xiaohongshu [none/use name] @ xiaohongshu @hexbear.net

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Yes I have made it very clear before that the consumption problem is merely a symptom.

The elephant in the room that the Chinese government has yet to (and refuse to) admit is the growing wealth inequality over the past two decades.

This is why I have also said that the government cannot simply subsidize its way out of this problem. No amount of macro/micro policy adjustments can solve that. It can only be done by resolving the fundamental issue of wealth inequality.

Funny you classify me as a doomer when I have been one of the very few people on this site that actually says that China is already economically and financially resilient enough to take on the US empire.

The people who keep making excuses for China’s liberal policies “but China is too weak yet… it needs to build up its productive capacity first…” and my favorite “China is playing the LONG GAME don’t you know” are the ones who are dooming lol.

Consumption in the US is driven by credit (borrowing) while keeping wages depressed to maximize profit for the banking sector.

What we are proposing here (Marx/MMT) is the government directly raising the real wages of the working people so they have the purchasing power to directly consume. But perhaps more importantly, it reduces wealth inequality which structurally favors the flow of income to the rich.

Very big difference here.

I have been a long time follower of Yu Yongding and I don’t see how he’s saying anything different from what I said.

I have said many times that the slump in consumption is merely a symptom to the real issue of wealth inequality.

I have said many times that China cannot possibly subsidize its away out of this consumption problem without solving the wealth inequality problem.

The difference is in the solution. Instead of investing heavily in and betting for a “technological breakthrough” to achieve “economic transformation”, the country can simply invest in social welfare and raising the living standards of the people. The Soviet Union wasn’t exactly considered as a technology pioneer (compared to say, Japan, of the same period) but its people were living well. I don’t see why China shouldn’t go for the social welfare route (of course, they don’t, because they still believe in the power of the free market).

Michael Roberts unfortunately doesn’t know what he’s talking about on China. He’s ignoring the private debt problem, the local government debt problem and the entire complex array of government finances becoming deeply intertwined with the property market, shadow banks and the financial institutions.

Zhang Weiying is Austrian school people lol. They love this free market shit.

Stop the price wars: China’s state media guns target cutthroat industrial competition SCMP

People’s Daily again rails against the scourge of neijuan plaguing sectors from EVs to batteries

China’s Communist Party mouthpiece has taken another shot at the unsustainable price wars dragging down industrial profits in the world’s second-biggest economy, urging firms to abandon the race to the bottom and refocus on quality.

In a front-page editorial on Sunday, People’s Daily raged against cutthroat neijuan tactics “infesting” various industries with excess capacity, including electric vehicles, photovoltaics and batteries.

Neijuan, also known as “involution”, refers to a self-defeating cycle of excessive competition.

“Solar module prices have tumbled to just 0.6 yuan per watt, prices have been slashed on over a hundred EV models while producers of energy storage equipment seek to underbid each other in the race for orders,” the editorial said.

“Disorderly price undercutting and homogeneous competition have infested many industries, distorting the market mechanism.

“It is a race to the bottom and will weaken the competitiveness of the entire industry.”

The editorial echoed earlier calls by both People’s Daily and other state-run outlets to stamp out neijuan, which is proving intractable as business profits plunge, leaving many manufacturers struggling to realise even razor-thin margins.

Amid persistent deflation and simmering trade tensions with the United States, industrial profits fell by 1.1 per cent year on year in China in the first five months, with a 9.1 per cent decline in May.

Profits for China’s car sector, one of the foundations of the country’s economy, were down 11.9 per cent during the January-May period.

The People’s Daily editorial highlighted the decline of the neijuan-riddled sector, saying average profit margins dropped to 4.3 per cent last year, with only four EV makers – BYD, Huawei-backed Seres, Li Auto and Leapmotor – making money in 2024.

“Resources are wasted on inefficient competition, which stifles innovation and leaves an imbalance in supply and demand. Neijuan directly affects wage levels, government tax revenues, investment confidence and the whole economy,” it said.

It also warned that neijuan took forms other than price wars, including companies that abused their dominance of the industrial chain to exploit partners upstream and downstream.

In addition, the editorial pointed to businesses that cut corners on quality and made copycat products in sectors that already had excess capacity, as well as local officials who made misguided efforts to woo investment through unsustainable tax breaks and subsidies.

