Jaxon Gonzales, 2026 SCCEI Summer Study Program Participant

Jaxon Gonzales, Economics

The SCCEI Summer Study program had a profound impact on the way that I view the Chinese economy, and as a result, the way that I view US businesses and innovation. Although I had been to China before, I was primarily excited by the ability to visit factories and companies that a normal tourist would not have access to. On top of that, I still learned a great deal about Chinese culture and people’s day to day lives that I did not know before.

The visits that struck me the most were the factory tours, especially newer factories like XiaoMi or TGood. In the United States, there is often an idea that China is able to compete in the global economy because they have an abundance of cheap labor. In these high-tech factories, this idea was resoundingly rejected.

Although Chinese labor is generally cheaper when compared with the United States or Western Europe, several of the factories that we visited had so few workers that labor costs were nearly a negligible part of their costs. Rather, time and time again, tour guides emphasized obsessions with efficiency, optimization, and increasingly automation that allow factories to run quickly and with less and less human input. Without cheap labor as an explanation for China’s economic success, these same tours showed me that intense competition and supply chain dominance explain a significant part of this success. Being able to source all of your inputs within a 100 kilometer radius, and having to compete with dozens of other firms making very similar products (even for complex industries like phones or cars) creates markets that are highly efficient and occasionally starved for profit.

Another part of the economy that the trip highlighted for me, and which I am still trying to wrap my head around to an extent, is the prominence of ‘super-apps’ that offer hundreds of features in one app (e.g. Alipay or WeChat) as well as giant conglomerates that work in many unrelated verticals (e.g. New Hope Group). Although I don’t think these have the same root cause, they appear as similar trends in my mind where companies are encouraged to grow into new unrelated verticals along with expanding horizontally. In the US, this would seem to be bad business practice that the market would discourage. Even the few tech companies that one might cast as similar like Meta or Alphabet seem to offer fewer products than Chinese super apps. Generally, I understand this as a consequence of how Chinese consumers have more widespread access to smartphones than laptops/computers and the pro-regional economic incentives created by China’s political system.

In the future, I hope to apply these insights in my work and eventually have a role that allows me to interact with the Chinese economy whether through international business or some sort of diplomatic/government position. Having a deeper understanding of China’s economic advantages thanks to this program will be a huge help in crafting sensible policy or evaluating potential business decisions.