How America and China Transformed Global Trade - Professor Elizabeth Ingleson

Professor Elizabeth Ingleson is a historian of capitalism, US foreign relations, and US–China relations — a timely and critical intersection she explores in her acclaimed first book, Made in China: When US-China Interests Converged to Transform Global Trade, published by Harvard University Press in 2024.

In the book, she unpacks a pivotal shift in the 1970s: when the old dream of American companies selling to China’s vast population gave way to a new vision — one of tapping into China’s massive labour force.

Drawing on rare corporate archives and extensive Chinese publications, Made in China reveals how business leaders, diplomats, traders, and policymakers on both sides helped reshape China’s role in global capitalism — and, in the process, redefined the American economy itself through deindustrialisation and offshoring.

TIMESTAMPS:
01:52 - Deng's Legacy
02:29 - Why 1978 Isn't the Real Beginning
07:46 - The Two Nixon Shocks of 1971
14:26 - From 400 Million Customers to 800 Million Workers
17:43 - Mao's Three Worlds Theory
23:43 - Trade vs Diplomacy in US & China
27:27 - The Marco Polos of America
33:41 - Why MNCs Burned Cash In The Early Days
38:10 - The Textile Industry As The Canaries in the Coal Mine
47:07 - The 1974 Trade Act That Changed Everything
55:39 - Rethinking the Good Life
57:13 - Manufacturing Jobs: Political Theatre vs Reality
1:00:30 - Decoupling: Rhetoric vs Reality
1:03:51 - Advice for Graduating Students

Keith 00:57:48

Today I am joined by Professor Elizabeth Bryant Ingleson. She is a historian teaching at LSE's International History Department. I managed to read her book, "Made in China: When US-China Interests Converge to Transform Global Trade."

Keith 01:13:28

This book traces the history of diplomacy and economic relations between the US and China prior to 1978. In this book, she details how the interests of the Chinese state and US businesses converged to reframe the Chinese market. From a market of huge domestic consumption potential, it became a market teeming with millions and millions of workers.

In this process, the world's largest communist state also became the biggest contributor to global capitalism. I hope you enjoyed this conversation as much as I did.

Keith 01:52:95

The current dominant narrative around China's trade liberalization is usually framed as Deng Xiaoping's "gaige kaifang" in 1978, in which he becomes the leader of the CCP. As a result, he's able to implement the Four Modernizations, and also, equally important, open up the exclusive economic zones, the SEZs.

Keith 02:18:28

Why is it worth considering China and US history prior to 1978 in the lead up towards China's liberalization?

Elizabeth 02:29:40

It's a really brilliant question. Firstly, the changes that Deng implemented are very important to the story of how China was able to lift so many people out of poverty and how it was able to become the economic superpower that it is today. So it's not to suggest that Deng's changes weren't important.

But some of the changes that you yourself just pointed to, for example, his capacity to open up special economic zones. Those are changes or decisions that he made that were only enabled by prior shifts in the capitalist system and in the international economy more broadly that had been happening much earlier.

So what the book does is it doesn't take for granted not just China's changes, but the changes that China was engaging with, the changes in the capitalist system that enabled Deng to implement things like special economic zones.

What I found was that a lot of the experimentations that Deng was able to start to implement in 1978 had begun to be played with and experimented with in the latter years of the Cultural Revolution. A range of different pragmatists within China were looking at ways to bring modernization to China's economy and society. They started to do so even during the Mao era, in the latter years of the Cultural Revolution, as political power plays began to become even more significant as Mao's health deteriorated.

But even more importantly, I think this is a story that can't be told without thinking about the larger system that China was engaging with. Here it's a story of two sides working together. I think the most important part of that larger capitalist system is the role of the United States, which is the largest economic power in the capitalist system.

Changes that were happening within the United States, exactly the moment that experimentations were happening within China, and exactly the moment that the United States and China began to end over 20 years of Cold War animosity, these were the changes that also assisted that process. So the end of the Bretton Woods system, the move to financialization, and the capacity for capital to move more freely in the international system. This movement and this freeing up of capital enabled, for example, special economic zones to even exist.

These changes were co-constitutive, and they started to happen in the 1970s even before Deng was able to really hit the accelerator in the late '70s, early '80s.