This is the second time in a month that People’s Daily has taken aim at the vicious cycle of low price, low quality and ineffective, unrelenting competition.

The newspaper said at the end of May that regulators must act quickly and efficiently to stamp out price wars.

A month earlier, Beijing-based Economic Daily said in a commentary that neijuan remained prevalent, defining the phenomenon as “the harder you work, the less you gain”.

Observers said authorities needed to take tougher action to help ailing businesses escape the trap – action that could be spurred by the state media calls.

“Neijuan’s harm has been explained umpteen times but businesses are unable to escape it … It requires firmer state action,” said Tang Dajie, a senior researcher with the China Enterprise Institute think tank in Beijing.

Tang added that neijuan remained a big disincentive for tariff-hit exporters to pivot to the domestic market.

“Many more firms and investors are waiting to see how well and quickly Beijing can tame neijuan. It’s also a litmus test of the resolve and effectiveness of Beijing’s policies,” Tang said.

In his annual work report to the country’s legislature in March, Premier Li Qiang vowed to mount a “comprehensive crackdown on neijuan”. That followed similar directives from the top leadership at the annual central economic work conference in December.

In the past, authorities have promised to curb all neijuan excesses while also vowing to respect the market’s role in resource allocation and to create a unified, level national market, among others, to ensure “survival of the fittest”.

This shouldn’t come as a surprise for anyone paying attention to my posts.

I have an idea though: how about we raise the wages of the working people so they have the purchasing power to actually buy these products at a price that pay the workers well? Is this too much of a radical idea?

Well, Xi intended to curb private capital and I have given him the credit and defended him many times.

However, he is also responsible for some of the biggest misallocation of capital in the world’s history. The Monetization of Shantytown Redevelopment in 2015 (棚改货币化) will go down in history as the culprit for perhaps the most frenzied speculation in property market, where so much wealth were sucked into the real estate sector and would never be recovered. It is one of the reasons why the local governments are so heavily indebted at the moment, and why we have a potentially serious deflation problem that if not resolved, could easily spread to various other sectors.

The lack of central planning was palpable. They always wait until the last minute before taking action, and often times it is too little too late. It is very clear that the central government has lost the ability to curb the authority and recklessness of the local/provincial/municipal governments. Just look at how Shanghai openly defied Zero Covid and allowed three years of national effort to be wasted.

Which is why I always laugh when people say China has some super long-term plan to achieve this or that. The opposite is true! China has some truly incredible crisis management skills that have so far prevented a deep crisis from erupting, and this is truly impressive if you understand what they did. However, without resolving the fundamental issues, it is simply kicking the can down the road. A complete revamp of the system is required and no amount of macro/micromanagement policy adjustments can allow you to escape that.

By the way, the promise to curb private capital has been overturned recently. I am VERY neutral about Xi right now. All I can see are the libs in charge these days.

Trump can smell weakness and goes straight for the killing blow. This is the kind of people he likes to bully the most.

You’re comparing two different things.

Western neoliberal countries have been infested with finance capitalists that want to maximize rentier profit. These countries, especially America, have had enough dealing with trade unions in the 20th century so they chose to de-industrialize to crush the workers movements at home, while allowing the rentier class (finance, insurance, real estate) to flourish. Using their “high income” status and favorable exchange rate, they extract surplus from the Global South to maintain an elevated living standards for its population. In both America and Europe, some critical industries were still retained although they are increasingly hollowed out by private equities etc.

The developing world is different. In the 1980s and 1990s, they sent their best students to attend Western universities to learn their economics, who returned to hold important policymaking positions and introducing neoclassical economics to their countries. China’s policy since joining the WTO in 2001 has been, for the most part, a perfect adherence to the IMF export-led growth strategy. China’s budget deficit almost never went above 3%, except for one year during Covid and I think they are going to increase to 4% this year due to the deflation issue.

This has been possible because China has been able to leverage its huge labor pool to undercut all the other exporting countries and dominate the export sector, selling cheap goods for Western consumers to enjoy in exchange for foreign currencies. It is the huge surplus of these foreign currencies that allowed China to keep its budget deficit to 3% of its GDP. This is precisely what the IMF intended - developing countries should send cheap goods to the high income countries, and only then, can they use those revenues to invest in their own countries. It is designed to benefit Western imperialist countries. There is nothing that says you have to accumulate a trillion dollar trade surplus each year, since you are utilizing precious labor and resources to send goods to other “wealthier” countries. You should export to earn enough foreign currencies to import essential goods and commodities and services, but the accumulation of trade surplus is the prescription of the IMF.

