Beijing cares little about its “citizens”, a “domestic market” is needed to save China
by Wei Jingsheng
Asia’s juggernaut is the world’s second biggest economy but only 8 per cent of its GDP is for local needs and consumption. The rest goes into useless speculation that is harmful to the national economy. Change is needed before it is too late. The great dissident provides his analysis.
Washington (AsiaNews) – China’s current Communist government only wants to make “money” and does not feel “accountable to the people”. However, by lowering the cost of money and developing a domestic market, it could avoid social, political and economic “collapse”, this according to Chinese dissident Wei Jingsheng who in this article looks at economist Lang Xianping’s own analysis to outline ways to save China.
Recently, Economics Professor Lang Xianping had some accurate comments about the current economic situation in China. However, he was not willing to link the responsibilities to the political system, and thus was unable to provide a realistic prescription. Nevertheless, the situation he described according to the surveyed data is indeed the real picture of China's economy. The data may seem like exaggerations; in fact, they are not. Not only is the data true, long ago, a lot of the contents were already haltingly delivered by other experts who are familiar with the matter. The reason that Professor Lang's comments produced a sensational effect is because he dared to voice a conclusion that others have not dared.
One of his important conclusions is that Chinese economic structure is extremely irrational and very deformed. During a speech in Shanghai, he pointed out that the Chinese people's total consumption is a shocking 8% of the total GDP (Gross Domestic Product), even lower than the least developed African nation at 16%. During his recent lecture in northeast China, he also pointed out that 70% of the GDP used in construction and related industries. The words Professor Lang used were "to produce reinforced concrete". That leaves only 30% for all the Chinese people across the country, and most of that is exported in exchange for foreign currency.
Most of that 30% went to the pockets of corrupt officials and both Chinese and foreign capitalists. Thus, the 1.3 billion Chinese people could only consume that mere 8% of the GDP -- a living fraction lower than that of Third World countries in a country that is known as the world's second largest economy. The two irrational structures, the minimal public consumption and the excessive construction are the root cause of unsustainable development in China, as well as the root cause of most of social conflict in China. Not only is China's economy not sustainable; its politics is unsustainable as well.
So, regardless of whoever is in power, whether the Communist Party dictatorship or a democratic replacement, that government must change the economic structure making the whole and each detailed part more reasonable. Then, the development of China and the Chinese people's living standard could be on the right track, the society could be in relative harmony, and politics would be relatively stable. Otherwise, intense social and economic conflicts will inevitably lead to the collapse of the government and social unrest.
How to change to make it reasonable? Let us examine the problems first. The two irrationals pointed out by Professor Lang, minimal consumption and excessive construction, are in fact two aspects of one irrational policy. From one perspective, the peoples' consumption is too low, which results in a small domestic market. From another perspective, the government invests most of the money on real estate projects for high profit, meanwhile holding down the exchange rate in an effort to dump consumer goods, which could be used domestically, in the international market. Some of this foreign currency was used for foreign goods in an attempt to increase consumption, mostly among the wealthy, but that was just a small part. This profiteer type of development strategy, like fishing by draining the whole pond, is the root cause that leads to deformities of the economic structure. This is that mercantilist strategy very politely referred to by the international media and scholars.
Under the control of this profiteering strategy by Deng Xiaoping, Jiang Zemin, and Hu Jintao, the people of China and the United States have given away high profit to the Chinese government, and the bureaucratic capitalist class and international capital that has relations with the Chinese government. The result after they united and made huge money is the impoverishment of the people in China and other countries including the United States, thus resulted the decline of the global consumer market, thus the global economic recession. During this recession, the most miserable ones are the Chinese people.
The consumption level of the Chinese people was designed at a minimum for survival. Now with the economic recession, naturally the Chinese government transfers the crisis to its poorest citizens. More and more people cannot survive by relying on their meagre income. This is when politics has entered a state of crisis. So adjusting the economic structure is not only what the people need, but also any government in China would pressingly need.
