The figure, which marks a rise of 100 million over five years, was released at a time when the authorities are looking to domestic consumption to boost growth.
The purpose of state owned banks is to keep the economy functioning well, so if debt became an issue then yeah there would be systemic debt forgiveness. It's also worth noting that household savings in China have hit a record high, so doesn't look like there is a problem with personal debt to begin with at the moment https://www.wsj.com/livecoverage/stock-market-today-dow-jones-bank-earnings-01-12-2024/card/chinese-household-savings-hit-another-record-high-xqyky00IsIe357rtJb4j
Paywalled article. Anyway, my issue isn't that I imagine that China will have too many people with near-zero savings and substantial debt -- I can't really speculate on that -- my problem is that this financialization of the economy is moving away from socializing the economy on any sort of rational basis. Even within the assumptions of a market economy, it doesn't seem to me like it's actually good for development by pumping consumption numbers for their own sake, that's literally just capitalist expansion getting out of hand when having relatively low consumption (on a voluntary basis) is, in a sane world, a good thing. People talk a big game about the birdcage economy, but it doesn't seem like a tempering of the capitalist anarchy in production at all to be so deliberately wasteful.
That's absolutely not happening though. In fact, China's private sector has been in a structural decline since 2021 directly as a result of policy. https://www.piie.com/research/piie-charts/2024/chinas-private-sector-has-lost-ground-state-sector-has-gained-share-among
I think what you're forgetting here is that China is still a developing country, where there are hundreds of millions of people who still live in fairly impoverished conditions. Raising their standard of living necessarily involves raising consumption, because their current consumption levels are incredibly low.
I'm not really an Economics Guy, but I've seen a few versions of that "piie chart" at least (what an awful pun when it's not even a pie chart). It's kind of ironic that I'm arguing that they are becoming finance ghouls and you counter with an article showing the increased market capitalization (i.e. stock value) of SOEs. Anyway, imagining that it was something more convenient to your point, like market share (since market share has probably followed a similar pattern), I still wouldn't find it compelling because my view is that China is not a dictatorship of the bourgeoisie, but a dictatorship of state capitalist bureaucrats. That is to say, SOEs that are guided by profit are still subject to capitalist anarchy in production, and we can see from things like the rising stock value of these companies that they are guided by profit, with the unprofitable sectors (like the public transit we both admire) merely being investments, vehicles, for the profitability of the other companies.
I think what you're forgetting here is that China is still a developing country, where there are hundreds of millions of people who still live in fairly impoverished conditions. Raising their standard of living necessarily involves raising consumption, because their current consumption levels are incredibly low.
This seems like backwards thinking to me. Aside from the fact that China has been pretty open about wanting to use debt for consumption for Growth tm, not for raising anyone's standard of living, putting people in debt just isn't a great way of combating poverty, as China itself has demonstrated by combating poverty through changing the real material conditions of the poor through housing, transit infrastructure, and so on. It wouldn't be a good thing either way, but I'm pretty sure their debt schemes are meant for middle income households.
You appear to be focusing on the wrong thing here. What that chart shows is that SOEs constitute an increasingly growing portion of the economy right now.
Meanwhile, you can call Chinese model state capitalist, but it's worth taking a second to actually think through what that means in practical terms. The primary goal of a privately owned capitalist enterprise is to produce profit for the owners, with any social value being strictly incidental. It's a vehicle of wealth accumulation. On the other hand, the primary purpose of state owned enterprise is to provide social value, such as building infrastructure, providing social services, producing energy, and so on. Therefore, SOEs are fundamentally different from actual capitalism.
That is to say, SOEs that are guided by profit are still subject to capitalist anarchy in production, and we can see from things like the rising stock value of these companies that they are guided by profit, with the unprofitable sectors (like the public transit we both admire) merely being investments, vehicles, for the profitability of the other companies.
That's demonstrably false. If that was the case then China wouldn't be able to do large scale infrastructure projects such as cross-country high speed rail. In fact, these projects are often decried by western economists as being inefficient and unprofitable precisely because their goal is to produce long term social value as opposed to being profit driven.