Keith 03:38:40

By ending the Bretton Woods system, capital mobility allowed more MNCs to really entrench their operations overseas, especially regarding manufacturing. One thing that I'm still quite curious about, and something that I'm still thinking about with regards to those two shocks working in tandem, is that it's still not clear to me that China, at that point, even with the Sino-Soviet split, being on the opposite end of the ideological spectrum, would necessarily welcome American MNCs or American investments.

So, I guess the question would then be, what kind of kick-started that process of US-China trade, despite them being, as the Chinese called them, 'ideological opponents'?

Elizabeth 04:26:95

This was not a time when MNCs were setting up shop in China. There was no real possibility of that. This was a time of slow, careful, but also uneven, experimentations on the part of China. What was happening was an attempt to shift China towards an economic or development model that would become export-oriented. So, selling exports in order to fund the importing of technology, fertilizer plants, big textile plants. This was still very much the model.

But the experimentations that were happening in the 1970s in China weren't about multi-national corporations setting up, but rather, they were about seeing if we could position ourselves as a space where the capitalist world saw us as somewhere to procure goods from, a place where we could provide them with exports.

And the big shift that I trace in the book, and the fundamental shift that was necessary for the changes that came later, such as multinational corporations setting up in China in the '80s and afterwards, before that could happen, there needed to be a much more fundamental shift in what it means to speak of US-China trade. This shift started in the 1970s.

This was a shift in which Western corporations in the United States and elsewhere turned to China and saw it not as a place to absorb American goods, to absorb things that had been manufactured within the United States, or within the United Kingdom, or within West Germany. But rather, they began to see China as a place to procure cheaply made items.

So in other words, a shift from what had famously been described in the 1930s as 400 million customers, to seeing China as a place of 800 million workers.

That fundamental shift from seeing customers to seeing workers was a larger and very crucial change that was necessary for a larger reconfiguration of how China was understood and positioned in the global economy. And it's from there, from seeing a place of labor, seeing a place of workers, that ultimately paved the way for multinational corporations and other manufacturing spaces to begin to set up shop in China, not just to procure from China, but to set up whole factories there. But in order for that to happen, these larger changes occurred first.

Keith 07:15:35

Within China, what was the shift in the way it framed itself? I think you referenced Mao's Three Worlds Theory. Was it a way to facilitate an opening in which it could be seen as being acceptable or working with capitalist countries, even though it still outwardly labeled itself as a communist country?

Elizabeth 07:43:24

Mao's Three Worlds Theory has been the subject of some really interesting research. It was read to the international community in 1974 by Deng Xiaoping at a very special session of the United Nations. A special session in which the Global South were pursuing a vision referred to as the New International Economic Order or the NIEO. Deng read Mao's vision out at this special session of the United Nations.

Most scholarship points out the importance of this vision in shifting China's foreign policy emphasis away from revolution towards one of development, centering development as the central node of China's foreign policy ambitions in 1974. So it's been understood as a really significant speech outlining a much larger vision that Mao had been pursuing: moving away from revolution and closer to reform and development methods.

What's really important about the speech is that it positions China as a space not just suggesting that development is crucial to understanding its foreign policy, but rather it highlighted the particular kind of development it was suggesting: China would be a site of raw materials and other goods that the United States and other capitalist countries could buy from.

In other words, it overtly situated China not just within a developmentalist vision, but as a particular kind of player in the international system that would be purchased from, that it would be selling goods to other countries.

Again, it was part of a larger shift in saying, "We are going to be export-oriented and position our development in that way, and not be something to absorb American goods or manufactured items from elsewhere."

Keith 20:04:19

How did China slowly open itself up in this space, even as it positioned itself as an exporter of raw goods?

Elizabeth 20:14:14

It was an exporter of raw goods and textiles, things it could produce as cheaply as possible. What's so interesting is that China did want American technology to a degree. I should also emphasize, I try to do this in the book, but I also want to emphasize it in this conversation. This vision on China's part was very contingent and contested. There was a group within the Politburo, those labeled pragmatists, who were very much pursuing this line. But there was a very strong group also within the Politburo who were pushing back against this, often labeled radicals.

There was a real push and pull in foreign economic policy throughout the 1970s, particularly after Mao's death in '76. This was a very contested dynamic. One way we can see that contestation play out is over US technology. On the part of pragmatists, there was an interest in American technology, satellites, fertilizer factories, and textile manufacturing facilities. Airplanes are another example I examine.

