Yuen Yuen Ang is the Alfred Chandler Chair Professor of political economy at Johns Hopkins University. She is an influential scholar, writing extensively on China’s political and economic trajectory, its international relations and its adaptive development in a fragmented, unpredictable world. Originally from Singapore, her award-winning work includes the books How China Escaped the Poverty Trap and China’s Gilded Age. This interview first appeared in SCMP Plus. For other interviews in the Open Questions series, click here. As a professor based in the United States, do you think there is a general decline in knowledge about China there? Can that be attributed to the sharp drop in Americans studying in China? To put things in historical context, I would point to my “grand teacher” Michel Oksenberg. He served in the administration of US President Jimmy Carter, and was the expert behind the normalisation of relations between the US and China. In addition to his policy work, he was a passionate educator who nurtured generations of China experts. A majority of leading China scholars today are his disciples or grand-disciples – including myself. I’m sharing this story to remind us of how deeply and purposefully the pioneers of US-China engagement had invested in helping American policymakers and the public understand China. They went to great lengths to build up a community of expertise. Today, we are looking at a different environment. Despite that, America is still benefiting from knowledge investments made in the past. For instance, if the US Congress or US-China Economic and Security Review Commission want to understand any topic better, they can call upon the insights of numerous China experts across the country. There are well-established mechanisms for gathering knowledge about China. By comparison, does China have a similar knowledge infrastructure about the US that has been built up over decades? Foreign policy experts often debate “what the West got wrong about China” – but I would pose the reverse: does China also get the West wrong? Another factor, I think, contributing to misunderstandings is the social media environment. We’re all suffering from an attention deficit. We used to read books, then articles, then essays, then blogs, and now it’s further reduced to tweets of 280 characters. So you can imagine what sorts of messages fit in that tiny space. It has to be simplistic. If there are two sides to a story, you can only choose and exaggerate one side to fit in one tweet. For public intellectuals, the great challenge these days is to explain complex problems in a simple, memorable – yet not simplistic – way. To spark interest without misleading. American commentary swings from one extreme to another, sometimes within days … It is only a reflection of America’s self-perception What misunderstandings, if any, are there among US policymakers about China’s economic system or its trajectory? One misleading narrative is more of a see-saw; it claims the Chinese economy is going to collapse but also that China will take over the world. American commentary swings from one extreme to another, sometimes within days. In 2024, the talk of the town was “peak China”. It was all over the media. Only a few months later in 2025, do you hear anyone talking about it any more? Suddenly, it has disappeared. Instead, The New York Times publishes pieces like [Thomas Friedman’s column] “I Just Saw the Future. It Was Not in America.” What happened? Did the Chinese economy dramatically perk up within five months? No. It has nothing to do with China’s reality. It is only a reflection of America’s self-perception. Last year, near the end of the [Joe] Biden administration, the US economy was doing well. It bounced back strongly after the pandemic. So there was a great deal of confidence in the US at the time. By comparison, China was struggling with a real estate meltdown and deflation. These problems were real. Set against American confidence, the meme of “peak China” took off – including in Asia. But in 2025, the situation in America abruptly changed. Pessimism set in, and China appeared scary again. In short, what people perceive and broadcast can be very different from reality. In this case, the Chinese reality barely nudged, yet American perceptions went from night to day. You described China’s economic system as “directed improvisation” in your 2016 book How China Escaped the Poverty Trap. Could you elaborate on the idea? China is not – as many foreign observers imagine – a development model that is planned from the top, at least not during the market reform era since the 1980s. Rather, it is a combination of directions from the top plus improvisation from numerous actors on the ground, including local governments and entrepreneurs. Together, they produced a diversity of “China models” within China. Directed improvisation goes against the usual binary that we are presented with: either top-down planning or free market. In fact, these extremes do not exist. The US economy is not a 100 per cent “free market”. The government heavily regulates the economy and guides innovation. During China’s early stage of export-led mass industrialisation, one expression of directed improvisation was that the central government permitted local governments to find their own ways to attract investment. This resulted in multiple regional models, with some localities centred on foreign direct investment and others on private entrepreneurship. Nearly a decade later, have you observed any changes in this model? Today, “directed improvisation” is just as relevant, but the direction and the goals of development have dramatically changed. China has entered a different chapter. Beijing wants to retire an old economic model that was highly dependent on low-cost exports, construction and real estate. It wants hi-tech, innovation-driven development. So we now see “directed improvisation” expressed in this new context. The central government still plays an indispensable role in telling local governments to steer the ship in a different direction. They set new key performance indicators (KPIs) that signal to local officials that their job is not just to deliver any gross domestic product, but high-quality GDP. And local governments, in