Chinese Economics Thread

[Ultra]

This is what happen when China gets rich.
There are always going to be some idiot in China that ruined it for everyone else.

Note: The Golden Python is very expensive pet.

I say death sentence to anyone who ruins the good name of China.

 

[Qi_1528]

On the serious side, there's a real problem with people amassing so much wealth that they don't know what to do with it all. It sounds like a great problem to have, but I believe it's part of reason large wealth inequality is creating so many problems around the world. Money ends up being parked and not put to productive use.

I see here on SDF and pretty much anywhere else that capitalist ideology reigns strong. There is too much emphasis on analyzing the economy of China (or any country) from a capitalist perspective, this is unproductive and dangerous to China in the long run. The solutions to environmental degradation, wealth inequality, and a host of other issues lie not in capitalism for capitalism is the cause of these problems. Unfortunately even state officials are falling into the trap of viewing the world through capitalist ideology. Recently at the Plenum for the 13th 5-year plan, some high level officials were saying that they would sustain economic growth by lowering taxes on businesses. This is neoliberal trickle-down economics, it has not worked in any other country and will not work in China. The state and Communist Party needs to work hard and examine the economy from a Marxist perspective to solve the problems caused by inequality and environmental destruction. Here, I will do some of that hard work and thinking for China and present a Marxist solution to some (not all) of the ills facing China's economy.

Welcome to the forums.

You'll get no argument from me that neoliberal economic theory is provably flawed. I believe most people in the CPC understand this too. Don't forget that different factions exist within the party, and you always get a few extremists. A lot of what the party does is the result of compromise, as it should be in any polity. As for tax cuts... it's not so clear cut as you say. Tax cuts to small businesses can be a good thing. This is where the tax cuts you mentioned are aimed at as I recall. It's big businesses which make massive profits that need to pay their fair share. It's all about creating settings which are fair to everybody.

Don't forget that Marx (at least in the earlier part of his life) believed socialism could only develop from a mature capitalist economy. China's economy may be the largest in the world by some measures, but it's still quite immature. Deng Xiaoping used this in his justification of reforming the economy to a mixed market system. Mao tried to skip straight to Socialism, and to be fair, the Chinese economy did manage a decent growth rate during his era, even during the the turmoil of the cultural revolution, but others believed something more akin the Lenin's New Economic Policy would be better for China's development.

One of the major goals of communism is having workers control the means for production, aka their workplace. It is the most readily achievable goal of communism. In fact it does not event require a revolution to take place. Worker cooperatives are one example of worker ownership that can be found in both socialist and capitalist societies. Thus, China should pick the low hanging fruit first and aim to achieve this goal first.

I've come to the conclusion that no one class should rule. Decisions should be made based on compromise to benefit everybody as much as possible. You can say that's what Western democracy was supposed to achieve and it failed, but I think the goal itself is still worth trying to achieve. That said, I have no objection to co-operatives, and I'd like to see the CPC encourage them to exist alongside private and state companies, excepting in certain key areas which should be state only. Competition between different forms business isn't a bad thing.

We must contrast a worker owned business with a standard capitalist business to see the benefits. In a typical business, power is structured hierarchically with ultimate authority given to a president or a board of directors. Decisions about running the business and distributing the profits of the business are made in an undemocratic manner. The work place, a place where we go for 30 to 50 year our lives- 5 days a week-8 hours a day, is run as an autocracy. One could argue that a worker can chose to find a different work place or start their own business but given that there is always unemployment, there is always a replacement to be found for a worker if he stands up against his master. This is why the relation between employer and employee is still one of force and coercion: we might not have slaves or serfs but workers are at a huge disadvantage when it comes to having their voices heard in a business.

This is why labour laws and collective bargaining exist. China needs to make quite a lot of progress here, but you also have to realise that it's culture has been more ethics based than rules based for 2000 years. The Chinese experience with a rules based polity wasn't very pleasant. It's going to take time for them to develop a system which ensures everyone gets a fair go. I can agree that one of the mistakes of the reform era was to declaw unions to the extent they were. Workers need a way to voice their legitimate grievances, and as we saw a few years ago, when the unions failed to stand up for workers properly, they took matters into their own hands.

One of the most important things to understand about China is that it's still very much renewing itself. I mentioned before about the different factions in the CPC. Some of the largest arguments about the direction the country should take appear to be going on within and between these factions. Don't make the mistake of believing the party is monolithic.