What was particularly important was that even though there was an interest in American technology, all of that interest came second to the politics of diplomacy in the era. This was an era when, yes, Nixon and Mao met in 1972, but it took almost the whole decade, until very late 1978, when two new leaders, Jimmy Carter and Deng Xiaoping, were finally able to achieve full diplomatic normalization.

In that interim period between Nixon and Mao, and Carter and Deng, the capacity to negotiate was very much limited by the diplomacy of the era and attempts to reach an agreement on how to normalize relations. Trade, Chinese interests, and American technology were victims of this larger diplomatic tussle.

At times when the diplomacy started to fail, or when the diplomacy wasn't going in the direction that Chinese leaders wanted them to, they pulled back. They often canceled purchases or orders that had been made, or they chose to import technology from West Germany or elsewhere.

A large part of the reason for that, not the only, but a large part of it was the politics of diplomacy, and a way of saying that from China's side, we would only increase our economic ties with you and our purchases from you as a consequence of improving diplomacy. When that doesn't work, we're going to pull back on our trade.

So there was a real connection between trade and diplomacy on the Chinese side that saw trade as a reward for good diplomacy, not something that would come first to ease the way for diplomacy. On the US side, it was the latter vision that was operating: the idea that trade would help the larger diplomatic aspects.

Keith 23:43:40

Their conceptualization of how trade and diplomacy would work was different. In China, relations had to be right first, I suppose, before trade could begin. Whereas in the US, if I'm correct, you trade first, and then your relations improve over time. What were the hot-button issues of the day that prevented further progression?

Elizabeth 24:06:90

There were also barriers in terms of trade restrictions that were imposed. So on high-tech goods, for example, the United States had real restrictions on certain dual-use products. They didn't want to give high-tech that might be used for military purposes.

To your question, one of the most contentious issues was actually the larger trade deficit or balance. That was the most hot-button issue in China's understanding of trade, particularly with the United States, but more broadly as well.

There was a real concern that as trade with the United States evolved, there was a deficit in the United States's favor. So the United States was selling more, or at a higher value, to China than China was selling to the United States. For China, what that meant was there was a real desire to balance that out and to increase the number of things it sold to the United States in order to redress that imbalance.

Where that became most possible, and where the real push was, was in textiles. So China began, I suppose, the hot-button issue then for Chinese leaders, or the pragmatists pushing this agenda, was to increase the number of textile goods that they sold to the United States in order to decrease that trade deficit.

Every year of the 1970s—in fact, every year since the 1970s, with one exception in 1984, which was an outlier year due to global recession—China's sales to the United States have always increased, up until today.

Throughout the 1970s, there was this real push to increase the number of goods they sold to the United States through textiles. These were still very low numbers, and precisely because they were low numbers, this push on China's side to sell more to the United States was in fact encouraged by US policymakers and US traders. This was because the numbers seemed so low, and because it was still a communist nation, very much in the throes of working out its modernization and development models.

So US policymakers and US business leaders encouraged this attempt to sell more textile goods to the United States. This was also part of an earlier vision of American policymakers seeing trade as something that would help diplomacy. So if US policymakers could help China sell a little bit more of its textiles, that might help the diplomacy more broadly.

Keith 27:09:68

It seems to me that the textile industry in the US, and perhaps China, are like the canaries in the coal mine. They show us how things have evolved and perhaps act as a preview of how the relations between both countries will pan out.

Elizabeth 27:27:85

One of the things that I found so interesting about working through this story was the role of individuals and the role of small-scale business people in the United States and China that enabled this. One of the threads of this story involves business people within the United States. One person I look at in particular is a Chinese-American woman, Veronica Yapp, who changed careers. She'd been an architect, and soon after, she saw that relations between the US and China were softening. She started to think, "I can start to import goods from China."

She and many others did this by primarily importing pre-made textiles. These goods were made in China, in a factory, to specific American specifications, without changes based on size or color. She began to import those kinds of things.

But even more importantly, I think, she and others began to import Chinese clothing such as Mao coats and qipaos—things that were overtly Chinese. This was in an era when university radicals wore Maoist coats, demonstrating their revolutionary credentials. So these Mao coats were sold as very overtly Chinese commodities, part of a larger cultural shift that was going on, a cultural shift that I chart.

