This week, Project Syndicate catches up with Andrew Sheng, a former chairman of the Hong Kong Securities and Futures Commission and Distinguished Fellow of the Asia Global Institute at the University of Hong Kong.
Project Syndicate: You recently wrote that, in China, COVID-19 has already led to a “massive re-orientation of priorities, such as innovative ways of dealing with business cash flows, survival of [small and medium-size enterprises (SMEs)], job disruptions, and restoring key supply chains.” Should we expect the government to revise its policy approach in the wake of the crisis? What might the most significant changes be?
Andrew Sheng: The COVID-19 outbreak is perhaps the biggest wake-up call in history, threatening both individual lives and entire economic and social systems. It is truly a “viral” crisis, not only because of the pathogen in question, but also in terms of information transmission. Never have so many people been alerted so fast to new developments in any large-scale shock.
There is one chart – which I call the “shock and shift” chart – that has gotten particular attention, as it illustrates the importance of “flattening the curve.” When a highly contagious pathogen like the COVID-19 coronavirus hits suddenly, it can quickly overwhelm a health system, resulting in a higher death toll and social panic. But when measures are taken to slow the spread of the virus, the situation becomes manageable.
When COVID-19 first emerged in China, the country was not able to prepare. (Other countries did have that opportunity, but few took it.) But Chinese leaders and residents quickly stepped up for what Xiao Geng and I call “China’s COVID moment.” The government imposed a draconian lockdown, confining more than 700 million people to their homes for more than eight weeks. As anxious and uncomfortable as they were, people recognized that the community’s collective survival was at stake and accepted the unprecedented measures. But China – including its policy approach – will never be the same.
We ask all our Say More contributors to tell our readers about a few books that have impressed them recently. Here are Sheng's picks:
by Kautilya (Translation: L. N. Rangarajan)
This classic on statecraft, written in (it is estimated) the fourth century BC, begins with the premise that it is not only people’s material welfare that matters; spiritual good and aesthetic pleasures do, too. Some may consider Kautilya’s thinking to be even more ruthless than Machiavelli’s, but this is the most comprehensive and realistic system-wide classic that I have ever come across.
by Karl Polanyi
Polanyi’s classic work, The Great Transformation – which documented the social changes accompanying the rise of modern capitalism in the West – reflected far more systemic thinking than the neoliberal free-market model. It recognized that the market is part of the economy, which is part of society, which is part of our planet. This new collection of Polanyi’s essays embodies his wide-ranging and systemic thinking, including his genuine regard for the wellbeing of the masses. It is highly relevant today.
by Walter Scheidel
This book woke me up to how history has solved rising social inequality through violence, war, revolution, and pestilence. Inequality is built into nature, but excessive inequality is avoidable. When elites indulge in excessive greed, they sow the seeds of their own destruction.
From the PS Archive
Sheng and Xiao examine why it has been so difficult to identify the underlying logic of China’s development model. Read more.
Around the web
In an interview with the Institute for New Economic Thinking, Sheng identified the main driver behind the 2008 global financial crisis and drew parallels between financial and environmental excesses. Watch the video.
Sheng discusses the challenges and potential of financial governance for Yale’s International Center for Finance. Watch the interview.