In her new book, Gilded Cage: Technology, Development, and State Capitalism in China, Ya-Wen Lei, a professor of sociology at Harvard University, describes how the Chinese Communist Party has extended its social contract with the people of China — to provide stability and economic growth in exchange for the loss of certain freedoms — by leveraging the tools of the high-tech economy to promote a digital domain controlled by the central government. Lei is from Taiwan and is affiliated with the Fairbank Center for Chinese Studies and the Weatherhead Center for International Affairs. The following is a lightly edited transcript of a recent conversation.
Q: What’s the “gilded cage” of your new book’s title?
A: Gilded Cage is the story of how China transitioned from a labor-intensive economy to a high tech-oriented economy, and how the government designed this transformation, and the kind of instruments it uses. The cage enables and also restricts different social groups, including government officials themselves. The story is about the economic changes in the lives of government officials and workers in the manufacturing sector and the platform economy, like delivery workers and software engineers.
Who are the “old birds” you write of in the cage metaphor?
The phrase “birdcage economy” is often used to describe China’s economy. In the early days of economic reform leaders such as Chen Yun formulated this term to describe controlling the economy as it grew. I found that since the mid-2000s, before the global economic crisis, many local government officials began to distinguish old birds from new. Not all birds were equally good and they wanted to evict old birds, including labor and obsolete capital, because they thought they were consuming resources that could be better allocated to new birds. So who were the new birds, like deserving labor and deserving capital, that could produce more economic outputs? It’s a new story about the old birdcage economy.
What was the relevance of Bill Clinton’s prediction during a 1998 visit to Beijing about how the Internet might affect China?
During Clinton’s visit he said he expected China would experience some kind of industrial transformation and post-industrial transformation at the same time. The speed would be much faster than in Europe and the U.S. His prediction came true. When he visited, China didn’t really have a high-tech or Internet sector. The Internet began to grow in the U.S. at the same time, but in less than 20 years China now has one of the largest digital economies in the world. That kind of transformation is unprecedented and impressive. Clinton made the point that China’s development would be very fast — what scholars of developmental studies began to call “compressed development” to describe lots of things happening simultaneously in a short period of time.
What Clinton wanted, in the beginning, was for China to energize the U.S. economy. In the end, his strategy created a problem that the U.S. government has to handle today. My book is about how the Chinese government strategy created a new birth for itself, which is the Internet sector, and then learned how to control it because it went beyond all expectations. China’s big tech companies became so powerful and had so much infrastructure power. Similarly, Clinton’s strategies helped make China into a very big, new bird. Today’s U.S. government is left to try to contain that bird.
The state-directed sector-development that China practiced also happened in the U.S. under Ronald Reagan. How did they differ?
In the 1960s, in the U.S., the welfare state and big government ideology dominated political discourse. There was something called the “cybernation revolution” and people in the U.S. and the U.K. freaked out because they expected a future in which people didn’t have jobs. President Lyndon Johnson created a commission to discuss how to deal with social problems in a society where technologies like computer science could produce unlimited productivity. There were lots of discussions with the labor unions, which were very strong in the U.S. at the time.
Then there was a decline of the new deal order when Reagan was elected. The conception of the role of the government became very different. In the past, there were more regulations and the U.S. government paid more attention to social problems, social inequality, and the life of U.S. workers. But suddenly, because of the lobbying of a lot of companies, and also because of globalization, they decided not to pursue that developmental agenda. Tech companies began to have a lot of lobbying power.
The Chinese government gave the tech companies autonomy to create big kingdoms in which they behave as sovereigns, with their own laws and rules and regulations to govern a lot of workers and users.
In many ways, the tech sector in the U.S. and in China were very similar in terms of their ideology. They didn’t want government regulation and they believed in the transformative power of Information Technology. The U.S. case is characterized by a loosely-regulated tech sector, under a very specific political environment that was very fragmented. Tech companies dominated and became very powerful.
China pursued a very similar strategy, wanting to develop its tech companies with a lot of money from U.S. investment, but the major difference was that in China, the very loosely regulated environment was a deliberate decision of the Chinese government. In the U.S., tech companies took advantage of the fragmentation within the government, but in China, because of the government’s ideology, they believed that in order to develop a certain sector they had to have a more tolerant regulatory approach. The leaders saw the trade-off between development and regulation. They thought a strict regulatory approach was very outdated, using European countries as an example.
BIO AT A GLANCE | |
---|---|
BIRTHPLACE | Taipei, Taiwan |
CURRENT POSITION | Professor of Sociology in the Department of Sociology at Harvard University |
You describe a China in which tech permeates all aspects of each citizen’s life. How far along the road to gamification as a means to control has China traveled and who benefits most, tech companies or the Party?
They both benefit in some way. I cannot really measure who benefits more. Because of the Chinese government’s very tolerant regulatory approach, platform companies are able to develop a lot of tools like algorithms to regulate and control workers in China, like delivery workers, in very inhumane ways.
