Shanghai-based Shaun Rein is the founder and managing director of the China Market Research Group, a strategic market intelligence firm focused on China.

A photo of Shaun Rein. He sits cross-legged on a sofa placed on a stage. A wide screen behind him has a text. It reads, Shaun Rein.

Shaun Rein

Shaun Rein has lived and worked in China for over two decades, successfully predicting major changes and transitions in the Chinese market in his books The End of Cheap China and The End of Copycat China. He thinks that after the end of “cheap China” and “copycat China,” China will usher in a new revolution—common prosperity. It will mean more opportunities and a better competitive environment for multinationals, including those from the United States.

CNS: Three of your books, which are all international bestsellers, are on the Chinese economy and market and the effect of China’s economic rise. How has the Chinese market changed over the years?

Shaun Rein: In 2011, I wrote The End of Cheap China, in which I argue that multinationals will no longer see China merely as a manufacturing hub, but as a sales hub. While the cost of doing business in China has risen due to rising labor costs and other factors, rising incomes have also made China one of the world’s largest consumer markets.

When The End of Cheap China came out, most of the American media, including the Wall Street Journal, claimed that I was wrong, but over the years, bit by bit, my views have been borne out.

My second book, The End of Copycat China, argues that China will become the most innovative country in the world. In the past, China focused on the innovation of business models, but in the future, it will shift to the innovation of original technologies.

Ten years ago, there was no need [for Chinese companies] to do this because they could be worth billions of dollars just by acquiring the existing technologies from the U.S. and other world markets. But now, we can see the Chinese innovations in AI, robotics, quantum computers. The quantum computer developed by a team led by Chinese academician Pan Jianwei is much faster than Google’s.

My books and the ideas in them are arguably one of the best tracks of the Chinese economy in the past 20 years. Now I focus on common prosperity. Many foreigners do not understand it or even fear it. However, common prosperity is about helping low-income groups, rather than trying to destroy capitalism.

CNS: What kind of new opportunities will China’s promotion of common prosperity bring for multinationals?

Shaun Rein: Seen from different regions, after the reform and opening up began in 1979, first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen benefited more. The chances of a senior high school graduate from these places getting admission in a prestigious university like Peking University or Tsinghua University are higher than for their peers who come from less developed provinces like Anhui or Henan, which is unfair. Common prosperity benefits not only the first and second tier cities, but the smaller ones as well.

When I interviewed consumers in many Chinese cities in 2010, corruption and pollution were their biggest concerns. In 2021, when I did the interview again, their biggest concerns were no longer pollution and corruption—these two areas have improved a lot, and people are now more focused on housing, education and healthcare. This is what common prosperity is trying to solve.

The Chinese government wants to make everyone, not just one-tenth of its people, rich.

I suggest that American companies go deep into China’s third-, fourth- and fifth-tier cities where there is huge potential. In the future, better opportunities will exist in many fields, such as sports health, intelligent manufacturing, tourism and so on.

During the COVID-19 pandemic, the city of Sanya on Hainan Island became a popular domestic tourist destination owing to high-speed rail and other convenient transportation. Nowadays, domestic travelers never complain about poor hotel conditions, restrooms and infrastructure in China.

CNS: How do you see China-U.S. economic and trade relations? Have both countries benefited from them?

Shaun Rein: The prosperity of the American middle class is largely due to the efforts of Chinese labor. Without China, the United States would have been a much poorer country over the past 30 years and would not have had so many middle-class people who can afford Apple and Nike products. Similarly, in the 1970s, when China was a relatively poor country, it needed a lot of capital to create jobs, much of which came from the U.S. There is no doubt that both countries benefit from trade and cooperation. The peoples of both countries are better off when the two countries work together.

But the Trump administration’s attacks on China by launching trade tariffs left many negative impressions about China in the minds of Americans, ruining this economic partnership.

However, the truth is that China won the competition with the U.S. (in some areas) through a low-cost and well-trained labor force, and good infrastructure, such as roads, airports, railways, etc. Some U.S. politicians need a scapegoat to cover up their wrongdoings, and they find one in China.

CNS: What is the biggest misunderstanding or miscalculation that Americans have about China?

Shaun Rein: First of all, they don’t understand why the Chinese government has widespread popular support. It is not that the Chinese have been “brainwashed” but because the government has done a good job in improving and implementing policies and creating jobs and economic opportunities.

Second, some of the U.S. leadership is biased and discriminatory against China. For more than 70 years, the United States has been the most powerful nation on earth. America believes in military power. Today, with the rise of China, some fear that China’s power will undermine America, which scares them.

CNS: In which areas could China and the United States expand cooperation and normalize their relations?

Shaun Rein: One is environmental protection, and the other is trade and investment. China has made great achievements in environmental protection over the past decade and there is potential for cooperation between the two countries.

The American business community sees China as more of an opportunity than a threat, which provides opportunities for U.S.-China cooperation. Closer economic ties could reduce the likelihood of military conflict. It is important that China continues to roll out the red carpet for U.S. corporate investment.

(Interviewed by Pang Wuji)