 

[vesicles]

I see here on SDF and pretty much anywhere else that capitalist ideology reigns strong. There is too much emphasis on analyzing the economy of China (or any country) from a capitalist perspective, this is unproductive and dangerous to China in the long run...... This is neoliberal trickle-down economics, it has not worked in any other country and will not work in China. The state and Communist Party needs to work hard and examine the economy from a Marxist perspective to solve the problems caused by inequality and environmental destruction......

Well, believe it or not, China has tried the Marxist perspective (1949- early 1990's). Unfortunately, it didn't work. It made China into the backward society, from which China is now desperately trying to get away.

Is the current economic system in China perfect? Absolutely not! But does it mean that they should revert back to the old system? Absolutely not! It makes no logical sense whatsoever. The breakneck economic development that has been going on for the past twenty something years should be evident enough. Of course, there is inequality, along with all sorts of issues associated with developing economy of a huge nation in such gigantic scale. Every problem is magnified by a thousand fold simply because of the scale of China's size. However, I don't think anyone can doubt that the current system is moving China in the right direction: the country is getting stronger and people getting wealthier and better off all around.

Yes, inequality is staggering now. It feels bad when some are getting huge portions of the pie and getting filthy rich, while everyone else is getting much smaller portions of the pie. But every one is getting some of the pie. Even the bottom poor of today is doing much better than how average and even top-tier people did in the 1960's, 70 and even 80's. And it is still getting better. Salaries of migrant workers have been steadily increasing, while major cities are making policies to help migrant workers settle down in big cities. These policies include housing, health care and school for their kids.

This compared to the old system, where absolutely no one was getting anything? Old China between 1949 and 1992 vs. current China? I simply see no logic in wanting to go back to the old system. Why would anyone want to go back??? So instead of feeling jealous about someone else getting super rich but still living a nice life yourself, you are willing to give up everything that you have now to go back to the old system just so that everyone is dirt poor?

My view? Stay patient and let China work things out. And one thing that we can be sure of is that they are trying to work things out. Just give them time. If you look at all those Western developed nations, all of them had been in similar kinds of mess that China is in now when they were in the process of developing their economy. It takes time to get out of it. You have to give them time. But be sure to stay on the current course. Its like driving to the beach. Yes, they have not arrived at the beach yet. But all the palm trees, the smell of the ocean and sound of waves suggest that they are in the right direction. You certainly don't want to change direction now. That would make you even further away from the beach...

 

[Hendrik_2000]

Well, believe it or not, China has tried the Marxist perspective (1949- early 1990's). Unfortunately, it didn't work. It made China into the backward society, from which China is now desperately trying to get away.

Is the current economic system in China perfect? Absolutely not! But does it mean that they should revert back to the old system? Absolutely not! It makes no logical sense whatsoever. Yes, they have not arrived at the beach yet. But all the palm trees, the smell of the ocean and sound of waves suggest that they are in the right direction. You certainly don't want to change direction now. That would make you even further away from the beach...

Excellent reply If I may add communist system doesn't not suit well to Chinese people psyche. I know there is the tradition of taking care of family, clan and community at large but it is far from communism where individual effort are stifle.Chinese is by nature are very individualistic, entrepreneur,and flexible Because of diverse origin and the large size of the country making conformity difficult to achieve unlike the Japanese. They thrive on individual effort like we are seeing today. The country is moving in the right direction by empowering the people by doing nothing except providing framework of legal, welfare, infrastructure etc

 

[PanAsian]

Well, believe it or not, China has tried the Marxist perspective (1949- early 1990's). Unfortunately, it didn't work. It made China into the backward society, from which China is now desperately trying to get away.
...

Specifically on this point, it is not Marxism but a combination of several hundred years of missing out on the industrial and military technology revolutions, unforced socio-political and economic failings, and being subject to colonial conquests that made China into a backward society. Despite some negative effects Marxism was a critical tool in positively resetting some of China's historically pent-up internal socio-political and economic imbalances.

 

[PanAsian]

I see here on SDF and pretty much anywhere else that capitalist ideology reigns strong. There is too much emphasis on analyzing the economy of China (or any country) from a capitalist perspective, this is unproductive and dangerous to China in the long run. The solutions to environmental degradation, wealth inequality, and a host of other issues lie not in capitalism for capitalism is the cause of these problems. Unfortunately even state officials are falling into the trap of viewing the world through capitalist ideology. Recently at the Plenum for the 13th 5-year plan, some high level officials were saying that they would sustain economic growth by lowering taxes on businesses. This is neoliberal trickle-down economics, it has not worked in any other country and will not work in China. The state and Communist Party needs to work hard and examine the economy from a Marxist perspective to solve the problems caused by inequality and environmental destruction. Here, I will do some of that hard work and thinking for China and present a Marxist solution to some (not all) of the ills facing China's economy.

