Weekend Long Read: What China Can Learn From Germany’s Battle of Economic Ideas

The global economic disruptions, particularly fueled by former U.S. President Donald Trump's trade war, have reignited debates over economic models and the role of the state in responding to crises [para. 1]. While such discussions have long been present, they have intensified amid global economic challenges, positioned between ideas like China’s “socialism with Chinese characteristics” and Europe’s ordoliberalism [para. 2][para. 5]. China's economic transformation since the 1970s has been guided by this hybrid framework of state control and market reforms, allowing it to become the world’s second-largest economy [para. 3].

Ordoliberalism—a less-discussed economic philosophy outside Europe—formed the foundation of Germany's post-World War II recovery via the social market economy [para. 4]. It emphasizes strict competition, strong rule of law, and state-defined market frameworks without state interference in enterprise activities, maintaining elements of Adam Smith’s philosophy [para. 5][para. 20]. While ordoliberal principles helped West Germany rebuild into a major economic power, its divergence from Keynesian economics, which emphasizes active government interventions like fiscal policies to manage economic cycles, fueled ideological tensions [para. 6].

The clash between ordoliberalism and Keynesianism has gained fresh attention in China through *The Future of Economics*, a book that explores Germany’s evolution in economic thought. Written by leading academic figures like Wu Jinglian, now 95, the book critiques the polarized approach to government-market relations, advocating for balance instead [para. 8][para. 21]. Wu highlights that economics should not fall into extremes—neither total government oversight nor complete market freedom—but should respect the conditions necessary for competitive markets [para. 21]. He emphasizes that competitive pricing guided by scarcity and competition is core to functional economies [para. 23].

The book also recalls a significant debate ignited in 2009 within Germany’s economic community. During this time, major changes disrupted the ordoliberal dominance in economic courses in favor of Keynesian macroeconomics. This shift reflected and contributed to broader disputes over Germany’s economic future [para. 17]. While ordoliberalism guided Germany post-WWII and aided EU integration policies, Keynesian measures gained influence during economic crises, such as the global financial crisis of 2007-2009 [para. 15].

Edited by Lars Feld, Hu Kun, and Daniel Nientiedt, *The Future of Economics* provides Chinese readers an insight into the historical and academic disputes in Germany [para. 25]. The book sheds light on how ordoliberalism and Keynesianism shaped Germany and their implications for global economics, offering lessons for Chinese economists in navigating market and government roles [para. 22][para. 23].

Since the 2000s, Germany has shifted toward more Keynesian-style economics with policies emphasizing state intervention, especially during crises. Wu highlights that this divergence peaked in debates from 2009 to 2019, marking a gradual departure from ordoliberal principles [para. 26]. Consequently, the German economy saw stagnation, contracting from 2023 to 2024, sparking renewed calls to rethink ordoliberalism’s relevance [para. 27]. Wu argues this debate extends beyond Germany, having significant implications on global economic strategies [para. 27]. Thus, the discussions and reflections in *The Future of Economics* transcend academia, potentially influencing governmental and scholarly perspectives worldwide.