This shift involved seeing China no longer as a Red China threat. Instead, goods coming from China were desirable and part of a larger cultural acceptance of things made in China more broadly. So it begins that way; it begins with overtly Chinese things. It moves to, as they say, buying pre-made textile items and other things.

But particularly by the mid-decade, Chinese manufacturers themselves became more open and receptive to accepting patterns and specifications outlined by American traders, such as sizing that fits the American market or colors that work better with the American market. So you do start to see the ways that the manufacturing process begins to adapt to international needs.

It's very stop-and-start, with many problems that I trace. But what's particularly interesting is that even as many textile importers—not just small-scale, but also large retailers like J.C. Penney within the United States—a lot of these corporations were losing money. They were importing goods from China, importing towels, for example, or shoes, or socks, or gloves from China. But very often, they were losing money, but willing to put in this effort anyway, in the hope that one day China would improve its manufacturing processes. At that time, it would remember its long-standing friends and reward them.

So there was a real sense that short-term losses might be offset by a long-term relationship and the understanding that this country, with so many people and potential cheap workers, might work in their economic favor.

Keith 31:20:79

Can you give us a flavor of what were some of the problems in the early days of this feeling-out process between both countries?

Elizabeth 31:30:17

The biggest problem was the lack of political relations, the lack of formal political relations. The reason for that was the dynamic between the United States and Taiwan. The thorniest political issue throughout this period was the US military and political relationship with the government in Taiwan, and what that meant for the PRC.

Throughout the decade, the story I'm tracing is shadowed by the bigger diplomatic dance that was happening between all three polities: how to navigate an era in which China was no longer isolated or diplomatically cut out of the economic and political order, and what that meant for Taiwan.

One of the threads I trace in this book is how political leaders within Taiwan sought to use trade itself—trade with the United States—to say, "Our trade with you, the United States, is so much bigger than your trade with China." "We are your seventh-largest partner. China might be a big country, but it doesn't have the manufacturing facilities that we have."

Taiwan leaders started to really use trade themselves to position themselves as a much more stable and reliable ally and partner in this period. This was a real way in which trade became part of and was drawn into the larger diplomatic tussle at the time.

Keith 31:59:75

Is it clear that even with all the political tensions in the background, and some of the quality issues you've highlighted as part of that process, companies were taking massive losses from importing from China, yet they still believed there would be a payoff eventually? What allowed them to maintain that faith?

Elizabeth 34:41:87

That's a great question. Some of the things I was pulling out, and I think are really important, are the more intangible factors. The role of seeing China as this exotic, exciting space—a trading partner very different from what many of these individual business people had been engaging with. This very long history of American relationships with China sees this entity, this political space, as having an allure. I illustrate that allure in a few different stories.

Business people were losing, as you say, huge amounts of money and not making profits, but they positioned themselves like Marco Polo, discovering and exploring China. So I do think there's a real cultural factor underpinning many of the hard-nosed economic decisions that were being made.

I think the economic capacity to absorb the losses is very important. Many larger corporations were able to import from China at a loss. For example, Coca-Cola and Bank of America imported hundreds of thousands of dollars worth of rugs that they displayed in their Chicago branch. They had beautiful old rugs in bank branches in Chicago. Many large-scale corporations could afford to absorb the losses.

The smaller groups were much more unable to do so. That's why most smaller business people trading with China at this time were importers. Those who were unable to absorb the economic losses were buying from China. The losses were experienced by those who wanted to export to China. They wanted to sell their goods to China, but instead were told, "No, we're not going to buy your things until you've bought from us first."

That's why you have Coca-Cola and Boeing airplanes, and a whole range of really big corporations that were buying from China, despite the fact that what they really wanted to do was sell to China. Ford Motors is another example.

Keith 36:29:16

That's the part that really intrigued me, because you're doing it in the heat of the Cultural Revolution. It's not apparent that you know whether things will pan out for the better in the moment. That really requires a huge leap of faith.

Elizabeth 36:45:24

It requires a leap of faith, but I think it also highlights how international trade operates. It's not just hard-nosed fiscal considerations. There are a range of interpersonal and cultural factors that underpin the international economy. A whole range of economists, like John Kenneth Galbraith, for example, often spoke about the role of emotion in understanding the stock market and international commerce.