Not only that, but the role of the markets in China is far more limited than it is in western liberal economies. Chinese model follows idea of a birdcage economy introduced by Chen Yun. It states that the market acts as a bird, free to fly within the confines of a cage representing the overall economic plan. Meanwhile, the state acts as the planner, setting the overall goals and priorities, etc while the market acts as the allocator, determining the most efficient way to achieve those goals. This model helps ensure that the primary function of the market is as a tool for economic development rather than a platform for wealth accumulation.
This seems like backwards thinking to me
If improving the standard of living for the population seems backwards to you, then I really don't know what else to say here.
Aside from the fact that China has been pretty open about wanting to use debt for consumption for Growth tm, not for raising anyone’s standard of living, putting people in debt just isn’t a great way of combating poverty, as China itself has demonstrated by combating poverty through changing the real material conditions of the poor through housing, transit infrastructure, and so on.
We've already established that people aren't being put to debt, and in fact Chinese personal savings are growing. I don't understand why you're back to using this talking point that's clearly false. Raising living conditions through providing housing, infrastructure, and so on, is precisely what continues to happen in China. However, as people's conditions improve they also tend to consume more. These things aren't at odds with each other.
It wouldn’t be a good thing either way, but I’m pretty sure their debt schemes are meant for middle income households.
The primary goal of a privately owned capitalist enterprise is to produce profit for the owners, with any social value being strictly incidental. It's a vehicle of wealth accumulation. On the other hand, the primary purpose of state owned enterprise is to provide social value, such as building infrastructure, providing social services, producing energy, and so on. Therefore, SOEs are fundamentally different from actual capitalism.
State-Owned Enterprises can be run on the basis of social value, but the reason I emphasize the State Capitalist thing is that it is not necessarily the case that they are run this way, they can be profit-seeking and in China several of them are -- look at the China National Petroleum Corporation for instance, which is extremely profitable.
That's demonstrably false. If that was the case then China wouldn't be able to do large scale infrastructure projects such as cross-country high speed rail. In fact, these projects are often decried by western economists as being inefficient and unprofitable precisely because their goal is to produce long term social value as opposed to being profit driven.
I think you just misread what I said here. Obviously their transit isn't in-itself profitable, I already said that, but they are beneficial to the profitability of other companies.
Not only that, but the role of the markets in China . . .
I mentioned the "birdcage economy" thing already, I'm well aware of it. My position is that it's an empty talking point, just so many words.
If improving the standard of living for the population seems backwards to you, then I really don't know what else to say here.
I can't tell if this is a reading issue again or bad faith, but clearly what I was referring to was increasing the capacity for consumption (to phrase it charitably) of the impoverished sections of the population by encouraging them to take on debt. We'll get to the question of the actual veracity of that . . .
We've already established that people aren't being put to debt, and in fact Chinese personal savings are growing.
You keep using faulty deductive inferences like this. Debt isn't automatically subtracted from savings, you can hold both.
I don't understand why you're back to using this talking point that's clearly false.
Here we can see Xi himself declaring: "Steps should be taken to reasonably increase consumer credit so as to support spending on housing improvements, new energy vehicles, elderly care, and services related to education, health care, culture, and sports." Side note, taking on debt for almost all of the things listed seems like something not great to aspire to, because they are either too trivial and don't merit debt or are vital enough that they should be handled by the state, but whatever, that's probably too big a question for us.
This is on top of household debt doubling from 32% to 64% relative to the GDP from 2012 to 2022 source. That source does report debt stabilizing, but note that Xi's statement about wanting to extend it is from the following year.
State-Owned Enterprises can be run on the basis of social value, but the reason I emphasize the State Capitalist thing is that it is not necessarily the case that they are run this way, they can be profit-seeking and in China several of them are – look at the China National Petroleum Corporation for instance, which is extremely profitable.
Overwhelming evidence shows that it is the case for the vast majority of Chinese SOEs.
I think you just misread what I said here. Obviously their transit isn’t in-itself profitable, I already said that, but they are beneficial to the profitability of other companies.
