As a reader of Noahpinion, I usually disagree with him on most topics (being French explains my different perspective on most subjects) and his views on China are so oversimplified!
Very happy to read good and articulated frameworks on China
If you are correct, then it seems like a structural shift towards a capital market driven economy might be able to serve the high-tech sectors of the future to create a high tech, high value economy as you say.
However, my understanding is that the advanced technology sector tends to manifest in terms of economic clusters located around a few urban centres, and these enterprises tend to be pretty capital intensive, and therefore not huge employers in the grand scheme of things.
My question is whether this can provide a suitable replacement to the property sector as an engine of growth- this is because (again as I understand it) construction tends to be pretty labour intensive, and also an activity that is widely dispersed throughout the country, rather than limited to a few economic clusters.
So a while a shift to a high tech, high value economy would obviously be a great thing for many Chinese, I worry that it would also leave a lot of less educated workers in less prosperous areas behind. My reasoning around this is based on my understanding of the experience of Western countries, where the 'populist revolt' we've seen in the last decade or so has been driven by these kinds of economic disparities between more developed and left behind regions. Could this be a side effect that would emerge if China was to make such a structural shift to a high tech focused growth model?
Edit: On reading this piece again I can see an answer to my question is given by the process of continuing urbanization in China with lower tier cities catching up with tier 1 cities as entrepreneurs and skilled workers decamp to seize opportunities in more affordable inland cities. I guess the interesting question is whether this effect will be enough to replace/balance out the slowdown in the property sector?
I see many challenges ahead. It’s not going to be smooth. What I am sure of is that the way Chinese government is structured is that they see themselves as this “grand balancer” of interest groups, which is the main premise of my “duo-China” model. This is a fundamentally different system from the western governments. Just give you an example, most of surplus tax revenues by rich provinces are collected by central government and redistributed to poorer provinces. This transfer payment scheme does create a lot of waste (extreme examples include unused highway in remote mountainous) but it’s also part of the guardrails to protect against the “populist revolt”.
High-tech manufacturing industries are high-capital, low-labor costs, meaning they may not be a great way to increase employment overall. Great observation. What we see in the West is that these firms tend to use their productivity advantage to outcompete other producers, capturing higher margins and profit -- economic value. The result is a smaller number of people capturing a greater share of economic surplus, leading to income and wealth inequality. Investing in machines or capital projects to reduce labor costs (aka workers' incomes) can stagnate economic activity by leading to a situation where rich people have too much capital to invest profitably because poor people have too little income to consume what these rich people are producing. The solution is to redistribute the economic surplus generated by the high-value industries more fairly. Western countries tend to do this through the tax code or public services.
There is an asterisk however, which is that industry-wide over-investment can lead to oversupply and negative profit. If you can make cars 10x faster but there are no buyers, then you are losing money. You are destroying value, and so there's no economic surplus to redistribute. So there must be hard budget constraints somewhere down the line to show whether economic activity is value-creating or value-destroying. If the Chinese government subsidizes private or public firms too much (aka, soft budget constraints), then it could lead to overall economic loss after all is said and done.
Well done! Your description of China's need to shift from a commodity-driven economy to a intangible capital-driven economy is a lesson that Asia is teaching for the Global South who also are transforming from commodities to intangibles. I also appreciate your description of the time frame difference from immediate Western time to more longterm Asian time frames. Such gigantic economic and cultural shifts take time to assimilate and an appreciation for the humanistic cultural aspects of "disruptive" progress is the concept of "balance" often missing in Western cultures.
Speaking of the Global South, the 'Duo-China' framework aligns interestingly with similar trends in Southeast Asia. Vietnam, for example, sees private businesses flourishing despite a one-party system. Could China draw lessons from its neighbors on managing these economic-political tensions?
Yes, I think there is a lot of confusion equating 'democracy' with capitalism. Ironically, corporations are fashioned on a 'single party' hierarchical structure with merit-based management like China and some of the SE Asian countries. We don't elect company presidents by popular vote but they are chosen by a board of directors for their experience and results. Appointing amateurs as national leaders by populism is not very 'business-like'.