There's a real myth, I think, that business people operate distinctly from emotional reactions or larger cultural milieus.

Keith 37:30:26

The US textile industry was also undergoing a seismic shift, which you detail in your book. There were early signs of de-industrialization happening during that period, especially within the textile space. Although China's textile trade to the US was not huge, it was significant or even alarming in some cases. Could you help me understand or dissect the impact of China's textile trade on the de-industrialization of the US textile industry?

Elizabeth 38:10:35

Nothing about this story was inevitable, but a group within the United States, observing the unfolding dynamics, worried about the larger implications if this trade relationship continued as it was. That was organized American labor groups. The largest and most vocal group within the American labor movement were textile manufacturers. They saw cheap Chinese textiles entering the United States and worried about the implications for their own industry. This was at a time when they were already under extraordinary pressure from various factors, especially increasing imports from East Asia and globally, not just from China.

The textile industry was already under a lot of pressure, and it saw China's entrance into the market as a potential to accelerate this existing pressure. This is where they were, as you've referred to, the canaries in the coal mine or the textile mill. They were particularly concerned about structural changes to how manufacturing operated. They feared structural shifts towards importing goods as a way to sell to American consumers, which could be applied to a whole range of other industries.

Other industries under extraordinary pressure at the time included steelmaking and auto industries within the United States. Both of which, at that point, weren't seeing China as a particular threat. For that reason, they were actually willing to buy cheap cotton gloves from China. The steel and auto industries within the US actually benefited from the cheap Chinese textile goods because they could buy cheaper cotton gloves to wear under their large industrial gloves.

For those industries—the steel and auto industries—which were also facing extraordinary difficulties, the difficulties were coming from elsewhere. For them, cutting down on costs with cheaper cotton gloves was a benefit. There was real tension then within the American labor movement regarding which parts saw China as a particular problem. For the more male-dominated unions within the United States, these cheap Chinese textiles were a short-term solution. It was a more female-dominated textile industry that was at the forefront of calling for a thorough examination of what was happening and advocating for restrictions, demanding real thought about the larger structural changes unfolding.

Ultimately, these calls were not heeded and were deprioritized for various reasons. I won't go too deep into the weeds here, as I do in the book, but these calls were not heeded not only because politics prioritized diplomacy over labor—a very important factor in understanding why the textile industry's interests were ignored. There was a sense that the interests of a few hundred or thousand workers across the US were less important than the larger diplomatic story of rapprochement with China. That was a very important factor, and Washington did prioritize China over those interests.

But it wasn't only that. Many textile manufacturing companies themselves were turning to China. The textile groups worried about China were also turning to China to replace certain product lines and import in specific ways. What they most wanted was market order. They wanted Chinese goods and textiles to enter the United States with order and ease of entry, rather than being perceived as dumped in huge volumes with an immediate impact on prices.

So there was an interest even among corporations, including textile manufacturers, to move to cheaper Chinese goods. But what they most wanted was the slowness and order that comes with restrictions, allowing them to structurally adjust to this outsourced manufacturing process gradually.

The point here is that you have a whole range of different interests, far more complex than a simple story that someone like Donald Trump has capitalized on. It's much more than a simple story of Washington ignoring American workers' interests. It's a whole range of different interests, working in different ways—sometimes congruently, often incongruently—that ultimately led to the systems operating today, where labor is so devalued and capital is central to the dynamics at play.

Keith 44:13:39

Perhaps the irony of the modern economy is that history tends to rhyme. When the US textile industry was disrupted by Chinese imports, it was largely ignored. But today, we see China doing something similar, only this time with higher-end technologies. The government is paying much more attention, perhaps because these problems could have been mitigated or resolved earlier.

And the point of shock you mentioned earlier—the sense of market order. I think that was something they perhaps didn't really focus on back then; I don't know if it was a blind spot, but it didn't seem to be an issue, mainly because they thought it was relatively low value-add.

Elizabeth 45:07:95

The contemporary story is really instructive because there are similarities in how China has adapted international technologies to its own benefit, such as the creation of deep-sea and other AI developments. It's also been able, far more than before, to set the terms of international trade and political economy.

