Recently I’ve been in the mood to read up on China’s economy, and a friend recommended this book. I rushed through it on WeChat Reading in about a week. Although I devoured it somewhat hastily, it was thoroughly exhilarating. I had read some chapters of Wu Xiaobo’s Turbulent Thirty Years before; this book serves as a sequel, with a consistent style, but reading it resonated more deeply, because this was precisely the golden decade in the lives of us first-generation post-90s. As a “gradually conscious” firsthand witness, the sense of replay is very strong.
Overview
Wu Xiaobo excels at grand narratives and emotional buildup. In this book, he panoramically recreates the turbulent ups and downs of China’s economy and enterprises from 2008 to 2018. The title “Big Water, Big Fish” seems tacky at first glance, but after finishing the book and reflecting on it, it’s actually quite vivid. The relationship between market and enterprise is precisely that of fish and water—the vast water accommodates the growth and struggle of fish, while the big fish makes the water vibrant and magnificent.
This decade was also a life stage for me, from an ignorant teenager to a young adult entering society. As a firsthand witness to this period of economic history, some of the phenomena I didn’t pay much attention to, and some I couldn’t make sense of. The author, in a chronicle-like manner, from a higher-dimensional perspective, closely following the dual dimensions of time and space, organically weaves together various threads, and reveals some little-known behind-the-scenes stories from that time. Through these hidden currents beneath the iceberg, when we re-examine this history, we can faintly trace some underlying patterns.
Author: Woodpecker’s Miscellany https://www.qtmuniao.com/2021/11/02/big-water-big-fish, please indicate the source when reprinting
Threads
2008, as the starting point of this book, was a year of frequent major events. The snow disaster in the south at the beginning of the year, the Wenchuan earthquake in the middle of the year, and the Beijing Olympics that followed—all deserve heavy emphasis. But speaking of the event with the greatest impact on China’s economic trajectory, it was undoubtedly the subprime mortgage crisis that erupted in the United States, and China’s response with the four-trillion stimulus. China went from tightening credit at the beginning of the year to quantitative easing by year-end—a 180-degree policy turn—using investment-driven growth to alleviate the economic deceleration caused by declining exports. The subsequent large-scale infrastructure construction, home appliance subsidies to rural areas, land dividends, soaring housing prices, excess capacity, supply-side reform, and the Belt and Road Initiative all have much to do with this.
Starting in 2010, with the rollout of 3G, telecom operators “lowering fees and increasing speeds,” and the popularization of smartphones, China began entering the mobile internet era. Weibo reshaped the way public opinion was disseminated, WeChat greatly impacted people’s means of communication, and e-commerce and mobile payments profoundly changed Chinese people’s shopping habits. The great development surrounding mobile devices, mobile internet, the Internet of Things, and O2O drove China’s industrial transformation, and absorbed a large number of service workers transferred from low-end manufacturing, thereby obtaining a second spring of economic development. But at the same time, it also posed new challenges to national legislation and policy, financial regulation, and anti-monopoly governance.
By 2012, in terms of scale, China’s economy was already enormous and had formed a certain ecosystem; in terms of growth model, it faced institutional bottlenecks and path dependence issues. The basic elements that originally supported economic growth, such as cheap labor, low environmental costs, and low land acquisition costs, began to disappear one after another. All signs indicated that the first half of reform and opening up was drawing to a close. At this time, the new government came to power, stepping up anti-corruption efforts politically, decentralizing power and simplifying administration economically, and reconstructing the financial system through securitization. China’s economy began to transform amid constant adjustments. The subsequent Belt and Road Initiative, supply-side reform, free trade zone pilots, carbon neutrality, and Xiong’an New Area exploration all bear traces of this.
Resilience
China’s development over this decade was fortunate; foreign media repeatedly predicted China’s collapse. For example, in 2011, Paul Krugman wrote in The New York Times, “Will China Break?”, asserting that China’s insufficient domestic demand, declining export surplus, and serious real estate bubble made China’s situation seem almost indistinguishable from the collapses we had seen elsewhere. However, what was surprising was that the Chinese economy always had new branches suddenly appearing. These branches had different names in different periods, such as institutional dividends, demographic dividends, land dividends, internationalization dividends, currency bubbles, or consumption upgrades. In 2011, the thickest and most conspicuous branch was called the internet shockwave.