If you look at Xi’s career history, he’s always been a moderate.

Back in 2007, when the Party Secretary of Shanghai, Chen Liangyu was opposing the central government’s order (Hu-Wen administration) to curb spending, there was a call to rebel with the Southeast Five Provinces. Xi (who was Party Secretary of Zhejiang at the time) chose the moderate stance of maintaining neutrality with both sides.

After Chen was toppled, Han Zheng became the acting party chief for a few months before the position of the Party Secretary of Shanghai went to Xi. That’s how Xi’s moderate stance got him the Shanghai position, a very important position before being promoted to the national leadership role.

By the way, Han Zheng was the one who attended Trump’s inauguration this year and led the negotiations with the US lol.

Also, Bo Xilai - who was initially groomed to be the party successor - was a lot more left than Xi, until the scandal that also toppled him and paved the way for Xi’s ascent to party leadership.

Oh, we have “Marxists”.

Meng Xiaosu (孟晓苏), the father of property market in China, was famous for saying that “the end goal for Marx‘s ideal is not the maximization of public ownership, but the maximization of personal ownership” and used the argument to support the creation of housing market that ultimately causes reckless speculation and further wealth inequality.

There are many “Marxists” throughout history who would dig into famous works to find quotations to “legitimize” their policies.

For example, back in 1980, when trying to circumvent the national law that forbids land sale to private owners, Luo Jinxing (骆锦星) who was the Deputy Chief o the Shenzhen Property Management Bureau at the time, dug into Chapter 4 of Lenin’s State and Revolution, in which Lenin quoted Engels’s The Housing Question (1872) to justify that land sale is actually permitted during a “transitional period”:

"... It must be pointed out that the 'actual seizure' of all the instruments of labor, the taking possession of industry as a whole by the working people, is the exact opposite of the Proudhonist 'redemption'. In the latter case the individual worker becomes the owner of the dwelling, the peasant farm, the instruments of labor; in the former case, the 'working people' remain the collective owners of the houses, factories and instruments of labor, and will hardly permit their use, at least during a transitional period, by individuals or associations without compensation for the cost. In the same way, the abolition of property in land is not the abolition of ground rent but its transfer, if in a modified form, to society. The actual seizure of all the instruments of labor by the working people, therefore, does not at all preclude the retention of rent relations."

When Luo reported this to the Municipal Council Secretary Zhang Xunfu (张勋甫), the latter added a quote from the Communist Manifesto to support their claims:

Abolition of property in land and application of all rents of land to public purposes.

With the nodding approval of Marx, Engels and Lenin, it is now justifiable for the government to sell land to private owners lol.

We have this kind of “Marxists”. In fact, many such cases.

For all their flaws, they achieved something that was truly progressive in a society that not too long before was backward and full of violence. It was a mark of progress for humanity. We can and should accept all that and still admit its flaws and mistakes.

Do not let anyone erase that achievement. Do not let anyone convince you that the Soviet Union was a defective system that no longer has any relevance to our society today. Do not let anyone rewrite history. You’ll find yourself fighting an even worse uphill battle if you concede on these grounds.

I don’t know who that is.

There are no Marxist voices in the mainstream today. All the distinguished Marxist economists have long been banished to the humanities and social science departments long ago. They do write books, sometimes articles/blogs on the internet, and newspaper columns, but they have very little influence on policymaking. The mainstream is full on dominated by Western economists these days.

If you actually listen to the debate, both sides are openly making fun of the Mao era central planners for being inefficient lol.

Also FYI the correct term for Marxist economics in China is “political economy” (政治经济学). Nobody uses the word Marxist economics. Similarly, neoclassical economics is called “Western economics” (西方经济学). If you don’t know the correct terminology in Chinese, it can be very difficult to search for the relevant information you want.

Lenin was imprisoned and then exiled to organize from abroad. Stalin stayed underground and had to organize in secret, narrowly avoided prosecution by the authorities numerous times. These people were living dangerously.