turn, are also trying to find ways to attract investment and start-ups, but with a focus on the sectors and the types of innovation that the central government rewards, for example, electric vehicles, robotics and artificial intelligence (AI). But there are some interesting differences between the past and the present. At an early stage of economic development, it was relatively easy to set and enforce KPIs because they were simple and measurable. For example, GDP, tax revenue or industrial output. But now that China has moved into hi-tech development, the desired outcomes become increasingly ambiguous and hard to pin down. For instance, the central government has set KPIs for patents. Why patents? Because they are the most countable output of innovation. Initially, the KPI was a certain number of patents each year. But as you can imagine, local governments started gaming around that number. This unintentionally spawned an industry of patent agents, who specialised in filing as many patents as possible. They found tricks to boost the numbers without actually improving innovation (for example, filing multiple patents for the same invention). Years later, that prompted the central government to penalise such behaviour. It’s like a cat-and-mouse game. Do you think the pattern of local governments gaming to meet central government targets could be a problem for China’s pursuit of high-quality development? Innovation is, by definition, uncertain and unmeasurable. This is different from mass industrialisation, where both the government and companies know what to produce – namely, consumer goods for rich markets, like shoes and toasters. But with emerging technology, the best products are the ones you cannot imagine, or they just seem too out of the box for a government official to consider a worthy bet. For example, AI and quantum computing – how many people can confidently say they understand such technology? How would a government official, who is not a scientist or inventor in that field, know how to regulate this technology or know what incentives to give? In short, the uncertainty of innovation completely changes the game. And it is a challenge that is not unique to China. All of the Asian economies that escaped poverty and became middle-income – even the high-income countries that want to go further and become innovation powerhouses – are facing the same issue. So is the US government. Do you think China’s institutional framework makes it more difficult to address this challenge, or can it find a solution? What is particularly interesting in the Chinese context is that it is still using familiar bureaucratic tools to carry out a tech- and innovation-centred version of “directed improvisation”. Another challenge is that China’s development goals today are numerous. That wasn’t true in the past, when the list of goals was short, basically focused on one thing – GDP. So whether you produce GDP by exports, real estate or construction, the quality did not really matter. But now China has many different expectations – development has to be environmentally friendly, inclusive, innovative. Many of these goals are in tension with one another. For instance, if you want rapid GDP growth, it’s necessarily in tension with conserving the environment. Chinese government officials know clearly that the central leadership wants to move towards hi-tech, clean, inclusive development. But when implementing this vision, their context is different from the start-up stage of industrial growth. There is no playbook they can imitate. Back in the 1980s and 1990s, they could imitate the late industrialisation model in East Asia. Today, there aren’t many role models. China itself has become a trailblazer, and other countries are seeing it as a role model. Thus, I would say more than before, China needs “directed improvisation”. Although the desired destination is clear, the paths to it are unclear, untested or ambiguous. The only way to achieve that goal is by mobilising a lot of players to engage in creative adaptation. The central government, or even local governments, do not know the solutions in advance. You have described a principle in China’s early development as “using what you have”. Amid China’s economic transformation, what kind of local resources or capabilities do you think are necessary to sustain economic momentum in the next decade? Now that China is pursuing innovation-driven development, it would need a much more open-minded and experimental bureaucracy, and it must be willing to listen. Because when it comes to innovation, government officials are not the ones who know what success looks like. Only scientists or entrepreneurs would know that. The government cannot plan on creating DeepSeek, the AI start-up; it can only create an ecosystem that might give rise to DeepSeek. In other words, the government has to play a directing role, not a dictating role. If they attempt to dictate innovation, they will actually stifle it. They need to have a different mindset, a much more failure-accepting mindset. This is difficult in any public sector, because government officials are inherently risk-averse. For instance, local governments have created many government guiding funds. The failure rate is inherently high, because it is supposed to function like a venture capital fund. One recent policy debate is: what should be the acceptable failure rate? How much failure can the government tolerate? And if it fails frequently, does it mean it’s not doing its job? This is new terrain for China. But I think the fact that local governments are still willing to go into this uncharted territory says a lot about Chinese innovation capacity, because I can imagine that in many other parts of the world, you may not even have this conversation at all. For example, it would be difficult in a democracy like America, because public funds are scrutinised. If the government invests billions and fails, it has to be accountable to taxpayers. The party that wins, if there is a victory at all, is the one who can minimise weaknesses and maximise strengths Would you consider that one of China’s advantages in tech innovation compared to the US? The Chinese system has advantages and disadvantages. Usually, the debate is