From the overall level, this adjustment must start from increasing the domestic consumption of the Chinese people first. Simply put, there are two things that must be done immediately. One is to stop the real estate investment contributing to the bubble economy, and move toward investment in other consumer goods. The lower real estate prices could help to recycle the surplus of currency in circulation, and to curb inflation in China. Another is to improve the RMB exchange rate, to increase imports to fill in the shortage of the domestic market. This can also recycle currency in circulation in the domestic market and curb inflation.
These two simple measures could both curb inflation and improve people's living standards. The subsequent result is that China's economic development model would gradually move towards something more reasonable, while political crisis will tend to ease. However, the cost of these measures is what the Communist Party and its bureaucrat-capitalist class would not accept. The cost is that the government's revenue, along with that of the bureaucrat-capitalist class and the multinational companies, would drop significantly, even becoming negative.
If the Chinese government was a democratic government that must be accountable to the people, or even if it was only a kingdom or dynasty having a leader who is not fatuous enough to be irresponsible for the regime, it would take these simple measures of Robin Hood to save the country, unless it has already lost authority to take the measures.
But the current China is a deformed country, with a deformed government. The government does not need to be accountable to the people, nor responsible to the state. They are only responsible to the interest groups of their own bureaucrat-capitalist class. When the class of rich and powerful say no, the government will not do anything. You need not ask them what they would do when this country collapses. That is easy. They already know this government will collapse. They have already transferred or are transferring what they treasure -- their wallets, their wives and children - to other countries that are governed well. Even their mistresses have opened money-laundering enterprises in the West, which has traumatized anti-drug police to wonder which kind of money is getting laundered. So there is a modern vocabulary term in China now called "stripped officials", along with a saying called: "I am a rogue, so why should I be afraid". Whether China collapses or nor really has little to do with these Communist officials.
Under the control of a bureaucrat-capitalist class that is not responsible and does not want to be responsible, will anyone be able to pay a price of their own to save this country? So Professor Lang had to use language that does not belong to a professor: "You all should go cry." Although he does not dare to say the meaning clearly, his conclusion is indisputable. Without overthrowing the rule of the bureaucrat-capitalist class that is neither responsible nor wants to be responsible, there is no hope for China. So, crying becomes the only option and no one can save you all.
Recently, Economics Professor Lang Xianping had some accurate comments about the current economic situation in China. However, he was not willing to link the responsibilities to the political system, and thus was unable to provide a realistic prescription. Nevertheless, the situation he described according to the surveyed data is indeed the real picture of China's economy. The data may seem like exaggerations; in fact, they are not. Not only is the data true, long ago, a lot of the contents were already haltingly delivered by other experts who are familiar with the matter. The reason that Professor Lang's comments produced a sensational effect is because he dared to voice a conclusion that others have not dared.
One of his important conclusions is that Chinese economic structure is extremely irrational and very deformed. During a speech in Shanghai, he pointed out that the Chinese people's total consumption is a shocking 8% of the total GDP (Gross Domestic Product), even lower than the least developed African nation at 16%. During his recent lecture in northeast China, he also pointed out that 70% of the GDP used in construction and related industries. The words Professor Lang used were "to produce reinforced concrete". That leaves only 30% for all the Chinese people across the country, and most of that is exported in exchange for foreign currency.
Most of that 30% went to the pockets of corrupt officials and both Chinese and foreign capitalists. Thus, the 1.3 billion Chinese people could only consume that mere 8% of the GDP -- a living fraction lower than that of Third World countries in a country that is known as the world's second largest economy. The two irrational structures, the minimal public consumption and the excessive construction are the root cause of unsustainable development in China, as well as the root cause of most of social conflict in China. Not only is China's economy not sustainable; its politics is unsustainable as well.