We increasingly want our corporations to assume more public responsibilities for their actions so I really don't see any problem with government becoming more professional and business-like in its operations. The U.S. Congress is certainly no way to run a country or a national economy...
I hope not! It has much more than enough material resources and human potential to do it on its own! The sort of foreign investment that would come would be that which allies itself with domestic villains to engage in extreme market concentrations, capital concentrations, decision making regarding capital concentrations, reductions in opportunity, and suppression of scientific research and development; greatly reducing opportunity for most all Chinese. And while this may temporarily (it will not long after be lower than it had been) give boost to headline real GDP, it would be a disaster for the Chinese people writ large and their Civilization.
For other readers who may not be feeling confident in their ability to evaluate how legit this analysis is, my two cents having done a significant expat stint in China is that there’s a lot of valuable insight here.
Credentials: expat in Beijing for 6 years, degree from top Chinese University, many Chinese friends, learned the language to a professional level where I managed a team in Chinese, and traveled to half the provinces in the country.
I enjoyed this perspective, and also agree that the economic demands of the future will require political reform with greater emphasis on individual rights. It's just nice to be rich and be around rich people and live in a rich society, so I hope every country will eventually find its way to wealth. But I found the ending to be a little too optimistic.
>My reasoning is as simple and as down-to-earth as this: if the majority of the people still have many unfulfilled aspirations and are still hard-working (even our government employees work during holidays), there is no way for this country to have peaked.
I think most analysts use the term "Peak China" to refer to relative prosperity. Japan "peaked" decades ago but still grew and remains a highly prosperous country, but less prosperous relatively speaking. So it's not a question of whether China will continue to grow, but of its growth relative to others.
The main thing holding developing countries back from prosperity is that the firms and institutions required to create prosperity are missing or corrupted. In this article you point out that there will need to be political changes to facilitate forward progress as China gets richer, specifically around things like rule of law, trust, transparency, etc. But the rich and powerful of today did not get rich and powerful that way, and these vested interests will protect themselves and work against reform. The main difference today versus the past is that the people with power have a lot more power, and the ways to contest that power seem to be forbidden or ineffective. Likewise without government transparency, independent media, and free speech, we can't be certain that most of the problems are even on the table in public view or that we're getting true information. Additionally, there is a timer ticking with demography, and the government continuously conducts trainings for an invasion of Taiwan. So, while I agree that China will continue to grow with high likelihood, I'm skeptical that things will just work out, and it is plausible to me that China has peaked in relative economic power to the rest of the world. It's not an argument that can be dismissed simply, and its realization will depend on China's choices.
Hi Ben, appreciate your feedback! I think if the assumption is that 1) Chinese government is a Orwellian overload whose main drive is to hold on to power, and/or 2) China is bent on uniting with Taiwan, war or no war, then yes, China has peaked, at least has peaked in a meaningful amount of time. But, I do not agree with those two assumptions. Both assumptions though are very complicated matters, and I don't think I can discuss about them fully in this comment section. But rest assured, I will address those questions one day through my posts.
For point 1 -- I'm thinking more common conflict inside the government rather than power for power's own sake, like figuring out who pays for local debt, which project gets cancelled, which assets get sold, how injustices are treated, etc. The people who grew their careers working on those projects or whose jobs may be directly tied to it will fight for them. Maybe rich provinces have to bail out poor ones, and so some services get cut in Shanghai -- less Orwellian as you've put it, more individuals fighting to retain their positions and privileges amid worse economic circumstances and using state power to do so.
I think Xi and the government have consolidated power to do what they think is right in the face of these tradeoffs and vested interests. But, I guess regardless of the intent, if they're wrong and the outcomes are poor, are there sufficient avenues for collective action on part of the people to change course and fix those outcomes? Is the government sufficiently responsive to the people's pains and demands? If the government is powerful and right, then you could get a great outcome. But if it's powerful and wrong, then you could get a Zero Covid situation, whose execution and abrupt ending led to poor outcomes and cast doubt on the competency of folks at the top. The increasing censorship and control over the past decade or so is what makes me worried, as those are tools usually reserved for prohibiting collective organization and action rather than promoting it.
