However, Mr Xi’s plan is fundamentally misguided. One flaw is that it neglects consumers. Although their spending dwarfs property and the new productive forces, it accounts for just 37% of gdp, much lower than global norms. To restore confidence amid the property slump and thereby boost consumer spending requires stimulus. To induce consumers to save less requires better social security and health care, and reforms that open up public services to all urban migrants. Mr Xi’s reluctance to embrace this reflects his austere mindset. He detests the idea of bailing out speculative property firms or giving handouts to citizens. Young people should be less pampered and willing to “eat bitterness”, he said last year.

Welp. It’s time for me to take down another fallacious liberal economic premise. Liberals these days seem to have quite the obsession with “consumer spending”, and well, it partially makes sense. Capitalist economies operate at less than 100% of their full capacities. If they operated at full capacity, there would be no unemployment (unemployment is by definition, idle labor), which would cause the exploitation rate to fall to 0% (or in terms liberals might understand, cause the price of labor-power to reach equilibrium). In a capitalist economy, such a situation would pretty much instantly tank the economy.

In a developed capitalist economy, controlling consumer spending is important because it is one the few mechanisms that governments can use to control the operational capacity of the economy. If there is high consumer spending, then businesses are incentivized to produce closer to their full cap. It also stimulates investment. Obviously, the whole matter is a delicate balancing game, too low consumer spending = sluggish growth and high poverty, too much consumer spending = inflation and low profits for capitalists.

So far, this is relatively standard theory. What liberals don’t understand however, and what is a key Marxist innovation in economics is that the size of the consumer sector is limited by the size of the means of production/capital goods sector. Given some size of the consumer sector, you will need a minimum size in production goods simply to supply the consumer goods sector. You cannot indefinitely increase the amount of bread your nation produces. To produce bread, you eventually need steel (to make bread making tools + tractors), gas (baking and tractors), fertilizer, etc. Any production goods you have left over after supplying the consumer goods sector can then be used to grow the economy. This is the primary reason why socialist societies, especially underdeveloped ones are able to grow at such ungodly speeds. They both utilize close to 100% of their labor, and put huge emphasis on production goods.

China here is in a relatively unique situation. Perhaps the late soviet economy faced this situation as well, but I am not so knowledgeable there. They have grown their productive sector to the point where they are essentially a developed economy. For developed economies, the productive goods sector matters even more than in underdeveloped economies. You can see what happens to developed economies that ignore heavy industry by looking at Europe and America. The whole economy decays. This is because developed economies have accumulated such great masses of capital, that simply maintaining it, and replenishing losses requires a large % of the workforce. This is why growth for developed economies slows down and becomes dependent on automation (i.e, producing more capital per worker). But even improvements in automation require dedicating a lot of workers to the production sector.

If China were to do what the liberals want it to do, China would become just like Europe or America. It would deindustrialise fairly rapidly and become dependent on other countries producing consumer goods. Expect, China is the one that Europe and America rely on for consumer goods, so China following the liberal recipe would not just tank the Chinese economy, but pretty much the whole world’s economy. Worst case-scenario, liberalisation of China causes manufacturing output to halve (as it did in the USSR). The whole world then looses 15% of its manufacturing by value. But Chinese manufacturing is generally undervalued (deliberately, to boost exports), so in reality, more like 20% of world manufacturing is lost. Then you account for the interconnections of global supply chains and the situation looks very grim.

Funniest shit i’ve read all week.

Some particularly precious gems from this joke of an article include:

“history’s wildest property boom has turned to bust”

Are you talking about the 2008 crash of the US housing bubble? Oh, no, you’re trying to spin the fact that China deftly avoided getting into a situation like that of the US before the crash by deflating its own speculative bubble in a calm and controlled manner into a bad thing.

“the global system of free trade that China used to get richer is disintegrating”

China’s trade with the BRICS and the Global Majority is doing better than ever, meanwhile the West is the one torpedoing the “global system of free trade” by trying to freeze out Russia and China and in the process only shooting themselves in the foot.

“consumers are depressed”

Lol, and you claim to know this how? The data that shows Chinese people as among some of the happiest in the world? Looks to me more like it’s the writers at The Economist and other similar bullshit artists who have been predicting China’s imminent fall for decades who are depressed seeing China prosper instead. (If you meant “consumption is depressed” you should have written that instead, sorry, i can only respond to what you write.)

“deflation lurks”

Oh no, the horror! I’m positively terrified now imagining i am a person living in China and lower prices lurk just around a dark shadowy corner always waiting to strike when i am at my most unsuspecting! How will i possibly cope with the fact that i can buy more stuff for less money? Oh the humanity!

“entrepreneurs are disillusioned”

Yeah i bet they are. If by entrepreneurs you mean financial parasites and speculators and western monopolies hoping to keep the gravy train going continuing to milk every dollar they can out of China’s people taking advantage of their labor force. They sure are disillusioned that they can’t do that anymore now that China has advanced up the value chain, huh?

“A crisis in the property industry, which drives a fifth of gdp, will take years to fix”

Looks to me like they already did fix the crisis in the property industry by bringing it down from absurd overinflated levels to more reasonable size. Meanwhile the rest of China’s GDP is largely driven by actual productive sectors of the economy and not speculative hot air, you know like the West used to have but doesn’t anymore because of deindustrialization.

“It is forecast to lose 20% of its workforce by 2050.”

Cool story bro. Let’s say we take your “forecasts” at face value - ever heard of automation? Also, remind me again what the fertility rate and the average age of the labor force is in Europe?

“Mr Xi wants state power to accelerate advanced manufacturing industries, which will in turn create high-productivity jobs, make China self-sufficient and secure it against American aggression”

Oh yeah that sounds awful, who would ever want that? No, better to follow The Economist’s advice and be an economic success story like today’s UK.

“This eschews the conventional path of a big consumer stimulus to reflate the economy.”

And i suppose that is going to conveniently require a bunch of loans right? Because Chinese people just aren’t spending enough and taking out enough debt like Americans are. How else are the poor banks supposed to make a profit if the people aren’t funding their gluttonous consumption with loans? And wait a second, weren’t economists telling us just a few years ago that it’s bad to just give people more money to spend because that causes inflation? Shouldn’t you first make more stuff so people have something to spend money on?

“To induce consumers to save less requires better social security and health care, and reforms that open up public services to all urban migrants.”

The sheer audacity of The Economist telling us that China’s social security and public services are insufficient. Have you taken a look lately at neoliberal austerity and the dismantling of the welfare state in the West?! You wanna talk public services, how about you build some high speed rail first?

Push the button Xi, btw can we have that as an emote?

Wonder why they hide all the information about China’s success behind the paywall and let anyone see the rhetoric