Services without Deindustrialisation and Japan’s Chip Leverage | Society and Economy Digest (December 2025)

State and Society | Chinese Economy | Technology (Chips and AI) | Renminbi Internationalisation and the Dollar | Stablecoins and E-CNY

This is the second part of our briefing on China’s end-of-year academic and policy discourse, focusing on society and economics where part one delved into foreign policy.

The end of 2025 produced many reflections from China on the nature and limitations of reform—both on the institutional and economic side.

In terms of institutions, the heterodox sociologist Zhao Dingxin uses his prior attempts at reforming Zhejiang University’s sociology department to analyse a pattern of institutional inertia: early attempts to increase one’s competitiveness by imitating the trappings of Western institutions eventually become an “irrational iron cage” that further weakens substantial progress. Lü Dewen notes a similar irrationality in the persistence of pandemic-era controls within the local government of an unnamed northern city, which persist out of stasis rather than genuine need.

The question of economic reform is currently dominated by the dilemma of how to boost services and domestic consumption…