Chinese communists had it even worse. During the Long March, attrition rate was 95%, either died fighting the pursuing KMT forces, or from exposure to the elements. Barely a few thousand cadres made it to Yan’an, outgunned and outnumbered, after trekking thousands of miles of the most arduous mountainous terrain. Without ideological conviction, the group would have disbanded long before they made it to their destination.

If you can understand Mandarin Chinese, this 3 hour debate between Justin Lin Yifu (neoclassical) and Zhang Weiying (Austrian school) from 2016 - widely popularized as China’s Keynes vs Hayek Great Debate - is everything you need to know about China’s industrial policy for the past decade.

Many prominent economists also voice their views quite openly. You just have to read the economy/finance section of Chinese newspapers to keep up.

You are selling China very short here. China is already the world’s second largest economy (largest by PPP), largest global manufacturing share, mostly technologically independent, with a robust financial sector and a vast market potential for consumers.

What China simply needs to do is to launch a Chinese-style Marshall Plan, which will weaponize the yuan and give the Global South countries the purchasing power to import goods from China. This will in turn raise the wages of the Chinese workers, and giving them the purchasing power to also import goods from the other Global South countries, and drive their economic development along the way. This will cause China to give up its net exporter status and give away some portions of its low value added manufacturing sector, but that will also free up labor and resource to be allocated for social welfare, improving living standards etc. Most importantly, this will allow the Global South countries to de-dollarize and permanently ending dollar hegemony.

The problem is that China is still very much stuck to IMF’s export-led growth strategy. This requires China to sell cheap goods to Westerners to earn currencies from high income countries, before they are allowed to invest in their own. A very regressive way of developing your own country.

Make no mistake, China isn’t the only one to employ this strategy. Before this, it was Taiwan and South Korea when GATT (later known as WTO) was formed. The Four Asian Tigers. Then it was Thailand and Indonesia and various Southeast Asian countries in the 1990s (The Tiger Cubs) before they were all wiped out by the 1997 Asian Financial Crisis. China came to the forefront when it joined the WTO in 2001 after the economic crisis during 1995-96 when Deng’s reform had reached its limit, leveraging its vast labor pool to turn itself into the world’s factory and destroyed the export advantage of every other developing country.

This is an ideological problem. China has fully bought into the IMF ideology. There is nothing that says you have to export cheap goods to foreign countries to accumulate large amount of foreign currencies before you are allowed to invest in yourself. The only advantage of doing so is that you can use your huge trade surplus to keep your budget deficit low (per IMF recommendation of under 3%) and show IMF how good of a student you are, how fiscally responsible you are, how good you are at “balancing the budget”.

Russia followed the same strategy and got wrecked. All the Eastern European countries that followed the IMF “balance the budget” strategy got wrecked. People don’t understand that China is the exception here because of its absolute advantage with its vast labor pool that no country could match. Look at any other country that attempts to emulate the same IMF export-led growth strategy and you will see that nobody could compete with China at all, and their economies all got wrecked as a result, or barely hanging with large amount of IMF bailout/foreign debt.

This is why an alternative framework for the Global South is necessary, one that is independent of Western imperialist countries and most importantly, one that is socialist and not neoliberal. Otherwise, at best, we are getting multipolar neoliberalism, which seems to be happening now.

As Michael Hudson says, all the US has left is the promise (threat) NOT to bomb your country.

lol the dense text of Capital assumes knowledge of Adam Smith and David Ricardo. You can really struggle without a foundation on liberal economics (also known as political economy) and got lost because you don’t know what Marx was referring to.

To comment on the validity of the cases here: there is no definite proof as far as we know, but at least a dozen of internet accounts on major internet platforms (Weibo, Xiaohongshu, Douyin etc.) claiming to be the victims have posted photographic evidence of their own identification documents, police arrest warrants, detention notices, attorney bills etc. A number of practicing lawyers have also claimed that they have been approached by the victims. This has been happening since June last year but the number of cases seem to have increased over the past few months.

It is highly unlikely that people post fake evidence like this for drama, at least not in China, and especially since this has turned into a hot topic on the Chinese internet gaining quite a lot of attention. You can get into serious trouble for that. Especially for practicing attorneys linked to their actual businesses. I find it unlikely to be fabricated. Maybe the scale and extent have been exaggerated, but I don’t think people would want to risk losing their careers just for fabricating drama.