To take an example, in this article you argue for increased transparency and trust for financial markets, but just these past few months we've seen restrictions on speech with negative sentiment. That's the opposite direction. How does that turn around? Probably not by protesting. You write "Many rules will be rewritten. Value systems will be upgraded." I think it would be much appreciated if you could help us understand that process and how it will unfold in practice.
I don’t know if this is a big thing in the West but Chinese people generally have this “strong attachment to roots and hometown乡土情结”
In Greco Latin culture yes, in Germanic culture no. This is that north south climate split we also observe in China.
"Chinese" food outside China in France, Germany, and North-America is rather different. In Germany the egg rolls are huge with thick crust which is not crispy and the dipping sauce is ... sweetened ketchup. 我道歉! In France the spring rolls have thin translucent soft rice skin. The egg rolls in North America are small, crispy, with sweet-and-sour dipping sauce. I could go on...
I think your perspective on generational splits would be amazing. People over 60 lived in very different china than people under 30.
Still reading ravenously you write well and are insightful.
Regarding local finance investment drawing back capital from the highly developed coastal urban cities: I don't know, really. Maybe?
Thanks for these interesting details, haha. Regarding the investment shift, I am not sure either. What I am sure is there are incentives for businesses and workers alike to move inland. A lot of businesses I know are also doing this.
I guess the best way to look at it is from the party perspective, then the people's perspective.
The CCP obviously wants to reduce pollution, which can drive a "back to the countryside" perspective.
Meanwhile, the CCP also wants to project an image of China as a utopian society, well-ordered, clean, productive, peaceful, happy, developed, even futuristic.
They are likelier to be able to project that image from the developed coastal cities rather than the developping rural regions.
From the peoples perspective: China's population is in fact aging, and there is a 古乡 idea in Chinese culture which even non-Chinese me can see. This will reduce some of the stresses of pollution. Urban pollution tends to be air, rural tends to be groundwaters. However, young people often go to the cities for jobs.
From the taxation and public finance perspective: China is sufficiently wrecktastic that way I dare not wade in because unlike western liberals I know damned well when I am ignorant and to keep my mouth shut and just listen. I do know both those topics and am certain that a combination of special purpose public financing, public/private partnerships, targeted taxation (mostly of products rather than income streams) can enable China to restructure the local finances to attain the CCP's goals. I do not regard the military contention between the West and China as sufficiently fierce as to justify wrecking Chinese finance. That would however feed into the pary's ideology of evil capitalist exploiters, which is why, aside from wealth production, it's not in the Wests interests to wreck Chinese finances. It makes us look bad, polarizes, is extreme and unnecessary.
As we see, the barbaric savage xiongnu north of China are having yet another blood purge. Drunks with knives and not much commercial sense will wind up being pwn3d by China.
However, the danger asshole Putin poses to the party is sparking fears of blood purges in China, whether within the party (unlikely), the masses (such fears are predictable) or the West or at least sectors of the West (entirely likely). They misread and misapprehend the threats, challenges, and structures of the CCP, which is why your work is so vital.
Because Putin poses now a direct threat to the party I predict China will rapidly cut him loose, in other words, as I have been long predicting, China will definitively "throw Putin under the bus". I advise building pre-party fraternal mass organizations in "Russia" among the various oppressed nations subjugated by Russia because I predict revolutions in Russia. These can benefit China and the CCP and can even alleviate stresses between the West and China by showing China is a responsible partner as opposed to a kleptocratic clique of war criminals like that Moscow mafia I hate so much
Now to the perspective of the ordinary Chinese people. Young Chinese people will keep flocking to cities, and elders will return to their roots. However, each of them are looking for safe stable productive places to invest their savings. The tax and financing restructuring I suggest has to take this into account and create tax favored long term investments for them because 1. Chinese people distrust the stock market 2. Investing in large real estate projects has been discredited. I suggest allowing investments into China's sovereign wealth fund. I do not regard expatriation of Chinese capital as a problem facing China. It may be possible to create investment vehicles within the framework of the belt and road initiative but unlike sovereign wealth fund investments such should be presented as risky since they are. Basically a securitization of BRI and SW is what I suggest, whether as shares or bonds.
