but of patience. Deng’s gradualism produced an economy that could course correct. The Eastern Bloc’s overnight transitions produced economies that could not absorb the shock. Albania is not going to adopt the mayor economy, and Jin made no effort to suggest it should. The analytic point that survived the conversation was sharper than that. Mechanisms matter more than labels. What made China’s growth durable was a particular structure of local incentives, central direction, and competitive experimentation that does not appear in any standard model. The cost of misreading those mechanisms, for any country trying to position itself in the order Jin described, is high.

Keyu Jin’s book The New China Playbook: Beyond Socialism and Capitalism is published in English by Viking. The conversation took place in Tirana during her recent visit to Albania.