The figure, which marks a rise of 100 million over five years, was released at a time when the authorities are looking to domestic consumption to boost growth.
Please, tell me what “Steps should be taken to reasonably increase consumer credit so as to support spending on [various things]” actually means then, because I fail to read it as anything other than “increase debt to increase consumption”.
Your assumption is that consumer credit translates into long term debt as is happening under financial capitalism in the west. Yet, this phenomenon is quite recent even in western countries driven by the fact that the economy is run by financial capitalists. There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about. The reason debt is a problem in the west is because people have no hope of repaying their loans, and living on credit has become the norm. There is no evidence of anything of the sort happening in China, and the record savings people have is a clear contradiction of this narrative.
I find your hostility disheartening. It’s not like I’m some neoliberal from .ee coming in and concern trolling about Xinjiang or something.
I find it disheartening that you just repeat the same couple of points over and over here without actually looking at the facts or the bigger picture. You just brushed off the fact that SOEs operate fundamentally different from private capitalist businesses. You ignore the fact that the private sector in China is shrinking. You never addressed the fact that personal savings in China are record high in 2024. You just keep harping on this one statement from Xi completely ignoring the overall context because it fits with the narrative you’re trying to paint that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about.
“stimulate the economy” is a vaguery. Be more specific about why it is good for socialist production.
that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
Savings and debt can both be held, as indeed they are in China, I don’t understand how you can say “the opposite is demonstrably happening”. Debt is already very high relative to the recent past and they are looking to increase it. If what you mean to be saying is that the large savings are evidence that the population can handle more debt without being immiserated, sure, I guess that makes sense, but then say that instead of this nonsensical inference that savings means debt isn’t growing.
“stimulate the economy” is a vaguery. Be more specific about why it is good for socialist production.
I think it’s important to stop and define what socialism is here first. Socialism is the intermediate stage between capitalism and communism where the working class has seized power and a proletarian dictatorship has been established. However, the social relations are still largely inherited from the capitalist stage of development. This is precisely where China finds itself today. While it is a socialist country, many of the economic relations make concessions to capitalism by necessity. Therefore, consumption remains an important aspect of the economy. Stimulating the economy in this context means creating more demand for production of goods and services.
Savings and debt can both be held, as indeed they are in China, I don’t understand how you can say “the opposite is demonstrably happening”.
I’ve already explained the relationship in my previous reply, and once again you’ve proceeded to ignore it. Here’s what I said:
There is little problem with people taking out loans that they repay
If the nature of debt is transitory, as in somebody takes out a loan for a short period, that is later repaid then there isn’t a problem. The actual problem arises when people end up taking on debt that they’re not able to repay, at which point they become indentured to the debt owners. In order for your argument to hold water, you have to demonstrate that this is happening in China.
I guess I still don’t really understand how it is useful. The reason is, if it’s transitory debt, how is consumption increased? You take out a loan for X amount from the state bank, spend it on a spiffy new electric car or whatever, but then later on pay X amount + a little interest back to the bank, i.e. the money you now have to spend on this new purchase is definitionally equivalent to (or a bit less than) the money you will eventually need to pay the bank. Obviously I understand how it is useful to a person, because when a transaction happens might be important for them, but for overall consumption, it seems like it either balances out or is a slight net negative, assuming we are excluding usury from the banks. What is actually being accomplished? As I think I said earlier, I’m not an Econ Guy.
The idea here is that the material conditions will continue to improve, and people continue being lifted into higher income brackets. Your argument is assuming no social mobility, but social mobility in China is actually quite high with millions of people moving into higher income brackets every year. For example, from 2010 to 2019 (the most recent period for which uninterrupted data is available), the income of the poorest 20% in China increased even as a share of total income. https://data.worldbank.org/indicator/SI.DST.FRST.20?end=2019&locations=CN&start=2008
I think social mobility refers to an the ability for an individual within a society to rise or fall in standing in the existing social order, not the whole social order changing shape, but I understand your use of it. I’m nonetheless pretty sure this doesn’t answer my overall question, “How does this increase net consumption?”, even though you have there made a good argument for debt being useful to individuals (something that I already conceded).