I do not anticipate wars involving China for the very reason of Western deterrence.
People not exposed to high speed rail don't quite catch the value of it, thinking of it as a replacement for air travel. Not in China, those train stations in metropolitan areas drop one right on top of subways, bus, and numerous taxi/DiDi(Uber equivalents): No long trip to/from the airport, No nightmare ticketing either, nothing at all like Amtrak. I try to explain it to Americans and Canadians and they think I'm selling propaganda.
Doh, how did I miss that point. I think it was made more affordable, which is one of the great things about China. Travel isn't just for the middle class and elites, the proletariat. None of the kids I knew in one USA highschool had even been out of their state, much less seen Washington, DC, etc.
One question to ask the "Liberalists" in China (using your framework) is whether they know who represents them in the People's Congress (National/Provincial/Municipal).
Where do you stand on the "TFR crisis" plaguing China and most of the world? In my economy doomer circle, demographics decline is the secular trend that dominates all others. I'm curious what the situation looks like to an economic optimist.
I honestly don't know. There is a limited capacity for humans to guage things that have not really happened yet. It's also impossible to quantify yet the effects of AI. Still, the experiences of Japan and South Korea (South Korea has a very bad tfr) may provide some argument that, at least in an East Asian culture setting, things may not be that bad. It also depends on what your definition of "bad" is. Vitality of society will surely be muted than it otherwise is. Young people will live a stressful life. But is this the thing that will make the society crumble? Not necessarily.
Very well written and informative as usual!!! China should be very careful, the same sorts of powerful forces who deceived America, seized control of it, and ripped it of course in the 1970s (i.e. some but not all within Big Mega Finance, high prestige universities, very large cap corporations, some others), well, it seems their counterparts in China may be attempting the same vile tricks over there. They may be trying to use the currently being drafted Private Economy Promotion Law to backdoor in a seamless single national market, using terms like "market access" and "fair competition" as sneaky euphemisms to conceal the fact that powerful forces are attempting to engage in extreme market concentrations, capital concentrations, decision making regarding capital concentrations, reductions in opportunity, and suppression of scientific research and development. They'll permanently reduce opportunity and resource access across almost all of China, place in instead a paltry welfare system to limit opposition to their crime, and snuff out the great potential of the Chinese people and their Civilization.
The Elon part made me sad. It would be funny but in his old home country there is a whole party led by Julius Malema that advocates for killing white people. Making this known causes rage among the woke far left.
Thought provoking article. The "Duo-China" framework offers a unique perspective on the potential for a growing "Liberalist China."
Regarding your points on capital market development, do you anticipate specific policy reforms mirroring those from Western markets (think Glass-Steagall or Sarbanes-Oxley) to bolster investor confidence and propel further liberalization?
Additionally, what do you think might be China's reaction if growing economic liberalization and increased financial transparency leads to the desire for other types of liberties or transparencies?
The main focus of capital market regulation would surround investor protection, anything that was proven to be effective in that regard by other countries is not out of question for China's testing.
The second question is trickier to answer. AllI can say is there may be no intention for government to promote this "desire for other types of liberties" per se, but once there are no other options on the table and that you have to boost capital market, then certain things will be set in motion.
But again, even if there will be more "liberties", the basic underlying need to balance between the "two Chinas" will still be the dominant theme. It will be dominant as far as I can see, possibly even for my whole lifetime. The core purpose of this series of mine is to explain to you that specific moments in this "balancing" can't be construed as "Oh China is shutting down her gates", or "Oh, China is liberalizing now!" It's a dynamic, cyclical, non-linear process
Thank you so much for your analysis and work!
As a reader of Noahpinion, I usually disagree with him on most topics (being French explains my different perspective on most subjects) and his views on China are so oversimplified!
Very happy to read good and articulated frameworks on China
Merci beaucoup!
Thanks for this Robert, great analysis!