One of the major goals of communism is having workers control the means for production, aka their workplace. It is the most readily achievable goal of communism. In fact it does not event require a revolution to take place. Worker cooperatives are one example of worker ownership that can be found in both socialist and capitalist societies. Thus, China should pick the low hanging fruit first and aim to achieve this goal first.

We must contrast a worker owned business with a standard capitalist business to see the benefits. In a typical business, power is structured hierarchically with ultimate authority given to a president or a board of directors. Decisions about running the business and distributing the profits of the business are made in an undemocratic manner. The work place, a place where we go for 30 to 50 year our lives- 5 days a week-8 hours a day, is run as an autocracy. One could argue that a worker can chose to find a different work place or start their own business but given that there is always unemployment, there is always a replacement to be found for a worker if he stands up against his master. This is why the relation between employer and employee is still one of force and coercion: we might not have slaves or serfs but workers are at a huge disadvantage when it comes to having their voices heard in a business.

Thus, the leadership of a business can make decisions that are beneficial to themselves (the top executives, shareholders, etc.) and harmful to the workers and/or the community the workers live in. For example, the company leaders can decide to move production oversees where labor is cheaper, or they could ignore environmental damage caused by their operations, both of these examples have occurred in the real world and we can easily see the negative impact these decisions have on workers and communities. Now consider a worker owned business. Would workers collectively decide to move manufacturing oversees for increased profits? Or would they decide to pollute the city they live in, potentially harming themselves and their children, for the sake of more profits? Most likely they would not. We can also see that the ultimate reason for making these harmful choices is the pursuit of profit; demanded by the company shareholders. A collectively owned business is not held hostage by shareholders who demand ever increasing profits each quarter and would therefore not need to engage in self-destructive actions to keep increasing profits. Instead of taking home a salary and then giving up the majority of profits to a few shareholders and executives, a worker owned business can keep all of the profits and democratically decide on how to distribute the money. They could choose to invest the profits funding other businesses, they could give the profits out as mortgages to themselves and charge a reasonable amount of interest, they could invest in their own pensions, or they could even spend money to bribe/lobby political leaders to make favorable policy for them. Regardless, there are numerous ways for the workers to invest the profits of their labor in a way that benefits themselves, their community, and ensures a return on said investment.

The model presented here is based on the work of Dr. Richard D. Wolff and designed in the context of the social and economic conditions found in the United States, the leadership of the Labour Party in the UK have also proposed a related solution of worker ownership. China should not fall behind on the path towards communism, much less fall behind to capitalist nations. Still this model will no doubt require adjustment to be relevant to workers in China, but it is clear that promoting worker ownership will help solve many of the challenges facing Chinese society (see above paragraph) and consistent with the principles of communism. Furthermore it is also compatible with "reform and opening up" since the state is trying to promote more free enterprises and 简政放权 (give more power to people/reduce overbearing government). Why not promote worker owned businesses rather than your typical joint stock companies? Why not allow economic democracy? This is the vanguard of Marxist philosophy and the Chinese government and people need to embrace it.

There is a time and place for certain methodologies, and these circumstances change through cycles. The developed economy applied Marxism you are referring to, worker-owned businesses, co-operatives, communes, etc have been proven to work well under particular circumstances in particular industries but not in general. It is interesting to consider but I don't most businesses, especially China's underperforming SOE's, are in circumstances where such organizational models are going to improve economic performance.

 

[dragoooons]

I've come to the conclusion that no one class should rule.
...I mentioned before about the different factions in the CPC. Some of the largest arguments about the direction the country should take appear to be going on within and between these factions. Don't make the mistake of believing the party is monolithic.

I'm interested in hearing more about your belief that not one class should rule.

Do you have any resources on the kinds of policy the communist factions within the CPC advocate for? I would like to review them.

Well, believe it or not, China has tried the Marxist perspective (1949- early 1990's). Unfortunately, it didn't work. It made China into the backward society, from which China is now desperately trying to get away.