The context here is that China’s economy contracted during the pandemic, and contracting economy is a problem because companies rely on consumer revenue to continue operating. If consumption starts dropping beyond a certain level then companies start to close down, which leads to people losing jobs, and so on. This is what China is aiming to avoid happening as opposed to simply encouraging people to take out loans to increase net consumption for its own sake.
Your assumption is that consumer credit translates into long term debt as is happening under financial capitalism in the west. Yet, this phenomenon is quite recent even in western countries driven by the fact that the economy is run by financial capitalists. There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about. The reason debt is a problem in the west is because people have no hope of repaying their loans, and living on credit has become the norm. There is no evidence of anything of the sort happening in China, and the record savings people have is a clear contradiction of this narrative.
I find it disheartening that you just repeat the same couple of points over and over here without actually looking at the facts or the bigger picture. You just brushed off the fact that SOEs operate fundamentally different from private capitalist businesses. You ignore the fact that the private sector in China is shrinking. You never addressed the fact that personal savings in China are record high in 2024. You just keep harping on this one statement from Xi completely ignoring the overall context because it fits with the narrative you’re trying to paint that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
“stimulate the economy” is a vaguery. Be more specific about why it is good for socialist production.
Savings and debt can both be held, as indeed they are in China, I don’t understand how you can say “the opposite is demonstrably happening”. Debt is already very high relative to the recent past and they are looking to increase it. If what you mean to be saying is that the large savings are evidence that the population can handle more debt without being immiserated, sure, I guess that makes sense, but then say that instead of this nonsensical inference that savings means debt isn’t growing.
I think it’s important to stop and define what socialism is here first. Socialism is the intermediate stage between capitalism and communism where the working class has seized power and a proletarian dictatorship has been established. However, the social relations are still largely inherited from the capitalist stage of development. This is precisely where China finds itself today. While it is a socialist country, many of the economic relations make concessions to capitalism by necessity. Therefore, consumption remains an important aspect of the economy. Stimulating the economy in this context means creating more demand for production of goods and services.
I’ve already explained the relationship in my previous reply, and once again you’ve proceeded to ignore it. Here’s what I said:
If the nature of debt is transitory, as in somebody takes out a loan for a short period, that is later repaid then there isn’t a problem. The actual problem arises when people end up taking on debt that they’re not able to repay, at which point they become indentured to the debt owners. In order for your argument to hold water, you have to demonstrate that this is happening in China.
I guess I still don’t really understand how it is useful. The reason is, if it’s transitory debt, how is consumption increased? You take out a loan for X amount from the state bank, spend it on a spiffy new electric car or whatever, but then later on pay X amount + a little interest back to the bank, i.e. the money you now have to spend on this new purchase is definitionally equivalent to (or a bit less than) the money you will eventually need to pay the bank. Obviously I understand how it is useful to a person, because when a transaction happens might be important for them, but for overall consumption, it seems like it either balances out or is a slight net negative, assuming we are excluding usury from the banks. What is actually being accomplished? As I think I said earlier, I’m not an Econ Guy.
The idea here is that the material conditions will continue to improve, and people continue being lifted into higher income brackets. Your argument is assuming no social mobility, but social mobility in China is actually quite high with millions of people moving into higher income brackets every year. For example, from 2010 to 2019 (the most recent period for which uninterrupted data is available), the income of the poorest 20% in China increased even as a share of total income. https://data.worldbank.org/indicator/SI.DST.FRST.20?end=2019&locations=CN&start=2008
I think social mobility refers to an the ability for an individual within a society to rise or fall in standing in the existing social order, not the whole social order changing shape, but I understand your use of it. I’m nonetheless pretty sure this doesn’t answer my overall question, “How does this increase net consumption?”, even though you have there made a good argument for debt being useful to individuals (something that I already conceded).
The context here is that China’s economy contracted during the pandemic, and contracting economy is a problem because companies rely on consumer revenue to continue operating. If consumption starts dropping beyond a certain level then companies start to close down, which leads to people losing jobs, and so on. This is what China is aiming to avoid happening as opposed to simply encouraging people to take out loans to increase net consumption for its own sake.
Fair enough