The economic crisis means little to the Chinese people
Now, except Ukraine, the worst place should be China. As soon as the economic data in April came out, many people were shocked.
Consumption data plummeted, with clothing, furniture, cars and building materials all falling in double digits. Some important coastal economic areas, such as Shenzhen, Hangzhou and Suzhou, have reduced their fiscal revenue by nearly half. The property market was also completely muted, and the sales of commercial housing plummeted by 29%. In terms of finance, RMB loans and social financing are also close to halving. This shows that China’s economy has lost vitality and enterprises have lost direction.
This should be the worst economic performance since China’s “reform and opening up”, which is almost an all-round retrogression. According to multi-party analysis, this should be closely related to the closure of Shanghai in April, as China’s trade hub and the largest container port. The suspension of Shanghai virtually paralyzed half of China’s economy. It even led to the withdrawal of foreign-funded enterprises.
Previously, there were rumors that Tesla planned to build a second factory in Shanghai, but then musk accidentally chose Indonesia. This may be related to many uncertainties in China’s policy. In short, the conflict between China’s high-intensity epidemic prevention and economic development has been completely exposed. Interestingly, China’s statistics department, which has always been good at beautifying data, suddenly chose to show the shocking data frankly and openly this time. This may indicate that there is also division at the top of China.
On the other hand, this bad economic data has been widely interpreted by China’s major economists and financial bloggers, but there is still a sense of desolation of “talking to yourself”. This data is naturally true, but the rough waves at the macro level do not seem to arouse the slightest waves in the hearts of ordinary Chinese people. Now, no matter in parks, supermarkets, shopping malls or restaurants, we can hardly hear the discussion on economic topics, and almost everyone stays out of it.
This is very interesting. Because most Chinese people don’t understand the economy, they naturally can’t understand the economic crisis. In this ancient country, most people’s understanding of economy is business. And business only gains and losses, no crisis. Therefore, most Chinese people will choose to hibernate when business is bad, and then wait for business to improve with an optimistic attitude.
Therefore, the problem of economic crisis is first of all a cognitive problem. This is the first industrialization in Chinese history. Most people have no concept of economy. Of course, the Chinese government completely dominates the media, whose job is to spread optimism and paralyze people’s sense of crisis.
In addition, China’s minimum wage is very low. Even in big cities such as Shanghai, the legal minimum monthly salary is only 2590 yuan. About $380. Therefore, the vast majority of China’s bottom workers are in fact in an economic crisis all their lives, struggling on the survival line. Young people can only support themselves, and middle-aged people can only maintain family expenses. They will never be able to own their own house, have no spare money to travel, and even can’t afford a car. They are unable to get married because of poverty. This is the life of most poor people in China. If you talk about the economic crisis with them, it’s like talking about losing weight with starving people.
Therefore, we cannot substitute the economic crisis standard of western industrial history to measure China. Since 2018, the “entrepreneurial death cycle” has been widely rumored on the Chinese Internet. A whole row of shops on the street are closed and there are few tourists in shopping malls, which is very common in any city in China. In fact, China has always been in a state of economic depression, and people are very adapted to the depression.
In addition, China’s survival philosophy is beyond any literary imagination and cannot be accurately defined by numerical values. You see, Shanghai has been closed for nearly two months, with tens of millions of people staying at home, no social, no job and no income. Just like turning on hibernation mode, reduce demand and consumption to unimaginable levels.
This is Shanghai, China’s international metropolis. Ruili, a remote border town, has been closed for nearly half a year. Jilin, a big city in Northeast China, has also been closed for several months. There is basically no voice of resistance. For those who can live under these extreme conditions, the economic crisis is not worth mentioning at all. At least the current level of economic decline is not worth mentioning.
The only good news now is that Shanghai has announced that it will gradually resume production. However, with the “sword of Damocles” of epidemic prevention hanging overhead, the enterprise has completely lost confidence. Especially for foreign-funded enterprises. Recently, the United States invited representatives of ten ASEAN countries. Some media interpreted it as discussing the transfer of industrial chain.
At this node, it will undoubtedly accelerate China’s industrial hollowing out and aggravate the economic crisis. According to the “Petty -Clark” law, the first stage of industrialization is the migration of labor force from agriculture to industry, and the second stage is the migration of labor force from industry to service industry. Developed countries are in the second stage. For example, the United States, the service industry accounts for as much as 80%. Germany and Japan also account for more than 70%.
China is now in the transition period between the two. The service industry has accounted for about 50% of GDP, but the agricultural population is still as high as 500 million, more than one-third of the total population. In contrast, the United States has less than 2% of the agricultural population. It can be seen from this that although China has created great wealth, its economic quality is actually very low.
The question is, now that the industrial scale is declining, should the surplus labor force be transferred to service industry or agriculture? This is the next challenge that China needs to face. If the labor force smoothly enters the tertiary industry (service industry), it means that China will also be among the ranks of developed countries. But the premise is that the service industry needs a consumption engine, which means that the income of Chinese workers must be greatly increased, national welfare must be optimized, and people’s livelihood issues such as medical care and pension must be reformed. This undoubtedly touches the interests of Chinese powerful class. It is obvious that the Chinese people have no ability or even consciousness of resistance.
Therefore, China’s working population is likely to regress to the primary industry (Agriculture), which also means a great recession. Now the Chinese authorities plan to normalize epidemic prevention and even make the “shelter” for the centralized treatment of coronavirus positive cases permanent. This makes the intellectual community uneasy. Many people predict that this is a harbinger of closing the country.
There is no doubt that China’s “reform and opening up” is facing a severe test. As the second largest economy in the world, the scale of commodity economy accounts for about 18% of the world. China’s economic crisis is bound to affect the world. Perhaps when the war in Ukraine is over, people will suddenly find that the biggest problem in the world is China.