As Pan Asia has said, each model of economic organization has developed from the historical circumstances facing each nation at a given time. China from 1949 to reform-and-opening-up enacted policies based on the experiences of the previous 50-100 years of its history. I agree that we cannot import the past policies into the present, not because Marxism is a failure, but because such policies would be largely inappropriate for the current circumstances facing China. The reason any future developmental plan must be socialist is because we have seen first hand what the eventual outcome of capitalism is in the West: concentrated wealth in the hands of the few who then turn that wealth into political power for their own benefit to the detriment of the majority. Can you imagine how powerless ordinary people will be in China if concentrated capital seizes power? At that point it will take another revolution to bring power back to the masses. This is the risk that China faces and it is a legitimate risk since we have already seen how power has concentrated in the western nations. I see communism as a protection against that scenario, in fact I advocate communism not just for China but for all nations though that is outside the scope of this discussion.

Chinese is by nature are very individualistic, entrepreneur,and flexible... The country is moving in the right direction by empowering the people by doing nothing except providing framework of legal, welfare, infrastructure etc

To address Hendrik's point that the Chinese people are highly individualistic. I will say that I don't believe there is such a thing as general characteristics for whole nations of people and that constructs such as individualism are difficult if not impossible to measure scientifically. But even assuming that Chinese people are individualistic, why not let them express that individuality by giving them control over the fruits of their own labor? Nothing about worker owned cooperative enterprises suppresses individualism. Now I agree with what many of the reforms the state is enacting but I think the state is not doing enough to address capital
concentration which I've explained why I think that's dangerous in the above paragraph.

... It is interesting to consider but I don't most businesses, especially China's underperforming SOE's, are in circumstances where such organizational models are going to improve economic performance.

Finally on the efficacy of worker cooperatives, I too don't know how competitive they will be compared to capitalist enterprises but the fact that they exist in capitalist nations means that people see value in organizing their enterprises cooperatively. I've outlined their benefits to the workers in my initial post. The state is encouraging the creation of cooperatives in rural areas, I just think that the state should promote cooperatives everywhere and consider other ways to promote worker ownership. For example they could subsidize stock purchases by the workers of a company during the IPO of that company.

The goal of all this promotion of worker ownership is so that a majority of people have a say in what to do with the wealth generated by their labor which will hopefully translate into a say in how the country is governed. The last thing I want to see in China is rule by the wealthy who see the people as just a tool to extract value from. That would be a return to the mentality seen in the late Qing dynasty and currently in the West.

 

[AssassinsMace]

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Not sure why they bother since most of what China would want from Israel the US probably has veto power. Maybe Netanyahu wants to bug Obama.

 

[antiterror13]

11 Chinese companies among the world's 100 most reputable

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I thought Haier would be in the list

 

[Hendrik_2000]

As I said before China is moving the economic ladder and becoming middle tech exporter by buying the iconic Japanese brand name like Sharp and Toshiba. It also show the relative fortune of China and Japan

Toshiba Appliances: Another Piece Of Japan Inc. Is Falling Into Greater China Ownership


Business news from Asia this week has been highlighting Hon Hai Precision’s dramatic purchase of once-mighty Sharp Corp. of Japan. Hon Hai, a Taiwan-headquartered contract electronics maker that one of Apple’s key manufacturing partners, is also one of mainland China’s largest exporters and employers. Its billionaire chairman Terry Gou is one of the world’s richest people.

Yet another piece of Japan Inc. this week has quietly started to fall into the hands of another Greater China company. China’s Midea plans to buy more than 80% of the money-losing home appliance arm of Toshiba for $473 million in a for-stock deal, Midea announced yesterday. The deal between the long-term partners still needs Japan regulatory approval.

The transactions say much about the trajectory of the two countries on the world stage in the past two decades. Japan has struggled with growth and debt, while China, the world’s most populous nation, has enjoyed rapid GDP gains and become the world’s No. 2 economy. Midea’s agreement also comes amid a wave of China investment globally and the deepening globalization of many of its largest businesses. The country’s financial institutions last year invested some $21 billion in overseas commercial real estate, according to a reported yesterday by DTZ/Cushman. Midea’s main owner He Xiangjian ranked No. 122 on the 2016 Forbes Billionaires List with wealth of $9 billion.

Toshiba’s home appliances unit had 5,000 employees at the end of September 2015; revenue for the 2015Q3. Its revenue from April to Sep. 2015 was $1 billion.

–with Maggie Chen