The Third Revolution | Elizabeth C. Economy

Summary of: The Third Revolution: Xi Jinping and the New Chinese State
By: Elizabeth C. Economy

Introduction

Embark on a journey to uncover the seminal transformation of China under the leadership of Xi Jinping. In ‘The Third Revolution: Xi Jinping and the New Chinese State’, Elizabeth C. Economy takes you through China’s growth story and the multiple strategies, paradoxes, and challenges that lie at its core. With centralized authority, a more active state, tighter restrictions on foreign influence, and a growing global presence, China’s ‘Third Revolution’ aims to achieve Xi’s ‘Chinese Dream’. This book summary reveals the inner workings and complexities of China’s ever-expanding global presence and its implications for the world.

China’s Third Revolution

When Xi Jinping became China’s president, he launched the “Chinese Dream,” a vision of national rejuvenation through economic growth, military power, and social welfare. Xi’s “Third Revolution” comprises centralized authority, a more active state, tight restrictions on foreign influence, and a bigger presence on the world stage. Despite its paradoxical nature and criticism for stifling dissent, Xi aims to fill the void as a leader in the liberal world order while becoming increasingly authoritarian.

China’s Economic Challenges

China must restructure its economy and increase consumer spending to become a true economic power. Despite impressive growth, the nation faces challenges such as an aging population and a need for economic reform. The government continues to pour money into key sectors, but leadership remains resistant to full privatization. Xi’s consolidation of power has increased Party involvement in the management of state-operated enterprises, hindering necessary changes. To become a true economic power, China must shift from a low-wage economy built on low-cost manufacturing to one based on creativity, high-end manufacturing, and services. China’s middle class has seen significant growth, but with consumer spending comprising just 37% of GDP in 2014, there is room for improvement. In addition, one analyst projects a $12 trillion shortfall in China’s pension system if reform does not occur. China’s position on the global stage depends on maintaining outsized growth and lifting millions out of poverty, but it must address its economic challenges to continue on this trajectory.

China’s Struggle with Innovation

China has proven to be successful in adapting products to consumer tastes but struggles with true innovation. The government’s heavy involvement in technological development has inhibited creativity and bred inefficiency. Patience and the willingness to fail are necessary for true invention, something China’s business culture discourages. Additionally, the lack of protection for intellectual property rights has led to a culture of stealing ideas from American and European companies. These factors have hindered China’s ability to produce products that can capture the global market.

China’s Pollution Crisis

China’s persistent reliance on coal as a primary source of energy has led to severe pollution problems. The country’s air, water, and soil are among the world’s most polluted, affecting the health and wellbeing of its citizens. The government’s reluctance to address this issue has only made matters worse, as seen in their reaction to the US embassy’s air-quality monitor Twitter feed. However, pollution is not the only environmental problem China faces; water supplies are rapidly diminishing, and the quality of those remaining is poor. Faulty pipes waste 20% of China’s water supply, and corporations have been known to waste water, further worsening the issue. The result has been the creation of cancer villages, which are towns with elevated cancer rates due to pollution. While there are possible solutions, such as fracking for natural gas to reduce coal reliance, they also have their drawbacks, such as being water-intensive. The pollution and water problems have resulted in a drag on China’s growth, making it imperative that the government addresses these problems.

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