Because low consumption is really just a symptom to a much more fundamental problem. The real problem, and the elephant in the room that nobody wants to talk about, is wealth inequality. Huge wealth disparities that have widened over the past two decades.
This is why you see everything looks so good on paper, amazing development in China that is truly out of this world, and yet most average people find themselves running out of money to spend, company layoffs, youth unemployment reaching double digits with like one third of university graduates last year not able to secure a job, local governments are heavily burdened in debt and need the interest rate to be lowered so they can keep refinancing themselves out of the outstanding debt (instead of, you know, just having the central government cancelling the debt).
Also China’s tax system is weird in that a disproportionate amount of its revenues came from value added tax (VAT), with personal income and corporate taxes comprising only a small fraction of it. This means the excess wealth of rich people and corporations are not being effectively taxed away, when taxation is one of the most powerful tools a government can use to reduce wealth inequality.
There are many ways to solve such economic problems. One is to revamp your financial and monetary system, which would give the government the power to directly inject money into people’s pocket and fix the wealth distribution problem. Another is to double down and keep selling more to earn foreign currencies, attract foreign businesses to bring their currencies over to save the economy etc.
gonna reply to both recent comments you made to me in this one:
Shanghai is the city with the highest GDP in the entire country and also its premier financial center. These people have a lot of power and seriously screw with the growth of the economy. One example is pension/retirement fund, which has become a hot topic recently. Because China cannot print money at will (and also the pension fund cannot be used in stock investment like you’d see in the US), it has to generate growth/revenues to finance the pension payout - there is some calculations floating around that the country will run out of its ability to pay retirement salaries to an increasingly aging population by 2035 if it cannot sustain a continuous growth at 5% over the next 10 years. This is why China is so obsessed with GDP growth even though we all know it’s just a number, and why they had to raise the retirement age recently.
All this can be solved by the central bank directly printing money, but that’s not the model they’re going after.
i guess my confusion comes down to why it seems like the libs are making a comeback. are the central leadership really unaware that they could reform their finances and then probably just have free reign to purge shangai? but if libs are actually making a comeback, why did the party tell all those property developers to go pound sand? why are they still pushing through with the poverty alleviation initiatives? it’s why i keep harping that i think they must just be overly afraid of instability or something like that, it’s the only explanation that makes sense to me with my relatively limited knowledge and am trying to see if you have a better idea? i find it even more unbelievable that they are simply unaware of this idea.
also, i dont disagree that wealth inequality needs to be combated, but again im wondering how much actual consumption can/should be boosted, really the technically best way to quickly rectify these problems you’re mentioning would be to move back to a fully centrally planned economy but uh i dont think thats anywhere close to being on the books lol.
its capitalist restoration, liberal parts of the CPC are becoming actively opportunist like in the USSR. The party is ineffective at crushing them because they’re trying to do a ‘both sides’ to appease them but it just plays into their hands.
They’ll do poverty alleviation but then do nothing above that, they told the property developers to get over it because they’re going to revive that economy eventually, and have made immense efforts to save that part of the economy.
from my understanding late 90s/2000s were much worse until president xi came into power, i dont think we could say for sure yet. it is concerning though
Because low consumption is really just a symptom to a much more fundamental problem. The real problem, and the elephant in the room that nobody wants to talk about, is wealth inequality. Huge wealth disparities that have widened over the past two decades.
This is why you see everything looks so good on paper, amazing development in China that is truly out of this world, and yet most average people find themselves running out of money to spend, company layoffs, youth unemployment reaching double digits with like one third of university graduates last year not able to secure a job, local governments are heavily burdened in debt and need the interest rate to be lowered so they can keep refinancing themselves out of the outstanding debt (instead of, you know, just having the central government cancelling the debt).
Also China’s tax system is weird in that a disproportionate amount of its revenues came from value added tax (VAT), with personal income and corporate taxes comprising only a small fraction of it. This means the excess wealth of rich people and corporations are not being effectively taxed away, when taxation is one of the most powerful tools a government can use to reduce wealth inequality.
There are many ways to solve such economic problems. One is to revamp your financial and monetary system, which would give the government the power to directly inject money into people’s pocket and fix the wealth distribution problem. Another is to double down and keep selling more to earn foreign currencies, attract foreign businesses to bring their currencies over to save the economy etc.
gonna reply to both recent comments you made to me in this one:
i guess my confusion comes down to why it seems like the libs are making a comeback. are the central leadership really unaware that they could reform their finances and then probably just have free reign to purge shangai? but if libs are actually making a comeback, why did the party tell all those property developers to go pound sand? why are they still pushing through with the poverty alleviation initiatives? it’s why i keep harping that i think they must just be overly afraid of instability or something like that, it’s the only explanation that makes sense to me with my relatively limited knowledge and am trying to see if you have a better idea? i find it even more unbelievable that they are simply unaware of this idea.
also, i dont disagree that wealth inequality needs to be combated, but again im wondering how much actual consumption can/should be boosted, really the technically best way to quickly rectify these problems you’re mentioning would be to move back to a fully centrally planned economy but uh i dont think thats anywhere close to being on the books lol.
its capitalist restoration, liberal parts of the CPC are becoming actively opportunist like in the USSR. The party is ineffective at crushing them because they’re trying to do a ‘both sides’ to appease them but it just plays into their hands.
They’ll do poverty alleviation but then do nothing above that, they told the property developers to get over it because they’re going to revive that economy eventually, and have made immense efforts to save that part of the economy.
from my understanding late 90s/2000s were much worse until president xi came into power, i dont think we could say for sure yet. it is concerning though