One question I have is the following:
If you are correct, then it seems like a structural shift towards a capital market driven economy might be able to serve the high-tech sectors of the future to create a high tech, high value economy as you say.
However, my understanding is that the advanced technology sector tends to manifest in terms of economic clusters located around a few urban centres, and these enterprises tend to be pretty capital intensive, and therefore not huge employers in the grand scheme of things.
My question is whether this can provide a suitable replacement to the property sector as an engine of growth- this is because (again as I understand it) construction tends to be pretty labour intensive, and also an activity that is widely dispersed throughout the country, rather than limited to a few economic clusters.
So a while a shift to a high tech, high value economy would obviously be a great thing for many Chinese, I worry that it would also leave a lot of less educated workers in less prosperous areas behind. My reasoning around this is based on my understanding of the experience of Western countries, where the 'populist revolt' we've seen in the last decade or so has been driven by these kinds of economic disparities between more developed and left behind regions. Could this be a side effect that would emerge if China was to make such a structural shift to a high tech focused growth model?
Edit: On reading this piece again I can see an answer to my question is given by the process of continuing urbanization in China with lower tier cities catching up with tier 1 cities as entrepreneurs and skilled workers decamp to seize opportunities in more affordable inland cities. I guess the interesting question is whether this effect will be enough to replace/balance out the slowdown in the property sector?
I see many challenges ahead. It’s not going to be smooth. What I am sure of is that the way Chinese government is structured is that they see themselves as this “grand balancer” of interest groups, which is the main premise of my “duo-China” model. This is a fundamentally different system from the western governments. Just give you an example, most of surplus tax revenues by rich provinces are collected by central government and redistributed to poorer provinces. This transfer payment scheme does create a lot of waste (extreme examples include unused highway in remote mountainous) but it’s also part of the guardrails to protect against the “populist revolt”.
High-tech manufacturing industries are high-capital, low-labor costs, meaning they may not be a great way to increase employment overall. Great observation. What we see in the West is that these firms tend to use their productivity advantage to outcompete other producers, capturing higher margins and profit -- economic value. The result is a smaller number of people capturing a greater share of economic surplus, leading to income and wealth inequality. Investing in machines or capital projects to reduce labor costs (aka workers' incomes) can stagnate economic activity by leading to a situation where rich people have too much capital to invest profitably because poor people have too little income to consume what these rich people are producing. The solution is to redistribute the economic surplus generated by the high-value industries more fairly. Western countries tend to do this through the tax code or public services.
There is an asterisk however, which is that industry-wide over-investment can lead to oversupply and negative profit. If you can make cars 10x faster but there are no buyers, then you are losing money. You are destroying value, and so there's no economic surplus to redistribute. So there must be hard budget constraints somewhere down the line to show whether economic activity is value-creating or value-destroying. If the Chinese government subsidizes private or public firms too much (aka, soft budget constraints), then it could lead to overall economic loss after all is said and done.
Well done! Your description of China's need to shift from a commodity-driven economy to a intangible capital-driven economy is a lesson that Asia is teaching for the Global South who also are transforming from commodities to intangibles. I also appreciate your description of the time frame difference from immediate Western time to more longterm Asian time frames. Such gigantic economic and cultural shifts take time to assimilate and an appreciation for the humanistic cultural aspects of "disruptive" progress is the concept of "balance" often missing in Western cultures.
Speaking of the Global South, the 'Duo-China' framework aligns interestingly with similar trends in Southeast Asia. Vietnam, for example, sees private businesses flourishing despite a one-party system. Could China draw lessons from its neighbors on managing these economic-political tensions?
Yes, I think there is a lot of confusion equating 'democracy' with capitalism. Ironically, corporations are fashioned on a 'single party' hierarchical structure with merit-based management like China and some of the SE Asian countries. We don't elect company presidents by popular vote but they are chosen by a board of directors for their experience and results. Appointing amateurs as national leaders by populism is not very 'business-like'.
We increasingly want our corporations to assume more public responsibilities for their actions so I really don't see any problem with government becoming more professional and business-like in its operations. The U.S. Congress is certainly no way to run a country or a national economy...