The working conditions of delivery workers is quite a salient problem. I compare how these platform companies in China and the U.S. are able to use algorithms to control and manage workers. The working conditions for platform workers are the worst in China. They have very punitive punishments that can deduct money from what workers earn just because they don’t deliver things on time. You don’t see this kind of punishment among delivery workers in the U.S. and other countries. This kind of control is most intensified in China because the Chinese government didn’t really care about this kind of regulation. The Chinese government gave the tech companies autonomy to create big kingdoms in which they behave as sovereigns, with their own laws and rules and regulations to govern a lot of workers and users. Even little shops and restaurants can create these kinds of rules.
Those kinds of rules benefit the Chinese government because it helps the government to solve several problems. The first problem is unemployment. Research has shown that since 2013, jobs in China’s manufacturing and construction sectors have declined over time. The newly-created platform sector provides flexible employment for people even though those jobs are very bad. Today, even many college graduates who cannot find jobs work in the platform sector as livestream hosts or drivers or delivery workers. The Chinese government calls the platform sector a 蓄水池 (Xù shuǐ chí), or “reservoir” that absorbs labor.
The second thing the platform economy gives the government is a solution to the migration problem. The government doesn’t want more people to go to big first- and second-tier cities. If they can work in smaller cities then big cities don’t have to deal with undesired people from the “low-end” population.
If these people have some money and can sustain their lives in second- or third-tier cities then the third benefit to the Party from the platform economy is a solution to the housing market problem. The real estate sector has been so important for local governments and platform economy workers can become potential buyers in smaller cities.
The tech companies and the Chinese government both benefit from this kind of arrangement. They have a symbiotic relationship even though it’s asymmetric. The government still has the larger power.
Just as there are old birds and new, there are old and new cages. How does a construction worker in an interior third-tier city get a coastal first-tier delivery job? How does he fly from cage to cage?
It’s very difficult to imagine new possibilities in the current Chinese economy. The new sectors can generate new jobs for low-skilled workers. I don’t see the next thing for these workers.
Alibaba co-founder Jack Ma has said that China’s planned economy, aided by technology, will overtake the market economy by 2030. Does he have allies in that thinking now in positions of power?
Today, the government is realizing that things have turned out to be much more difficult than they imagined. In past decades, some local government officials and tech people were very enthusiastic about the possibility of technology. They believed that with big data, algorithms, machine-learning, and cloud computing, they could achieve a very different kind of economy.
I write about technological fetishism. People actually give technology power, but in many situations reality and expectations just don’t align. This doesn’t only happen in China. After all, today in the U.S. we talk about how ChatGPT is going to take all of our jobs.
But China is unique. In one chapter I present survey data comparing people’s attitudes towards technology. Are they optimistic and do they think about the potential promise and problems of technology? China stands out among many countries. In the U.S., some people are also very optimistic about technology, but it’s nothing compared to China.
Chinese are constantly ranked number one or number two in their optimism about technology. They usually don’t think about the negative consequences. In China around 2010, when bike-sharing and online payments became popular, the Party started to talk about “the four interventions,” three of which were related to IT. People were super excited. I still remember when I went to Beijing to visit one of my professors and he told me, and everyone told me, so enthusiastically, “This is the future of China.” Countries that share similar attitudes are countries that belonged to the Soviet bloc with a socialist materialism ideology. Usually those countries are authoritarian countries.
What is the worst case scenario for your average Han Chinese when it comes to participating in this digitization?
Some studies of Chinese attitudes toward surveillance technology — and that’s an extreme example — show that people think it’s necessary, especially before COVID. The feeling was that surveillance technology or the social credit system didn’t undermine their life and that it was good for society. They thought that’s why China is so safe. Unlike the U.S., in China people tend to trust that the government can use technology in a reasonable way. The experience of COVID could have changed people’s attitudes about technology because they really did suffer.
In what way?
All the health codes meant you could not travel. They tracked you everywhere and could easily put you in a quarantine center just because they had your data. They knew you had contact with people with the virus. In the past, people didn’t understand that this technology could really restrict your freedom and liberties, but during the pandemic these technologies were used in a way that ordinary people began to understand that the technology really constrained their liberty.
MISCELLANEA | |
---|---|
BOOK REC | Invisible China: How the Urban-Rural Divide Threatens China’s Rise by Scott Rozelle |
FAVORITE FILM | Oppenheimer |
MOST ADMIRED | Nobel laureate Katalin Karikó for her relentless pursuit of knowledge and passion in a challenging and often unsupportive academic environment. |
Describe how the gilded cage straddles the developmental state and digital capitalism.
When we used to talk about the idea of a developmental state, scholars usually were talking about Japan, South Korea and Taiwan. There was a transition from a labor-intensive economy to more advanced manufacturing and the rise, for instance, of the semiconductor sector in Taiwan. A lot of literature on the developmental state doesn’t deal with more recent developments, such as the birth of the digital economy.
