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Cake day: June 26th, 2024

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  • In a piece published in November 2022, Nobel Economist Daron Acemoglu argues that China’s economy is rotting from the head.

    For a while, [China’s leader] Xi, his entourage, and even many outside experts believed that the economy could still flourish under conditions of tightening central control, censorship, indoctrination, and repression [after Xi secured an unprecedented third term (with no future term limits in sight), and stacked the all-powerful Politburo Standing Committee with loyal supporters]. Again, many looked to AI as an unprecedentedly powerful tool for monitoring and controlling society.

    Yet there is mounting evidence to suggest that Xi and advisers misread the situation, and that China is poised to pay a hefty economic price for the regime’s intensifying control. Following sweeping regulatory crackdowns on Alibaba, Tencent, and others in 2021, Chinese companies are increasingly focused on remaining in the political authorities’ good graces, rather than on innovating.

    The inefficiencies and other problems created by the politically motivated allocation of credit are also piling up, and state-led innovation is starting to reach its limits. Despite a large increase in government support since 2013, the quality of Chinese academic research is improving only slowly.

    […] The top-down control in Chinese academia is distorting the direction of research, too. Many faculty members are choosing their research areas to curry favor with heads of departments or deans, who have considerable power over their careers. As they shift their priorities, the evidence suggests that the overall quality of research is suffering.

    Xi’s tightening grip over science and the economy means that these problems will intensify. And as is true in all autocracies, no independent experts or domestic media will speak up about the train wreck he has set in motion […]