The consensus from most commentators I’ve read is that “nothing out of ordinary”, meaning it’s following the same trajectory from the 14th FYP, which as I’ve mentioned above, the Dual Circulation Strategy.
The latest policy paper in late November vows a 3 trillion yuan stimulus on consumption goods, which is a lot, but we’ll have to see if this fixes the problem, because the problem isn’t on the supply side, it’s on the demand side.
People curb their spending not because there aren’t cheap goods for them to buy, they are saving because they are feeling uncertain about the economic climate, especially under the continuous plunging property prices (which is still going!) that is evaporating the wealth of the middle class (the main consumption class) that went on the bandwagon of house purchasing frenzy of the 2010s.
Meanwhile, we have 600 million people (~40% of the total population), mostly in the rural area, that are barely making 1000 yuan (~$150) in income every month. These people cannot effectively contributing to domestic consumption because of their low income.
It gets even more complicated with the 280 million migrant workers (农民工) who work in the cities but have rural hukou, which means that they are mostly shut out from key public services like healthcare, pension and education that urban citizens enjoy. This is the true underclass that are actually breaking their backs making your iPhones, building infrastructure across China etc. and are often invisible to the eyes of the urban citizens. Hence you have this phenomenon known as “left behind children” (留守儿童) where the parents who work in the cities cannot afford to keep their children staying with them, so have to send the kids back to the rural areas to be raised by their grandparents/relatives. You can imagine the social problems that can be caused by long-term separation with one’s parents.
The problem is obvious - the elephant in the room that the leadership keeps pretend to not seeing - wealth inequality.
The solution is also obvious, although the CPC (especially Xi himself) is very very allergic to providing social welfare because they think it “encourages laziness” and points to Latin American countries as examples.
For me, the solution is very simple, especially since China is a socialist country:
Provide jobs guarantee to eliminate the concern of unemployment
Provide social safety net to ensure that those most in need can receive proper financial assistance (e.g. medical treatments) without having to worry about low income
Either of these three can rapidly and significantly boost domestic consumption, but there are obstacles:
The first two require the government to run a budget deficit, which is another thing that the government is allergic to because they have listened to the IMF to learn how to balance their budget. As a result, they have to accumulate foreign currencies (such as the $1 trillion trade surplus here through exports) before they can spend domestically, in order to bring down the deficit spending.
The third… hahaha… that’ll be a huge fight with the elite class that has benefited greatly from their collaboration with the bourgeoisie. Good luck!
Is agricultural business that powerful that rising minimum wages in agriculture will fuck powerful interests? i think the solution is like tried and true - mandatory 8h work days and then bumping minimum wage until you encounter inflation
The problem isn’t so much agricultural mega conglomerates you see in Western capitalist countries.
China’s rural problem comes from the reprioritization of urban development since the reform and opening up area, and it has to do with land finances.
Due to the reckless property building frenzy in the 2010s, the Tier 1/2 cities sucked the population out of Tier 3/4 cities, and in turn, the Tier 3/4 cities had to suck the population from provincial towns and rural villages.
As a result, the rural regions suffered the most during this infrastructure building phase. This is NOT to say that there hasn’t been development in the rural regions. In fact, you can see quite nice infrastructure in the villages due to the massive infrastructure building, but there is no economy. The youth have already left and there are very few job opportunities in the rural areas. Especially with the local governments struggling with their finances now that the land revenue is plunging, they have even less means to give attention to the rural areas.
There is a meme on the Chinese internet that says the high speed rails have connected all the small parts of China, but it also provided a one-way ticket for the youth to leave for the big cities forever. While you might think better connectivity would have helped rural development, in reality, the high speed rails have practically benefited the big cities at the expense of the rural areas.
Although in recent months there is a reverse trend as the economy is taking a downturn, with the tangping/lying down movement gaining traction, but that’s an entire effort post in itself.
but no jobs is precisely “no nicely compensated jobs”, sure after agricultural automation rural villages will become much smaller, doesn’t mean it can’t be a well paid career for those who stay. It’s not like screwing iphones logic boards or biking food is very mentally stimulating work, and if there was a financial choice, some people would stay
The consensus from most commentators I’ve read is that “nothing out of ordinary”, meaning it’s following the same trajectory from the 14th FYP, which as I’ve mentioned above, the Dual Circulation Strategy.
