The New China Playbook: Beyond Socialism and Capitalism by Keyu Yin
Book Review by Nout Wellink
For an outsider, China is difficult to understand. Such an outsider constantly encounters governmental interventions that contradict free market principles. The author of this fascinating book, Keyu Yin, seeks to explain why and how China’s approach (“Playbook”) is different from that of the West. Different, sometimes hard to understand, and not always entirely consistent.
Yin observes that, even 30 years after her first stay in the United States, the same questions are still being asked as they were in 1997. Her conclusion: even the most developed American has a limited understanding of what is happening in China. Deeply rooted is the belief that things will go disastrously wrong if the country doesn’t converge with Western values, economic systems, and political beliefs. In her book, she follows a more nuanced, complex, and meaningful approach. Only in this way can we understand which elements of the Chinese model are crucial and permanent, and which are temporary. In my opinion, Keyu Yin’s analysis is of great value to anyone involved in China, such as politicians, businessmen, and investors.
Yin sees the model that has developed in China (“Socialism with Chinese characteristics”) as a unique blend of a centrally planned economy and a market economy, constantly seeking a balance between the state, industry, market, community, and individual. I myself strongly felt the omnipresence of the State (read Communist Party) during my administrative involvement with two large Chinese state-owned banks, BoC and ICBC. I agree with Yin’s assertion that this dominant presence poses an inherent risk to Chinese society and economy, but, as I have experienced, it also holds the potential for great strength.
According to Yin, the unusually strong position of the State is rooted in the country’s centuries-old bureaucratic structure and the state ownership of land, resources, and institutions. There is also a dynamic balance between central and local authorities, with occasional policy contradictions. In times of external shocks or crises, as Yin notes, power tends to shift towards the center. We’ve seen this in recent years, where the Party’s grip on society has clearly increased.
The Party sees SOEs (State-Owned Enterprises) as a crucial part of the Chinese model, indispensable for achieving vital policy goals. These enterprises will not be privatized, even under significant external pressure. The discussion with China should, therefore, not focus on privatization but on how these institutions function in a market-oriented way. This is a more meaningful and discussable approach because the efficient allocation of scarce resources is also a Chinese interest.
Yin connects the dominant role of the State to the elusive concept of “culture.” The author refers to the paternalism deeply embedded in China’s history and culture. I cannot assess this, but I do agree with the conclusion she draws from this. In her opinion, “Stability” is the top priority of “China’s fatherly government.” Stability is indeed a key concept when it comes to understanding China. Political or economic discussions that threaten stability can lead not only to confusion and unforeseen reactions from the authorities but also to overreactions, which in turn lead to instability. As Yin rightly points out, understanding is different from unconditionally approving all actions taken based on this top priority. In the author’s words, there is constant maneuvering between Scylla and Charybdis.
Yin’s book is too rich in content to go into detail about all the aspects she mentions in a short time. Let me highlight a few that I recognize from my own experience. Yin refers to the collective memory of a not-so-distant past of hunger, deprivation, and backbreaking labor. This memory and the subsequent enormous progress—something a colleague once told me—make him and others look with some leniency at the mistakes made by the current government. When I asked how long this leniency—and the acceptance of the aforementioned paternalism—could last, the answer was somewhat vague: flexibility and pragmatism are part of the Chinese approach. “No path is fixed.” This aligns with Yin’s observation that China is constantly changing. More space will be asked for and given to protect the individual. Governments will also increasingly be held accountable for their actions.
Another point of importance that Keyu Yin mentions is the scale of the country and the often fierce domestic competition in the private sector. A combination of scale and misguided central impulses can, of course, have disastrous effects. A chilling example of this is Mao’s choice for the Russian industrialization model. But scale and competition can also lead to unmatched cost reductions, thus creating friction in international trade. The Chinese economy cannot be understood without taking this into account in analysis and judgment.
The dynamics of the private sector are also clearly visible in the rapid and broad adoption of new technologies. The startup DeepSeek (a “low-cost, high-performance large language model”), launched on January 20, 2025, has caused a shockwave, not only far beyond China but also within it. In China, DeepSeek has, on the one hand, caused a wave of national pride, but on the other hand, also some anxiety—particularly among young job seekers. The shockwave in the Western world has mainly been about the progress China has made in AI, but we fail to realize that by lowering the cost threshold, the real shockwave is still to come. Enterprises and governments throughout China, prompted by the State, are now planning a rapid rollout. Reports from companies and local governments are already appearing in the press. To compete with China, we must not only focus on promoting technological breakthroughs but also on their broad, actual usage.
Yin sees innovation and entrepreneurship as “defining features,” crucial characteristics of the Chinese economy. In her book, she argues that it is the combination of macro-level state guidance and micro-level market mechanisms that has led to China’s explosive growth and technological leap in such a short time. In China’s hybrid model, things sometimes go wrong due to contradictory mandates at the central and local levels and due to tensions when the government and markets move in different directions. But flexibility and pragmatism then act as corrective factors: there is no fixed path to the future.
In the final chapter, Yin addresses some points that deserve further reflection. She notes the Chinese tradition of placing the community’s interest above that of the individual. In her opinion, this stands in stark contrast to the approach in the West. In her Chinese “Playbook” for the future, she sees a search for a new balance between greater equality and market initiatives, security and quality growth, self-reliance, and engagement with the rest of the world. China, in her opinion, is leading the way in this search. “Common prosperity” in China and “shared prosperity” with the rest of the world are, in her view, crucial components of China’s future strategy. These elements are missing in the Western world, and she believes that this explains why people there are fearful, angry, and disillusioned. Her remarks on China’s approach to flagrant illegal incomes, the anti-corruption campaign, and extremely powerful internet giants have gained added color since the start of President Trump’s second term.
Another point from this extraordinarily readable book deserves attention. China, which long ago was the richest, technologically most advanced, and best-equipped country in the world, tirelessly strives for a position that reflects its size and stage of development. In her view, the West will have to face and accept this reality, no matter how difficult that may be. Yin’s hopeful message for the future is that our nations have more in common than we realize. At the same time, she warns that we must be careful not to create a dangerous world by propagating a transactional worldview of winners and losers, thereby pitting people and nations against each other. She wrote this before President Trump began his second term.
Despite many roles and activities in international banking and academia, Nout Wellink has time to read and write an interesting review for ChinaNU+. This time, he discusses The New China Playbook: Beyond Socialism and Capitalism by Keyu Yin. He believes the analysis presented by the author is of great value to anyone involved in China, such as politicians, businessmen, and investors.