For example, if you compare South Korea, Taiwan and China, the timing of their transformation was very different. When China began to develop it was already close to the Internet age, so it developed a digital economy. The problem of literature studying the digital economy is that it’s usually based on experiences in the U.S. because it has the largest digital economy. But that discussion doesn’t really touch on the important role of the government, how the government can actually help to build a digital economy. So the gilded cage in my book both helped the Chinese government build the second largest digital economy in the world, and resulted in the negative, adverse consequences of this development.
FAVORITE MUSIC |
---|
French chanson and classical music. I have been a fan of pianist Yuja Wang since 2008. I first attended her concert in Ann Arbor, Michigan, in 2008, when I was a PhD student at the University of Michigan. Her music and performances have captivated me ever since. |
Define surveillance capitalism and platform capitalism.
Surveillance capitalism is a term used by professor Shoshana Zubov at M.I.T. to describe new economy tech companies benefitting from collecting people’s data without regard for people’s privacy. It’s not about government surveillance but generally about how tech companies gather data, usually freely, without a need to pay, and without your permission, and then use that data to predict consumer behavior, both economic and political, that enables them to send you all kinds of targeted advertisements.
Platform capitalism is more general. A digital platform is an infrastructure that helps people do business, that mediates different kinds of economic transactions in a market space where people seeking certain kinds of services can find providers of that service. Before the invention of this kind of digital platform, you might have to look at the phone books or look at the Internet to collect information.
Has technology brought China closer to a market economy?
Technologies expanded China’s economy but have not really changed its nature. Technology has provided a way for the government to manipulate through control.
China was already moving from a planned economy toward a capitalist economy before the rise of the digital economy. Technologies expanded China’s economy but have not really changed its nature. Technology has provided a way for the government to manipulate through control. What I write about is not a planned economy but a state capitalist economy. The government used the tools they believed would facilitate the growth of the economy and control certain populations, but it’s not correct to say that it is technology that makes China a planned economy.
In China, it’s difficult to have an open public discussion about development in any sector in which the state has so great an interest. How does technology avoid the worst case scenario if people can’t participate?
My first book was about the contentious public. In it I tried to explain how the Internet facilitated the rise of China’s public sphere of open discussion. The problem now is that this kind of critical discussion has to a large extent been shut down for a decade already by the Chinese government. That’s really a tragedy because there are people in China with very different ideas.
I tried to write about debates among Chinese elites about the relationship between technology and development. When they thought about the transition from labor-intensive work to high-tech work, a lot of people seemed to see only one path, but there could be a lot of different arrangements. For example, how much power do you want to give to trade unions and labor? And do you actually care about equality? These were all parameters people needed to discuss because technology can lead to a lot of inequality.
China’s top leaders had a lot of discussion about these issues, but then didn’t want to talk about the negative consequences. There were internal debates among them. Before Xi Jinping came to power, around 2008, when China had a financial crisis, local governments like that of Guangdong initiated developmental policies to evict old birds. They wanted new birds. Many economists and even government officials criticized those policies. That kind of environment helped the government make its final decision. They knew the pros and cons and made a more balanced decision. But today, since the government has closed down that space, that kind of discussion is very rare, and that’s very bad for China.
Before it happened, was there any space to discuss the 2020 crackdown on the digital space?
I didn’t see a lot of discussion. At one point, the government figured out that the tech companies could create a lot of financial instability. One major difference between tech companies in China and the U.S. is that Chinese tech companies are very involved in the finance sector. Like Alibaba, almost all the big tech and Internet companies have an app that allows everyone to borrow money. Regulation was very loose at that time. But here in the U.S., big tech companies like Google didn’t lend you money.
The Chinese government noticed that big conglomerates operating across different sectors were very likely to contribute to financial instability. They saw that Ant Financial’s consumer lending was greater than the Alipay payment system. The government officials in charge of finance began to regulate, which made Jack Ma very upset.
Who would you most like to read your book?
I like my books to be read by Chinese readers, but it’s quite unlikely because it won’t be so easy to have a Chinese translation. The book speaks to what Chinese people have experienced, so they would care about delivery workers, for example, working 9-to-9 six days a week, and about software engineers and their problems. A lot of Chinese people whom I talked to expected that technology would transform their life in a positive way but nowadays have begun to realize that something went wrong.
You tell a story about the governor of Jiangsu saying “We want to robotize,” a dangerous notion in such a populous province.
Many provinces adopted that policy to use robots to replace human workers. Foxconn tried to do that around 2010 after many workers committed suicide. Some local governments’ announcements that they would use robots actually motivated me to do this study. I was shocked by the fact that the local governments didn’t care about China’s unemployment problem. They didn’t care about people’s lives. How was it possible that a government would do this? I read a lot of government documents promoting robotization. Nothing was mentioned about unemployment problems and about the life of people who could suffer. I talked to a lot of government officials and felt a strong sense of social Darwinism. In their minds they valued technology and robots much more than humans.
One purpose of the book is to remind readers that sometimes we tend to devalue humans even though humans contribute so much to society, and that we fetishize technology. This becomes very dangerous when governments begin to give technology so much power and to devalue humans. That’s what I am worried about.
Jonathan Landreth is a New York-based writer and editor who started reporting from China in 1997.