The point is that it's an example of SOEs providing social value. There are plenty of other examples of that. The fact that these benefits extend to business does not in any way detract from this.
I mentioned the “birdcage economy” thing already, I’m well aware of it. My position is that it’s an empty talking point, just so many words.
So far you've failed to articulate any coherent argument for this position, and all the actual tangible evidence is against it.
I can’t tell if this is a reading issue again or bad faith, but clearly what I was referring to was increasing the capacity for consumption (to phrase it charitably) of the impoverished sections of the population by encouraging them to take on debt. We’ll get to the question of the actual veracity of that . . .
You just made up a straw man regarding encouraging people to take on debt. There is no evidence of that actually happening. It's a thing you just made up, and you keep repeating it. That's just embarrassing.
You keep using faulty deductive inferences like this. Debt isn’t automatically subtracted from savings, you can hold both.
I'm not doing that. You're just arguing in bad faith.
Here we can see Xi himself declaring: “Steps should be taken to reasonably increase consumer credit so as to support spending on housing improvements, new energy vehicles, elderly care, and services related to education, health care, culture, and sports.”
That doesn't actually support what you're trying to claim here.
This is on top of household debt doubling from 32% to 64% relative to the GDP from 2012 to 2022 source. That source does report debt stabilizing, but note that Xi’s statement about wanting to extend it is from the following year.
What the article fails to mention is the relation of household debt to actual savings people have. The fact that debt has stabilized already undermines the narrative you're trying to craft here.
The difference in China is that banks are largely state owned and consumer debt can be easily forgiven.
And are the banks operating on a basis of systematic debt forgiveness?
The purpose of state owned banks is to keep the economy functioning well, so if debt became an issue then yeah there would be systemic debt forgiveness. It's also worth noting that household savings in China have hit a record high, so doesn't look like there is a problem with personal debt to begin with at the moment https://www.wsj.com/livecoverage/stock-market-today-dow-jones-bank-earnings-01-12-2024/card/chinese-household-savings-hit-another-record-high-xqyky00IsIe357rtJb4j
Paywalled article. Anyway, my issue isn't that I imagine that China will have too many people with near-zero savings and substantial debt -- I can't really speculate on that -- my problem is that this financialization of the economy is moving away from socializing the economy on any sort of rational basis. Even within the assumptions of a market economy, it doesn't seem to me like it's actually good for development by pumping consumption numbers for their own sake, that's literally just capitalist expansion getting out of hand when having relatively low consumption (on a voluntary basis) is, in a sane world, a good thing. People talk a big game about the birdcage economy, but it doesn't seem like a tempering of the capitalist anarchy in production at all to be so deliberately wasteful.
That's absolutely not happening though. In fact, China's private sector has been in a structural decline since 2021 directly as a result of policy. https://www.piie.com/research/piie-charts/2024/chinas-private-sector-has-lost-ground-state-sector-has-gained-share-among
I think what you're forgetting here is that China is still a developing country, where there are hundreds of millions of people who still live in fairly impoverished conditions. Raising their standard of living necessarily involves raising consumption, because their current consumption levels are incredibly low.
I'm not really an Economics Guy, but I've seen a few versions of that "piie chart" at least (what an awful pun when it's not even a pie chart). It's kind of ironic that I'm arguing that they are becoming finance ghouls and you counter with an article showing the increased market capitalization (i.e. stock value) of SOEs. Anyway, imagining that it was something more convenient to your point, like market share (since market share has probably followed a similar pattern), I still wouldn't find it compelling because my view is that China is not a dictatorship of the bourgeoisie, but a dictatorship of state capitalist bureaucrats. That is to say, SOEs that are guided by profit are still subject to capitalist anarchy in production, and we can see from things like the rising stock value of these companies that they are guided by profit, with the unprofitable sectors (like the public transit we both admire) merely being investments, vehicles, for the profitability of the other companies.