I often find TikTok to be a really instructive example. China has been able to set cultural norms and terms with its technology in a way that isn't even overtly Chinese. TikTok, we know, is a Chinese corporation, but it's now such an important part of Gen Z's world that it's simply accepted as part of a larger cultural milieu. This is very significant because it shows a power that is not just specifically associated with China, but rather an international cultural appeal that, while originating from Chinese product, extends much broader than that.

Keith 46:32:41

Going back to your earlier point, there was a devaluing of labor taking place during that period. This wasn't just due to prioritizing improved relations with China, but also because of specific legislation they implemented that weakened the bargaining power of labor unions. Could you elaborate a little more on how corporate interests sometimes didn't look out for labor interests within the US, even as they opened up to China?

Elizabeth 47:07:66

One piece of legislation I examine in particular is the Trade Act of 1974. This Trade Act was designed, among many things, to assist American corporations during the messy period after the Nixon Shock, following the end of the Bretton Woods dollar-gold convertibility. It was also part of decades-long trade agreement negotiations concerning the textile and other US industries. This longer story of textile and trade negotiations, within the context of the post-Bretton Woods system, came together in this Trade Act. So it's quite a contentious trade act.

One of its provisions was the implementation of the Generalized System of Preferences (GSP). The GSP provided cheaper or lower trade restrictions for countries wishing to export to the United States. They didn't have to face the same tariff barriers or export restrictions as other countries exporting to the United States. It was a way of assisting the movement towards offshoring manufacturing, which was already in play but significantly aided by this legislative change.

There were a few reasons why China wasn't able to capitalize on that shift immediately. China wasn't a GSP beneficiary until after normalization in the late 1970s. However, China was able to use its own interests in that process to shift its manufacturing and political purposes. It saw this change happening in the US and worked in conjunction with the experimentations being imposed or played with within China.

China also didn't have Most Favored Nation (MFN) status. Again, this was a restriction that would not be lifted until after full diplomatic normalization was achieved. China faced much higher tariffs and export barriers than other countries, which in some ways was a reason why American workers and labor groups were particularly worried. China was already able to make an impact in certain industries, like corduroy or velveteen. These were very 1970s fabrics. In these specific industries, particularly in textiles, China was able to make an impact and dominate some sectors, despite not having GSP or MFN status.

Again, that was part of the concern: even without those things, China was already so strong. What would happen once those provisions were provided to China?

Keith 50:38:52

Do you think anything could have been done to prevent that kind of de-industrialization at the scale in which America experienced?

Elizabeth 51:01:46

This is one of the things I think the story of the Trade Act, and other aspects of the book, bring out: focusing on the larger structural causes of the global economic system we live in today. I think one of the biggest ones is how something like the Trade Act of 1974, or the shutting down of the Mills Bill and the Burke-Hart Bill—both of which I refer to in the book—were attempts to be passed in the early 1970s. Those two bills were pushed out of Congress, and the Trade Act passed a few years later.

What happens is a real focus on encouraging cheaper imports and encouraging that to be via the movement of capital. The capacity for perhaps US-based multinational corporations to set up in Taiwan or South Korea—earlier it was Japan, but by this point, Japan was less of a destination. These shifts in the global economy, which were already happening, were encouraged as a consequence of these larger economic and political changes. The end of the Bretton Woods system, the Trade Act of 1974, and a whole range of processes encouraged and prioritized the free movement of capital and cheap consumer goods entering the United States.

If we were to think about alternatives, it would be an alternative vision. I think the Mills Bill and the Burke-Hart Bill in the early 1970s were examples of this. They attempted to say that the assumption that cheap consumer goods need to be prioritized misplaces the ways a good life can be achieved. A good life doesn't only necessitate the capacity to consume; a meaningful life isn't just through consumption.

That link between cheap consumer goods and a desirable social economy emerged particularly from the Second World War in the United States. One very influential historian wrote a book called "The Consumer's Republic," about how the ideas of nationalism and being a republic in the United States became connected to consumption. That consumption emphasis, tied with nationalism and what it means to be an American, came at the expense of higher wages. You might not have very high wages, but consumer goods are cheap. That was the argument.

In many ways, from the 1970s onwards, that idea became increasingly enmeshed in how the international political economy operated: the priority shifted to cheap consumption rather than higher wages. In my mind, that's what makes this an emerging era of neoliberal globalization. It's an idea that improvements would trickle down because globalization would lead to cheaper consumption. And that cheaper consumption is the trickle-down net positive. But underpinning that is the need for consumers to buy more and more things.

