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.
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.
That doesn't actually support what you're trying to claim here.
Please, tell me what "Steps should be taken to reasonably increase consumer credit so as to support spending on [various things]" actually means then, because I fail to read it as anything other than "increase debt to increase consumption".
The fact that debt has stabilized already undermines the narrative you're trying to craft here.
Debt certainly stabilized at the time of writing of the second article that I shared, but that's why I explicitly noted Xi made the above statement the following year, so after a decade of substantial growth in debt, once it stopped growing, Xi looked at the situation and said "It needs to keep growing".
I find your hostility disheartening. It's not like I'm some neoliberal from .ee coming in and concern trolling about Xinjiang or something.
Please, tell me what “Steps should be taken to reasonably increase consumer credit so as to support spending on [various things]” actually means then, because I fail to read it as anything other than “increase debt to increase consumption”.
Your assumption is that consumer credit translates into long term debt as is happening under financial capitalism in the west. Yet, this phenomenon is quite recent even in western countries driven by the fact that the economy is run by financial capitalists. There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about. The reason debt is a problem in the west is because people have no hope of repaying their loans, and living on credit has become the norm. There is no evidence of anything of the sort happening in China, and the record savings people have is a clear contradiction of this narrative.
I find your hostility disheartening. It’s not like I’m some neoliberal from .ee coming in and concern trolling about Xinjiang or something.
I find it disheartening that you just repeat the same couple of points over and over here without actually looking at the facts or the bigger picture. You just brushed off the fact that SOEs operate fundamentally different from private capitalist businesses. You ignore the fact that the private sector in China is shrinking. You never addressed the fact that personal savings in China are record high in 2024. You just keep harping on this one statement from Xi completely ignoring the overall context because it fits with the narrative you're trying to paint that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about.
"stimulate the economy" is a vaguery. Be more specific about why it is good for socialist production.
that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
Savings and debt can both be held, as indeed they are in China, I don't understand how you can say "the opposite is demonstrably happening". Debt is already very high relative to the recent past and they are looking to increase it. If what you mean to be saying is that the large savings are evidence that the population can handle more debt without being immiserated, sure, I guess that makes sense, but then say that instead of this nonsensical inference that savings means debt isn't growing.
“stimulate the economy” is a vaguery. Be more specific about why it is good for socialist production.
I think it's important to stop and define what socialism is here first. Socialism is the intermediate stage between capitalism and communism where the working class has seized power and a proletarian dictatorship has been established. However, the social relations are still largely inherited from the capitalist stage of development. This is precisely where China finds itself today. While it is a socialist country, many of the economic relations make concessions to capitalism by necessity. Therefore, consumption remains an important aspect of the economy. Stimulating the economy in this context means creating more demand for production of goods and services.
Savings and debt can both be held, as indeed they are in China, I don’t understand how you can say “the opposite is demonstrably happening”.
I've already explained the relationship in my previous reply, and once again you've proceeded to ignore it. Here's what I said:
There is little problem with people taking out loans that they repay
If the nature of debt is transitory, as in somebody takes out a loan for a short period, that is later repaid then there isn't a problem. The actual problem arises when people end up taking on debt that they're not able to repay, at which point they become indentured to the debt owners. In order for your argument to hold water, you have to demonstrate that this is happening in China.
I guess I still don't really understand how it is useful. The reason is, if it's transitory debt, how is consumption increased? You take out a loan for X amount from the state bank, spend it on a spiffy new electric car or whatever, but then later on pay X amount + a little interest back to the bank, i.e. the money you now have to spend on this new purchase is definitionally equivalent to (or a bit less than) the money you will eventually need to pay the bank. Obviously I understand how it is useful to a person, because when a transaction happens might be important for them, but for overall consumption, it seems like it either balances out or is a slight net negative, assuming we are excluding usury from the banks. What is actually being accomplished? As I think I said earlier, I'm not an Econ Guy.
The idea here is that the material conditions will continue to improve, and people continue being lifted into higher income brackets. Your argument is assuming no social mobility, but social mobility in China is actually quite high with millions of people moving into higher income brackets every year. For example, from 2010 to 2019 (the most recent period for which uninterrupted data is available), the income of the poorest 20% in China increased even as a share of total income. https://data.worldbank.org/indicator/SI.DST.FRST.20?end=2019&locations=CN&start=2008
I think social mobility refers to an the ability for an individual within a society to rise or fall in standing in the existing social order, not the whole social order changing shape, but I understand your use of it. I'm nonetheless pretty sure this doesn't answer my overall question, "How does this increase net consumption?", even though you have there made a good argument for debt being useful to individuals (something that I already conceded).