This seems like backwards thinking to me. Aside from the fact that China has been pretty open about wanting to use debt for consumption for Growth tm, not for raising anyone's standard of living, putting people in debt just isn't a great way of combating poverty, as China itself has demonstrated by combating poverty through changing the real material conditions of the poor through housing, transit infrastructure, and so on. It wouldn't be a good thing either way, but I'm pretty sure their debt schemes are meant for middle income households.
You appear to be focusing on the wrong thing here. What that chart shows is that SOEs constitute an increasingly growing portion of the economy right now.
Meanwhile, you can call Chinese model state capitalist, but it's worth taking a second to actually think through what that means in practical terms. The primary goal of a privately owned capitalist enterprise is to produce profit for the owners, with any social value being strictly incidental. It's a vehicle of wealth accumulation. On the other hand, the primary purpose of state owned enterprise is to provide social value, such as building infrastructure, providing social services, producing energy, and so on. Therefore, SOEs are fundamentally different from actual capitalism.
That's demonstrably false. If that was the case then China wouldn't be able to do large scale infrastructure projects such as cross-country high speed rail. In fact, these projects are often decried by western economists as being inefficient and unprofitable precisely because their goal is to produce long term social value as opposed to being profit driven.
Not only that, but the role of the markets in China is far more limited than it is in western liberal economies. Chinese model follows idea of a birdcage economy introduced by Chen Yun. It states that the market acts as a bird, free to fly within the confines of a cage representing the overall economic plan. Meanwhile, the state acts as the planner, setting the overall goals and priorities, etc while the market acts as the allocator, determining the most efficient way to achieve those goals. This model helps ensure that the primary function of the market is as a tool for economic development rather than a platform for wealth accumulation.
If improving the standard of living for the population seems backwards to you, then I really don't know what else to say here.
We've already established that people aren't being put to debt, and in fact Chinese personal savings are growing. I don't understand why you're back to using this talking point that's clearly false. Raising living conditions through providing housing, infrastructure, and so on, is precisely what continues to happen in China. However, as people's conditions improve they also tend to consume more. These things aren't at odds with each other.
Zero actual evidence for this statement.
State-Owned Enterprises can be run on the basis of social value, but the reason I emphasize the State Capitalist thing is that it is not necessarily the case that they are run this way, they can be profit-seeking and in China several of them are -- look at the China National Petroleum Corporation for instance, which is extremely profitable.
I think you just misread what I said here. Obviously their transit isn't in-itself profitable, I already said that, but they are beneficial to the profitability of other companies.
I mentioned the "birdcage economy" thing already, I'm well aware of it. My position is that it's an empty talking point, just so many words.
I can't tell if this is a reading issue again or bad faith, but clearly what I was referring to was increasing the capacity for consumption (to phrase it charitably) of the impoverished sections of the population by encouraging them to take on debt. We'll get to the question of the actual veracity of that . . .
You keep using faulty deductive inferences like this. Debt isn't automatically subtracted from savings, you can hold both.
Here we can see Xi himself declaring: "Steps should be taken to reasonably increase consumer credit so as to support spending on housing improvements, new energy vehicles, elderly care, and services related to education, health care, culture, and sports." Side note, taking on debt for almost all of the things listed seems like something not great to aspire to, because they are either too trivial and don't merit debt or are vital enough that they should be handled by the state, but whatever, that's probably too big a question for us.
This is on top of household debt doubling from 32% to 64% relative to the GDP from 2012 to 2022 source. That source does report debt stabilizing, but note that Xi's statement about wanting to extend it is from the following year.
Overwhelming evidence shows that it is the case for the vast majority of Chinese SOEs.
The point is that it's an example of SOEs providing social value. There are plenty of other examples of that. The fact that these benefits extend to business does not in any way detract from this.
So far you've failed to articulate any coherent argument for this position, and all the actual tangible evidence is against it.
You just made up a straw man regarding encouraging people to take on debt. There is no evidence of that actually happening. It's a thing you just made up, and you keep repeating it. That's just embarrassing.
I'm not doing that. You're just arguing in bad faith.
That doesn't actually support what you're trying to claim here.
What the article fails to mention is the relation of household debt to actual savings people have. The fact that debt has stabilized already undermines the narrative you're trying to craft here.