Please write Part III! I am really interested in hearing about social control and censorship.
Robert Wu a young China-born, foreign-educated entrepreneur makes an argument that China will resume growth depending on foreign investment.
Thanks! We will see. (Not just foreign investment though, but capital market in general, which includes all investors)
I hope not! It has much more than enough material resources and human potential to do it on its own! The sort of foreign investment that would come would be that which allies itself with domestic villains to engage in extreme market concentrations, capital concentrations, decision making regarding capital concentrations, reductions in opportunity, and suppression of scientific research and development; greatly reducing opportunity for most all Chinese. And while this may temporarily (it will not long after be lower than it had been) give boost to headline real GDP, it would be a disaster for the Chinese people writ large and their Civilization.
Great read, bring on P3!
For other readers who may not be feeling confident in their ability to evaluate how legit this analysis is, my two cents having done a significant expat stint in China is that there’s a lot of valuable insight here.
Credentials: expat in Beijing for 6 years, degree from top Chinese University, many Chinese friends, learned the language to a professional level where I managed a team in Chinese, and traveled to half the provinces in the country.
I enjoyed this perspective, and also agree that the economic demands of the future will require political reform with greater emphasis on individual rights. It's just nice to be rich and be around rich people and live in a rich society, so I hope every country will eventually find its way to wealth. But I found the ending to be a little too optimistic.
>My reasoning is as simple and as down-to-earth as this: if the majority of the people still have many unfulfilled aspirations and are still hard-working (even our government employees work during holidays), there is no way for this country to have peaked.
I think most analysts use the term "Peak China" to refer to relative prosperity. Japan "peaked" decades ago but still grew and remains a highly prosperous country, but less prosperous relatively speaking. So it's not a question of whether China will continue to grow, but of its growth relative to others.
The main thing holding developing countries back from prosperity is that the firms and institutions required to create prosperity are missing or corrupted. In this article you point out that there will need to be political changes to facilitate forward progress as China gets richer, specifically around things like rule of law, trust, transparency, etc. But the rich and powerful of today did not get rich and powerful that way, and these vested interests will protect themselves and work against reform. The main difference today versus the past is that the people with power have a lot more power, and the ways to contest that power seem to be forbidden or ineffective. Likewise without government transparency, independent media, and free speech, we can't be certain that most of the problems are even on the table in public view or that we're getting true information. Additionally, there is a timer ticking with demography, and the government continuously conducts trainings for an invasion of Taiwan. So, while I agree that China will continue to grow with high likelihood, I'm skeptical that things will just work out, and it is plausible to me that China has peaked in relative economic power to the rest of the world. It's not an argument that can be dismissed simply, and its realization will depend on China's choices.
Hi Ben, appreciate your feedback! I think if the assumption is that 1) Chinese government is a Orwellian overload whose main drive is to hold on to power, and/or 2) China is bent on uniting with Taiwan, war or no war, then yes, China has peaked, at least has peaked in a meaningful amount of time. But, I do not agree with those two assumptions. Both assumptions though are very complicated matters, and I don't think I can discuss about them fully in this comment section. But rest assured, I will address those questions one day through my posts.
For point 1 -- I'm thinking more common conflict inside the government rather than power for power's own sake, like figuring out who pays for local debt, which project gets cancelled, which assets get sold, how injustices are treated, etc. The people who grew their careers working on those projects or whose jobs may be directly tied to it will fight for them. Maybe rich provinces have to bail out poor ones, and so some services get cut in Shanghai -- less Orwellian as you've put it, more individuals fighting to retain their positions and privileges amid worse economic circumstances and using state power to do so.
I think Xi and the government have consolidated power to do what they think is right in the face of these tradeoffs and vested interests. But, I guess regardless of the intent, if they're wrong and the outcomes are poor, are there sufficient avenues for collective action on part of the people to change course and fix those outcomes? Is the government sufficiently responsive to the people's pains and demands? If the government is powerful and right, then you could get a great outcome. But if it's powerful and wrong, then you could get a Zero Covid situation, whose execution and abrupt ending led to poor outcomes and cast doubt on the competency of folks at the top. The increasing censorship and control over the past decade or so is what makes me worried, as those are tools usually reserved for prohibiting collective organization and action rather than promoting it.