The context here is that China's economy contracted during the pandemic, and contracting economy is a problem because companies rely on consumer revenue to continue operating. If consumption starts dropping beyond a certain level then companies start to close down, which leads to people losing jobs, and so on. This is what China is aiming to avoid happening as opposed to simply encouraging people to take out loans to increase net consumption for its own sake.
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.
Please, tell me what "Steps should be taken to reasonably increase consumer credit so as to support spending on [various things]" actually means then, because I fail to read it as anything other than "increase debt to increase consumption".
Debt certainly stabilized at the time of writing of the second article that I shared, but that's why I explicitly noted Xi made the above statement the following year, so after a decade of substantial growth in debt, once it stopped growing, Xi looked at the situation and said "It needs to keep growing".
I find your hostility disheartening. It's not like I'm some neoliberal from .ee coming in and concern trolling about Xinjiang or something.
Your assumption is that consumer credit translates into long term debt as is happening under financial capitalism in the west. Yet, this phenomenon is quite recent even in western countries driven by the fact that the economy is run by financial capitalists. There is little problem with people taking out loans that they repay, and this can stimulate the economy which is what Xi is talking about. The reason debt is a problem in the west is because people have no hope of repaying their loans, and living on credit has become the norm. There is no evidence of anything of the sort happening in China, and the record savings people have is a clear contradiction of this narrative.
I find it disheartening that you just repeat the same couple of points over and over here without actually looking at the facts or the bigger picture. You just brushed off the fact that SOEs operate fundamentally different from private capitalist businesses. You ignore the fact that the private sector in China is shrinking. You never addressed the fact that personal savings in China are record high in 2024. You just keep harping on this one statement from Xi completely ignoring the overall context because it fits with the narrative you're trying to paint that China is somehow putting people into consumer debt while the opposite is demonstrably happening.
"stimulate the economy" is a vaguery. Be more specific about why it is good for socialist production.
Savings and debt can both be held, as indeed they are in China, I don't understand how you can say "the opposite is demonstrably happening". Debt is already very high relative to the recent past and they are looking to increase it. If what you mean to be saying is that the large savings are evidence that the population can handle more debt without being immiserated, sure, I guess that makes sense, but then say that instead of this nonsensical inference that savings means debt isn't growing.
I think it's important to stop and define what socialism is here first. Socialism is the intermediate stage between capitalism and communism where the working class has seized power and a proletarian dictatorship has been established. However, the social relations are still largely inherited from the capitalist stage of development. This is precisely where China finds itself today. While it is a socialist country, many of the economic relations make concessions to capitalism by necessity. Therefore, consumption remains an important aspect of the economy. Stimulating the economy in this context means creating more demand for production of goods and services.
I've already explained the relationship in my previous reply, and once again you've proceeded to ignore it. Here's what I said:
If the nature of debt is transitory, as in somebody takes out a loan for a short period, that is later repaid then there isn't a problem. The actual problem arises when people end up taking on debt that they're not able to repay, at which point they become indentured to the debt owners. In order for your argument to hold water, you have to demonstrate that this is happening in China.
I guess I still don't really understand how it is useful. The reason is, if it's transitory debt, how is consumption increased? You take out a loan for X amount from the state bank, spend it on a spiffy new electric car or whatever, but then later on pay X amount + a little interest back to the bank, i.e. the money you now have to spend on this new purchase is definitionally equivalent to (or a bit less than) the money you will eventually need to pay the bank. Obviously I understand how it is useful to a person, because when a transaction happens might be important for them, but for overall consumption, it seems like it either balances out or is a slight net negative, assuming we are excluding usury from the banks. What is actually being accomplished? As I think I said earlier, I'm not an Econ Guy.
The idea here is that the material conditions will continue to improve, and people continue being lifted into higher income brackets. Your argument is assuming no social mobility, but social mobility in China is actually quite high with millions of people moving into higher income brackets every year. For example, from 2010 to 2019 (the most recent period for which uninterrupted data is available), the income of the poorest 20% in China increased even as a share of total income. https://data.worldbank.org/indicator/SI.DST.FRST.20?end=2019&locations=CN&start=2008
I think social mobility refers to an the ability for an individual within a society to rise or fall in standing in the existing social order, not the whole social order changing shape, but I understand your use of it. I'm nonetheless pretty sure this doesn't answer my overall question, "How does this increase net consumption?", even though you have there made a good argument for debt being useful to individuals (something that I already conceded).
The context here is that China's economy contracted during the pandemic, and contracting economy is a problem because companies rely on consumer revenue to continue operating. If consumption starts dropping beyond a certain level then companies start to close down, which leads to people losing jobs, and so on. This is what China is aiming to avoid happening as opposed to simply encouraging people to take out loans to increase net consumption for its own sake.
Fair enough