That fundamental belief hasn't always been how the capitalist system operated. It's also not the only way it could have unfolded from the mid to late 20th century.

We're living now in an era where that focus on consumption, low wages, and the lack of labor regulation—we're seeing the environmental and social impacts of that. That's an assumption embedded in how US-China relations unfolded during this period.

Keith 55:41:20

When you talk about the conception of a good life and how countries should reimagine their political economy, that's one of the key takeaways I had from reading the book: it's not clear that you should just freely liberalize trade and pursue cheap consumer goods at all costs. Policymakers should pay attention to the supply side: can you create good jobs? Can you create a better standard of living for your citizens? Can you give them higher wages? This allows them not just to consume. It also allows them to do other things with their lives, giving them a sense of financial security, housing security, health care security, and so on.

If you look at today, there's once again a huge emphasis on manufacturing, on bringing back manufacturing to the US in political discourse today. Is this an attempt at re-imagination, or is it purely resentment, a sense that "we were screwed out of the previous system, and we should just try to bring back whatever we can and make America great again by making more jobs"? What is perhaps the healthier political imagination the US should have, even as it continues to be very embedded with the Chinese economy?

Elizabeth 01:00:86

For all the talk of decoupling, it's very difficult. We're already seeing that with all the different tariff negotiations; there's a real interdependence between the two countries. No tariffs are able to end it. All that's happening is that it's making things very difficult. It's making the processes very expensive and painful for those affected.

There is, however, a thread within Chinese society, strongly pushed by Xi at the moment, to emphasize its own self-reliance. This idea of self-reliance, which I examine in a different era, was crucial to the period I look at. Xi has brought that Maoist concept back to Chinese politics to suggest the importance of having a Chinese economy that isn't so entwined with the international political and economic order, or at least the economic order more broadly. That is happening to a degree. Xi has really strengthened China's energy production, for example, and has turned towards green energy production as a core driver of GDP. I think that's quite significant.

But even now, in 2025, and for the foreseeable future, despite those attempts, the US and China are still deeply enmeshed in each other's economies. This idea of decoupling reflects the politics of our current period, but it doesn't reflect the economic realities.

More broadly, the era we're in—and I don't say this lightly—is one where great power politics and rivalry are really starting to gain an edge and bite. Therefore, we're in a very serious period where we need political leaders in both countries—and not just those countries, but countries all around them—to really pull back the rhetoric, the decoupling conversation, and the animosity, because there's a lot at stake. There's a dynamic that can have very significant consequences for the international system if allowed to remain so filled with animosity and tension.

Keith 01:03:00

We've heard your advice for leaders and policymakers. My final question for you would be one that I ask every guest. What is that one piece of advice you always give to your graduating students who are entering the working world?

Elizabeth 01:03:51

That's a really lovely question. I emphasize two things in my teaching. The first is something I emphasize throughout the year, something I wasn't told as a student but I think is increasingly important. That is to do good work. To be your best self, your best worker or individual in the world. You need to be balanced. Rest, joy, friendship, and family are just as important to your capacity to do your work as anything else.

One thing I emphasize is that if you want to write the best essay you can, you have to do the work. My point isn't to not do the work, but to do it with balance. Work hard, play hard, and allow yourself to rest, to have all of those things together. Because it's the ingredients of a cake that necessitate all of those things. I think we live in a world where we still don't quite value the importance of letting the mind and body rest in order to achieve. For me, achievement means working very hard, of course, but also includes rest. That's something I believe in quite strongly.

The final thing I'll say is about history. We touched on this, so I won't dwell on it too much. But history does show us the power of decisions, the power of action, the power of taking one path and not the other. There is power there because you can always see that your own choices as an individual can and do impact others and the world in ways you can't always anticipate or perhaps intend.

To hold onto that idea, and to remember that you yourself are an agent of change, comes with a real responsibility. Take that responsibility seriously. You are empowered, and therefore need to make sure you hold onto that contingency, if you will, and wield it to the best of your abilities.

Keith

With that sage advice, thank you for writing the book and for having this conversation with me.

Elizabeth

It's a real pleasure. Thank you for the conversation. I really, really appreciated it.