To take an example, in this article you argue for increased transparency and trust for financial markets, but just these past few months we've seen restrictions on speech with negative sentiment. That's the opposite direction. How does that turn around? Probably not by protesting. You write "Many rules will be rewritten. Value systems will be upgraded." I think it would be much appreciated if you could help us understand that process and how it will unfold in practice.
I don’t know if this is a big thing in the West but Chinese people generally have this “strong attachment to roots and hometown乡土情结”
In Greco Latin culture yes, in Germanic culture no. This is that north south climate split we also observe in China.
"Chinese" food outside China in France, Germany, and North-America is rather different. In Germany the egg rolls are huge with thick crust which is not crispy and the dipping sauce is ... sweetened ketchup. 我道歉! In France the spring rolls have thin translucent soft rice skin. The egg rolls in North America are small, crispy, with sweet-and-sour dipping sauce. I could go on...
I think your perspective on generational splits would be amazing. People over 60 lived in very different china than people under 30.
Still reading ravenously you write well and are insightful.
Regarding local finance investment drawing back capital from the highly developed coastal urban cities: I don't know, really. Maybe?
Thanks for these interesting details, haha. Regarding the investment shift, I am not sure either. What I am sure is there are incentives for businesses and workers alike to move inland. A lot of businesses I know are also doing this.
I guess the best way to look at it is from the party perspective, then the people's perspective.
The CCP obviously wants to reduce pollution, which can drive a "back to the countryside" perspective.
Meanwhile, the CCP also wants to project an image of China as a utopian society, well-ordered, clean, productive, peaceful, happy, developed, even futuristic.
They are likelier to be able to project that image from the developed coastal cities rather than the developping rural regions.
From the peoples perspective: China's population is in fact aging, and there is a 古乡 idea in Chinese culture which even non-Chinese me can see. This will reduce some of the stresses of pollution. Urban pollution tends to be air, rural tends to be groundwaters. However, young people often go to the cities for jobs.
From the taxation and public finance perspective: China is sufficiently wrecktastic that way I dare not wade in because unlike western liberals I know damned well when I am ignorant and to keep my mouth shut and just listen. I do know both those topics and am certain that a combination of special purpose public financing, public/private partnerships, targeted taxation (mostly of products rather than income streams) can enable China to restructure the local finances to attain the CCP's goals. I do not regard the military contention between the West and China as sufficiently fierce as to justify wrecking Chinese finance. That would however feed into the pary's ideology of evil capitalist exploiters, which is why, aside from wealth production, it's not in the Wests interests to wreck Chinese finances. It makes us look bad, polarizes, is extreme and unnecessary.
As we see, the barbaric savage xiongnu north of China are having yet another blood purge. Drunks with knives and not much commercial sense will wind up being pwn3d by China.
However, the danger asshole Putin poses to the party is sparking fears of blood purges in China, whether within the party (unlikely), the masses (such fears are predictable) or the West or at least sectors of the West (entirely likely). They misread and misapprehend the threats, challenges, and structures of the CCP, which is why your work is so vital.
Because Putin poses now a direct threat to the party I predict China will rapidly cut him loose, in other words, as I have been long predicting, China will definitively "throw Putin under the bus". I advise building pre-party fraternal mass organizations in "Russia" among the various oppressed nations subjugated by Russia because I predict revolutions in Russia. These can benefit China and the CCP and can even alleviate stresses between the West and China by showing China is a responsible partner as opposed to a kleptocratic clique of war criminals like that Moscow mafia I hate so much
Now to the perspective of the ordinary Chinese people. Young Chinese people will keep flocking to cities, and elders will return to their roots. However, each of them are looking for safe stable productive places to invest their savings. The tax and financing restructuring I suggest has to take this into account and create tax favored long term investments for them because 1. Chinese people distrust the stock market 2. Investing in large real estate projects has been discredited. I suggest allowing investments into China's sovereign wealth fund. I do not regard expatriation of Chinese capital as a problem facing China. It may be possible to create investment vehicles within the framework of the belt and road initiative but unlike sovereign wealth fund investments such should be presented as risky since they are. Basically a securitization of BRI and SW is what I suggest, whether as shares or bonds.