Having grown to its current size, China’s economy has formed a fairly complex internal ecosystem. On one hand, it can withstand various external shocks; on the other hand, it can generate more innovation through massive practice, constantly producing new growth engines. Coupled with a stable and long-term-oriented government, it has been able to repeatedly dispel collapse theories and continue moving forward with transformation, albeit haltingly.
Appendix: Timeline of Major Events from the Book
2008
Snow disaster, Wenchuan earthquake, Olympics, subprime mortgage crisis.
GOME founder Huang Guangyu incident.
Sanlu milk powder melamine exceeding standards.
2009
The Wu Ying private fundraising case, sparking discussion on deregulating private capital.
Industrial stimulus plans leading to China’s automobile production surpassing that of the United States; Evergrande going from the brink of death to rebirth.
Geely’s Li Shufu seizing the (financial crisis) opportunity to acquire Volvo from Ford.
Tencent entering the ranks of the world’s top three internet companies through QQ and gaming; Alibaba’s first Singles’ Day; Sina Weibo launch.
2010
GDP surpassing Japan; Shanghai World Expo.
The story behind Made in China—thirteen suicides at Foxconn.
Decline of Nokia; iPad release.
QQ daily active users exceeding 100 million; disorderly competition on the internet—the 3Q War.
VANCL’s rapid expansion.
European debt crisis—Greece falls into debt crisis.
Soaring prices of real estate and agricultural products—Suan Ni Hen (蒜泥狠, garlic), Dou Ni Wan (豆你玩, beans).
Weibo explodes in popularity, becoming a gathering place for big V’s who could sway public opinion.
2011
WeChat launch; first-generation Xiaomi phone release; Alipay spin-off; thousand-group-buying war.
Sportswear industry crisis—Li Ning, Jinjiang-based brands’ wave of offline store closures.
Minister of Railways Liu Zhijun falls from grace.
2012
New government takes office; reform and opening up enters its second half.
Muddy Waters’ Carson Block shorting Chinese concept stocks, triggering a trust crisis for Chinese stocks listed overseas.
Traditional machinery industry excess capacity, profit decline.
Traditional foreign-funded manufacturers such as Adidas begin shifting production capacity to Southeast Asia.
WeChat online users exceed 100 million; WeChat Official Accounts function pioneers the new media industry.
Zhang Yiming launches Toutiao; Cheng Wei launches Didi Dache.
Internet culture flourishes as never before—diaosi culture; Lost in Thailand achieves unprecedented box office success.
2013
Central Eight Regulations; intensified anti-corruption efforts.
Likonomics: decentralizing power and simplifying administration, supply-side reform, securitization reconstruction of the financial system.
Shanghai Free Trade Zone; Yu’e Bao launch; Li Ka-shing withdraws capital from mainland China.
Germany’s Federal Ministry for Economic Affairs and Energy proposes Industry 4.0.
Lei Jun and Dong Mingzhu’s one-billion-yuan bet; Huawei begins self-branded phones; Luo Yonghao starts Smartisan.
2014
Policy pivot: central bank interest rate cut; a new round of housing market loosening suddenly arrives; Shanghai Composite Index surges.
Government proposes the “New Normal,” lowering GDP growth expectations and beginning to prioritize environmental protection.
JD.com and Alibaba go public; Wuzhen World Internet Conference.
Didi-Kuaidi subsidy war.
2015
WeChat Red Envelope greatly boosts WeChat Pay’s market share.
Stock market turbulence—from extreme prosperity at the beginning of the year to extreme decline by year-end; Xu Xiang arrested; market rescue fails.
Baoneng attempts to acquire Vanke.
P2P bubble represented by Ezubao.
LeEco’s bubble financial empire.
Wave of internet mergers—Didi & Kuaidi, 58.com & Ganji, Meituan & Dianping, Tencent & Shanda, Jiayuan & Baihe, Meilishuo & Mogujie.
Post-90s generation driving transformation of the consumer market.
2016
Lu Qi joins Baidu.
AlphaGo defeats Lee Sedol.
Trump elected President of the United States.
Shared bike bubble; nationwide live-streaming craze.
Consumption upgrade and disappearance of the migrant-worker demographic dividend.
2017
New retail.
NetEase Yanxuan.
Xiaomi releases Mi 6, reversing decline.
Wolf Warrior 2 released.
2018
Summary and outlook.
Carrying on the past and opening up the future.