set up as a simplistic horse race: which is superior – the Chinese or American system? But that is not the reality. The reality is that the Chinese and American systems each have their strengths and weaknesses. And I would say the party that wins, if there is a victory at all, is the one who can minimise weaknesses and maximise strengths. One of the strengths of the Chinese system is that it has more room to make mistakes. It can be much bolder. It can make big bets that would be politically difficult in a democracy. But the downside of that same advantage is that it can result in tremendous waste. And the size of the waste could be so large that it exceeds any success. That is why in the Chinese context it is important to figure out a way to take risks without becoming too wasteful. But there’s no clear formula for striking the right balance. The Chinese government is flying the plane and building it at the same time. You’ve said that the binary of control versus freedom is too simplistic, and that the US government’s approach of “decentralised coordination” actually parallels China’s economic system. In light of this, do you think there are deeper institutional similarities between the two countries? Yes, there are similarities – I’ve called them “the clash of two Gilded Ages”. They are overlooked because of the narrative that China and America are two polar opposites with nothing in common. The term that foreign policy analysts like to use: “the clash of civilisations.” It’s attractive because it’s easy to think in terms of two opposites. It allows people to project their cultural biases onto the debate. And so it has a lot of traction, but it obscures important similarities between the Chinese and American political economies. America has always projected itself as the champion of free markets. For a long time, the US government carried out industrial policy – but never marketed it, because industrial policy was seen as politically incorrect, inconsistent with its ideology of market fundamentalism. Scholars of American innovation call the system that was quietly operating behind the scenes “decentralised coordination”. The network of American innovation was wide and highly decentralised, involving many companies, inventors, research labs and universities. The role of the US government was to coordinate this network. For instance, by setting strategic directions, identifying scaling bottlenecks that required government intervention and support, and providing seed funds. And if you think about all of the things I have just described, does that not sound like China’s “directed improvisation”? The impression that Chinese innovation is all top-down whereas American innovation is all bottom-up is false. In fact, it’s different degrees of “directed improvisation” using different tools. Of course, there are also large differences between them. The Chinese context is highly state-centric, with the central and local governments playing an outsize role, whereas in the US system, the government sees and calls itself a coordinator. Another difference is scale. The US government provided various subsidies and grants to start-ups and emerging technologies. But the current scale of financial support being provided by the Chinese government is many times larger. In your view, to what extent might this tech advancement reshape our understanding of the role institutions have been playing in fostering economic growth? Will tech innovation be the ultimate game-changer? There’s a bit of tech fetish in development discussions, projecting tech as a panacea that will solve all problems in society. We should avoid that. Humans have always been innovating. Remember when computers were first introduced, and how revolutionary it was? The difference now is that we’re even less able to envision the effects of new technologies. We are experimenting with AI, surprised by it, and also scared of it; how far will this go? Institutions will certainly play a key role, but in the innovation age, it will be less about planning and much more about directing. Yet traditional management is all about planning. If you go online and search the history of this term “directed improvisation”, the earliest use of this term appeared in computer programming – although How China Escaped the Poverty Trap was the first to apply it in the context of development. Initially, I was surprised. But it makes sense, because computer programming is about setting the parameters of creation. Fundamentally, there’s a similarity between the logic of programming and governing: how do you design a creative environment? Adaptation without direction does not work. If there’s no vision, no rules, no parameters, it will be pure chaos. But you also do not want to have the other extreme, which is top-down direction with no feedback and creativity from the ground. Innovation is not something that governments can plan, much less command. It is the result of many actors interacting with one another. The government has to play the part of an effective director, so that creative people can contribute ideas and co-produce an original play. There is frequent criticism from the West about China’s overreliance on exports and manufacturing, and weak domestic consumption. What’s your take? I would frame it differently. At this particular point in time, the West is trying to re-industrialise. This is in tension with China’s goal of furthering its capacity in advanced manufacturing. So, ideally, what Western policymakers would hope to see is a Chinese economy that is less export-driven and more consumer-driven. Their criticisms reflect a competition of economic models. Some US officials attributed China’s rapid economic rise to its entry to the World Trade Organization in 2001, as it opened a large market for Chinese exports. As China is facing heightened trade tensions and tariffs, how will that affect economic growth? Will China offset its impact through domestic consumption and doing business with countries involved with the Belt and Road Initiative? I’ve argued that we’re seeing an unprecedented economic paradox in China: a persistent growth slowdown alongside an impressive tech boom. The big question for China is, can it transition away from its old growth model