I do not anticipate wars involving China for the very reason of Western deterrence.
People not exposed to high speed rail don't quite catch the value of it, thinking of it as a replacement for air travel. Not in China, those train stations in metropolitan areas drop one right on top of subways, bus, and numerous taxi/DiDi(Uber equivalents): No long trip to/from the airport, No nightmare ticketing either, nothing at all like Amtrak. I try to explain it to Americans and Canadians and they think I'm selling propaganda.
And it’s much more affordable as well with much larger volume
Doh, how did I miss that point. I think it was made more affordable, which is one of the great things about China. Travel isn't just for the middle class and elites, the proletariat. None of the kids I knew in one USA highschool had even been out of their state, much less seen Washington, DC, etc.
One question to ask the "Liberalists" in China (using your framework) is whether they know who represents them in the People's Congress (National/Provincial/Municipal).
Where do you stand on the "TFR crisis" plaguing China and most of the world? In my economy doomer circle, demographics decline is the secular trend that dominates all others. I'm curious what the situation looks like to an economic optimist.
I honestly don't know. There is a limited capacity for humans to guage things that have not really happened yet. It's also impossible to quantify yet the effects of AI. Still, the experiences of Japan and South Korea (South Korea has a very bad tfr) may provide some argument that, at least in an East Asian culture setting, things may not be that bad. It also depends on what your definition of "bad" is. Vitality of society will surely be muted than it otherwise is. Young people will live a stressful life. But is this the thing that will make the society crumble? Not necessarily.
Very well written and informative as usual!!! China should be very careful, the same sorts of powerful forces who deceived America, seized control of it, and ripped it of course in the 1970s (i.e. some but not all within Big Mega Finance, high prestige universities, very large cap corporations, some others), well, it seems their counterparts in China may be attempting the same vile tricks over there. They may be trying to use the currently being drafted Private Economy Promotion Law to backdoor in a seamless single national market, using terms like "market access" and "fair competition" as sneaky euphemisms to conceal the fact that powerful forces are attempting to engage in extreme market concentrations, capital concentrations, decision making regarding capital concentrations, reductions in opportunity, and suppression of scientific research and development. They'll permanently reduce opportunity and resource access across almost all of China, place in instead a paltry welfare system to limit opposition to their crime, and snuff out the great potential of the Chinese people and their Civilization.
The Elon part made me sad. It would be funny but in his old home country there is a whole party led by Julius Malema that advocates for killing white people. Making this known causes rage among the woke far left.
My fault. And admittedly it’s not a good analogy in any case, but just an easy-to-understand analogy. Sad to hear about this
Thought provoking article. The "Duo-China" framework offers a unique perspective on the potential for a growing "Liberalist China."
Regarding your points on capital market development, do you anticipate specific policy reforms mirroring those from Western markets (think Glass-Steagall or Sarbanes-Oxley) to bolster investor confidence and propel further liberalization?
Additionally, what do you think might be China's reaction if growing economic liberalization and increased financial transparency leads to the desire for other types of liberties or transparencies?
The main focus of capital market regulation would surround investor protection, anything that was proven to be effective in that regard by other countries is not out of question for China's testing.
The second question is trickier to answer. AllI can say is there may be no intention for government to promote this "desire for other types of liberties" per se, but once there are no other options on the table and that you have to boost capital market, then certain things will be set in motion.
But again, even if there will be more "liberties", the basic underlying need to balance between the "two Chinas" will still be the dominant theme. It will be dominant as far as I can see, possibly even for my whole lifetime. The core purpose of this series of mine is to explain to you that specific moments in this "balancing" can't be construed as "Oh China is shutting down her gates", or "Oh, China is liberalizing now!" It's a dynamic, cyclical, non-linear process
@Robert Great reply. Agree 100% with all your points raised
Interesting article! What is the cost to the Chinese people to undergo this transition?