So, regardless of whoever is in power, whether the Communist Party dictatorship or a democratic replacement, that government must change the economic structure making the whole and each detailed part more reasonable. Then, the development of China and the Chinese people's living standard could be on the right track, the society could be in relative harmony, and politics would be relatively stable. Otherwise, intense social and economic conflicts will inevitably lead to the collapse of the government and social unrest.
How to change to make it reasonable? Let us examine the problems first. The two irrationals pointed out by Professor Lang, minimal consumption and excessive construction, are in fact two aspects of one irrational policy. From one perspective, the peoples' consumption is too low, which results in a small domestic market. From another perspective, the government invests most of the money on real estate projects for high profit, meanwhile holding down the exchange rate in an effort to dump consumer goods, which could be used domestically, in the international market. Some of this foreign currency was used for foreign goods in an attempt to increase consumption, mostly among the wealthy, but that was just a small part. This profiteer type of development strategy, like fishing by draining the whole pond, is the root cause that leads to deformities of the economic structure. This is that mercantilist strategy very politely referred to by the international media and scholars.
Under the control of this profiteering strategy by Deng Xiaoping, Jiang Zemin, and Hu Jintao, the people of China and the United States have given away high profit to the Chinese government, and the bureaucratic capitalist class and international capital that has relations with the Chinese government. The result after they united and made huge money is the impoverishment of the people in China and other countries including the United States, thus resulted the decline of the global consumer market, thus the global economic recession. During this recession, the most miserable ones are the Chinese people.
The consumption level of the Chinese people was designed at a minimum for survival. Now with the economic recession, naturally the Chinese government transfers the crisis to its poorest citizens. More and more people cannot survive by relying on their meagre income. This is when politics has entered a state of crisis. So adjusting the economic structure is not only what the people need, but also any government in China would pressingly need.
From the overall level, this adjustment must start from increasing the domestic consumption of the Chinese people first. Simply put, there are two things that must be done immediately. One is to stop the real estate investment contributing to the bubble economy, and move toward investment in other consumer goods. The lower real estate prices could help to recycle the surplus of currency in circulation, and to curb inflation in China. Another is to improve the RMB exchange rate, to increase imports to fill in the shortage of the domestic market. This can also recycle currency in circulation in the domestic market and curb inflation.
These two simple measures could both curb inflation and improve people's living standards. The subsequent result is that China's economic development model would gradually move towards something more reasonable, while political crisis will tend to ease. However, the cost of these measures is what the Communist Party and its bureaucrat-capitalist class would not accept. The cost is that the government's revenue, along with that of the bureaucrat-capitalist class and the multinational companies, would drop significantly, even becoming negative.
If the Chinese government was a democratic government that must be accountable to the people, or even if it was only a kingdom or dynasty having a leader who is not fatuous enough to be irresponsible for the regime, it would take these simple measures of Robin Hood to save the country, unless it has already lost authority to take the measures.
But the current China is a deformed country, with a deformed government. The government does not need to be accountable to the people, nor responsible to the state. They are only responsible to the interest groups of their own bureaucrat-capitalist class. When the class of rich and powerful say no, the government will not do anything. You need not ask them what they would do when this country collapses. That is easy. They already know this government will collapse. They have already transferred or are transferring what they treasure -- their wallets, their wives and children - to other countries that are governed well. Even their mistresses have opened money-laundering enterprises in the West, which has traumatized anti-drug police to wonder which kind of money is getting laundered. So there is a modern vocabulary term in China now called "stripped officials", along with a saying called: "I am a rogue, so why should I be afraid". Whether China collapses or nor really has little to do with these Communist officials.
Under the control of a bureaucrat-capitalist class that is not responsible and does not want to be responsible, will anyone be able to pay a price of their own to save this country? So Professor Lang had to use language that does not belong to a professor: "You all should go cry." Although he does not dare to say the meaning clearly, his conclusion is indisputable. Without overthrowing the rule of the bureaucrat-capitalist class that is neither responsible nor wants to be responsible, there is no hope for China. So, crying becomes the only option and no one can save you all.
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