The Triumphs & Crises of China’s Economy | Professor Barry Naughton on China’s Debt, Deflation, and “Industrial Policy 3.0”

Barry Naughton, a renowned professor and chair of Chinese International Affairs at UC San Diego, provides a deep dive into the current crises and triumphs of the Chinese economy. In this interview, Naughton analyzes why China is grappling with its most difficult challenges in decades, from a persistent housing bust to entrenched deflationary pressures. He offers a critical look at the shift from market liberalization to aggressive state-driven industrial policy, including the massive "government guidance funds" used to target a new technological revolution. The conversation explores the geopolitical showdown between the U.S. and China over critical mineral supply chains and the race for AI dominance. Naughton also addresses the demographic "graying" of China and the shifting household psychology that is transforming the nation’s growth potential. This is an essential listen for anyone looking to understand the "Industrial Policy 3.0" era and its implications for global trade and investment. Recorded on January 12, 2026. Barry Naughton’s books:“The Rise of China's Industrial Policy, 1978 to 2020”: https://www.amazon.com/Rise-Chinas-Industrial-Policy-1978/dp/6078066595 “The Chinese Economy: Transitions And Growth”: https://www.amazon.com/Chinese-Economy-Transitions-Growth-Press/dp/0262640643 More info:https://gps.ucsd.edu/faculty-directory/barry-naughton.html Follow Jack Farley on Twitter https://x.com/JackFarley96 Follow Monetary Matters on: Apple Podcast https://rb.gy/s5qfyh Spotify https://rb.gy/x56dx5 YouTube https://rb.gy/dpwxez