The latest policy paper in late November vows a 3 trillion yuan stimulus on consumption goods, which is a lot, but we’ll have to see if this fixes the problem, because the problem isn’t on the supply side, it’s on the demand side.
People curb their spending not because there aren’t cheap goods for them to buy, they are saving because they are feeling uncertain about the economic climate, especially under the continuous plunging property prices (which is still going!) that is evaporating the wealth of the middle class (the main consumption class) that went on the bandwagon of house purchasing frenzy of the 2010s.
Meanwhile, we have 600 million people (~40% of the total population), mostly in the rural area, that are barely making 1000 yuan (~$150) in income every month. These people cannot effectively contributing to domestic consumption because of their low income.
It gets even more complicated with the 280 million migrant workers (农民工) who work in the cities but have rural hukou, which means that they are mostly shut out from key public services like healthcare, pension and education that urban citizens enjoy. This is the true underclass that are actually breaking their backs making your iPhones, building infrastructure across China etc. and are often invisible to the eyes of the urban citizens. Hence you have this phenomenon known as “left behind children” (留守儿童) where the parents who work in the cities cannot afford to keep their children staying with them, so have to send the kids back to the rural areas to be raised by their grandparents/relatives. You can imagine the social problems that can be caused by long-term separation with one’s parents.
The problem is obvious - the elephant in the room that the leadership keeps pretend to not seeing - wealth inequality.
The solution is also obvious, although the CPC (especially Xi himself) is very very allergic to providing social welfare because they think it “encourages laziness” and points to Latin American countries as examples.
For me, the solution is very simple, especially since China is a socialist country:
Either of these three can rapidly and significantly boost domestic consumption, but there are obstacles:
The first two require the government to run a budget deficit, which is another thing that the government is allergic to because they have listened to the IMF to learn how to balance their budget. As a result, they have to accumulate foreign currencies (such as the $1 trillion trade surplus here through exports) before they can spend domestically, in order to bring down the deficit spending.
The third… hahaha… that’ll be a huge fight with the elite class that has benefited greatly from their collaboration with the bourgeoisie. Good luck!
Is agricultural business that powerful that rising minimum wages in agriculture will fuck powerful interests? i think the solution is like tried and true - mandatory 8h work days and then bumping minimum wage until you encounter inflation
The problem isn’t so much agricultural mega conglomerates you see in Western capitalist countries.
China’s rural problem comes from the reprioritization of urban development since the reform and opening up area, and it has to do with land finances.
Due to the reckless property building frenzy in the 2010s, the Tier 1/2 cities sucked the population out of Tier 3/4 cities, and in turn, the Tier 3/4 cities had to suck the population from provincial towns and rural villages.
As a result, the rural regions suffered the most during this infrastructure building phase. This is NOT to say that there hasn’t been development in the rural regions. In fact, you can see quite nice infrastructure in the villages due to the massive infrastructure building, but there is no economy. The youth have already left and there are very few job opportunities in the rural areas. Especially with the local governments struggling with their finances now that the land revenue is plunging, they have even less means to give attention to the rural areas.
There is a meme on the Chinese internet that says the high speed rails have connected all the small parts of China, but it also provided a one-way ticket for the youth to leave for the big cities forever. While you might think better connectivity would have helped rural development, in reality, the high speed rails have practically benefited the big cities at the expense of the rural areas.
Although in recent months there is a reverse trend as the economy is taking a downturn, with the tangping/lying down movement gaining traction, but that’s an entire effort post in itself.
but no jobs is precisely “no nicely compensated jobs”, sure after agricultural automation rural villages will become much smaller, doesn’t mean it can’t be a well paid career for those who stay. It’s not like screwing iphones logic boards or biking food is very mentally stimulating work, and if there was a financial choice, some people would stay
Need a runback.