and into a new one? China is now in an intermediate zone between the two. That is why we are seeing the strange coexistence of weaknesses and strengths at the same time. Trade tensions are not new to China. It began experiencing them back in 2016, and some would say even earlier. So Chinese policymakers already knew that they must move away, not only from the US market, but from the export-industrialisation model, which is dependent on high-income markets keeping their doors open. You can see the Belt and Road Initiative as a part of that effort in diversifying and creating new trade routes for China. But that effort is still new. Frankly, it’s less than 10 years old. I think some of those efforts have borne fruit, but not yet enough to compensate for the loss of access to the US market. After all, the American consumer market is still the world’s largest. In a broader context, this intermediate zone that China is facing is also what the entire world is facing. In the West, everyone is talking about the transition from an old economic order to an emerging economic order whose shape and form we are not sure of. Are there any lessons from China’s early development that other developing countries can learn from? Development has always implied emulation and copying. In the old, Western-centred political order, development meant becoming like the West, both in terms of its economic and political institutions. Even though this was not explicitly stated, global development was in practice a project of assimilation. So that now we are moving away from the Western-centred global order toward a multipolar one, we must be careful – we should not simply transfer the target of emulation from the West to China. That would be just repeating a logic that was wrong in the first place. So my advice to other countries has always been that you should learn from any country, but only take what is useful to you. Learning is not copying. Whatever lessons you take, you still have to tailor them to your own countries’ contexts. The inspiration of China’s development experience is that success necessarily requires adaptation. Even though China had role models of late industrialisation in East Asia, it adapted their models to Chinese conditions. In particular, today’s late developers cannot replicate China’s path, because the gates of globalisation are now half closed. Countries like Vietnam cannot hope to export their way out of poverty by doing exactly what China did 20 years ago, because times have changed. The old economic order was structurally unequal. It involved poor countries sacrificing … to produce goods cheaply for consumers in rich markets Are there any cautionary lessons you think China should reflect on as it charts its future path? I have encountered Chinese policymakers and local officials who reflect and express with regret the amount of pollution that China suffered over the course of its rapid industrialisation. My research involved going to different places and seeing the physical environment for myself. Often I would find myself standing at a river that had completely dried up. Locals told me the river used to be teeming with fish. I tried to imagine what it looked like 40 years ago. When you are actually there to see it for yourself, the destruction of the environment is not an abstraction. The Chinese middle class gets to consume goods that they did not have 30 or 40 years ago. But you can also see that the river is dry, and the air and the soil are heavily contaminated. I hear local officials say, “Was it worth it?” Could China have achieved development without sacrificing the natural environment so much? And I think many countries, not just China but countries like South Korea or even Britain, all went down this path of polluting heavily then coming back to clean it up. But maybe some losses of the natural environment are so severe that no amount of money can bring it back. So for today’s developers, that is a cautionary tale. Do you really want to pay an irreversible price just so that you can have rapid GDP growth, particularly as the climate crisis gets worse? There has been a lot of discussion of uncertainty as the global order appears to be reshaping. What potential trajectory do you foresee for the world economy and what kind of new models or governance framework might emerge? The term “polycrisis” has been popularised to describe the chaos that seems to define our current times. But I don’t see it in entirely pessimistic terms. I think of the current moment as a “polytunity” rather than a “polycrisis”. Yes, the establishment is breaking down – parts of it were good, but parts of it were not. The old economic order was structurally unequal. It involved poor countries sacrificing their natural environment and labour to produce goods cheaply for consumers in rich markets. As a result, consumers in rich markets overconsumed. They bought things that they did not need and worsened the climate crisis. Then the rich economies turned around and said, “You’ve created a problem for us. We have deindustrialisation and it’s your fault. So we’re launching a trade war.” For sure, the old economic order had its benefits, giving a populous country like China an opportunity to escape poverty through export industrialisation. But it also had various inequalities that I’ve just described. It is unsustainable. So if what is crumbling was not perfect to begin with, maybe the polycrisis isn’t as bad as we think. But if the existing imperfect order is crumbling, what is the alternative? The danger is that the alternative could be worse – that is what people are afraid of. But that is only one possibility. By coining the term “polytunity”, I’m highlighting the possibility of a better, fairer future. For example, while many developing countries today are anxious about the trade war, they also find themselves having a louder voice on the global stage than they did before. They have more agency to band together in a multipolar world. So as I see it, it’s not all bad. The “polycrisis” is paralysing only for those who are attached to the old order, who have benefited disproportionately from it. For those who are not, it offers the opportunity to reflect on the status quo and create a better alternative.