China has been attempting to push for a Dual Circulation Economy (external growth e.g. export balanced by internal growth e.g. domestic consumption) since 2020. This ended in a remarkable failure as China’s trade surplus soared to a record $1 trillion while the domestic economy undergoes deflation and wage stagnation.

So what’s the problem here?

The government tries everything, from fighting involution, to promoting consumption through giving various subsidies and lowering credit interest, except to address the elephant in the room: wealth inequality.

In June 2020, the late Premier Li Keqiang (RIP) revealed to the nation for the first time that 600 million of our population still live, on average, with an income of 1000 yuan (~$150) per month. For most of us, this was the first time that we learned about this fact - coming straight from the government itself.

Despite talks about eradicating absolute poverty, it is sobering to realize that the bottom 40% of China’s population (most of them in rural areas) still live on very low wages. This 600 million sized demographic contributes effectively very little to the domestic consumption.

The people that spend the most are the middle/upper middle class. However, these middle class people are now facing a serious problem: many of them bought houses in the 2010s, and the property prices are now plunging. As the asset prices continue to deflate, they are unable to sell their houses, and still have to pay the mortgage for the next 30 years. As such, consumption from this group is also plunging, leading to deflation as businesses fail, and more people are getting unemployed as production scales down.

As an anecdote, my friend persuaded her husband, AND her parents, AND her parents-in-law to purchase houses in 2019 - when the property bubble was already near its peak (although everyone still had the illusion that it will keep growing forever, somehow). The whole extended family went ALL IN. By 2021, Evergrande would begin its implosion and house prices across the country would begin to fall. Now, the average house prices have fallen to 2017 level, and they have effectively lost 40-50% from the initial value, but still have to work harder than ever to pay off the mortgage loan. She keeps complaining that she has lost the will to live.

That’s just the reality of the middle class in China today. People reduce spending and begin to save wherever they can for the fear of losing their jobs in the broad climate of economic downturn and uncertainty. And the accumulated savings - money not spent - set off the deflationary spiral as less consumption led to less business activity, less profit, less demand, and less need to keep workers employed.

What China is doing to prevent a downturn is to dump its exports to other regions amidst Trump’s tariffs, causing countries like Mexico to put up 50% tariffs on Chinese goods to protect its industries and in return, invited China’s wrath. So China’s economy is probably going to be fine, but the Global South countries will have to suffer because of China’s neoliberal policies.

This is why I keep saying that you cannot resolve these fundamental issues without directly tackling the wealth inequality. And the wealth inequality comes from the neoliberal ideas of “balancing the budget”, which encourages countries to run trade surpluses by suppressing domestic demand, when what they should be doing is to run large deficits and give people the money to spend.

There are 600 million people who live on 1000 yuan monthly. If China is willing to give up its neoliberal model and start raising the income of these people through running high deficits, then it can unleash the true potential of China’s domestic consumption to solve much of its economic woes. That’s how you tackle wealth inequality.

XHS take, who hypes nothing ever

This is not correct lol. I was one of the loudest voices on de-dollarization back when Biden raised the interest rate to “fight inflation” back in 2022 and early 2023 that led to a global dollar liquidity crisis.

I was hyping when Russia (very correctly) forgave $20 billion of Africa’s debt in August 2022, and China also followed suit with waiving the interests of some African debtors. I said very clearly back then that if China used its dollar reserve to pay off $800 billion of Africa’s debt, then we have a chance of wiping the slate clean and forge an alternative economic bloc while the US was mired in soaring inflation.

However, I also warned that the so-called BRICS nations, if they were serious about de-dollarization, have a limited window because when the short term US treasuries begin to mature, the huge fiscal flow generated from interest payment will simply flood the external sector and reverse the dollar liquidity shortage again. This proved to be correct.

I hype when the conditions are right. I don’t hype now because… the conditions simply aren’t there.

Having said that, I still pin some hope on the 15th Five Year Plan. So we’ll see.

This site literally cried about Biden banning TikTok lol.

No worries. I was merely clarifying my position. You can, of course, choose not to believe in them. Won’t blame you or anyone though.

Again, you are still not getting my argument. First, they came for the gun rights. What do you think is going to happen next? Do you think they’re going to stop there? You aren’t thinking far enough.

Minorities are getting terrorized by ICE everywhere across America and do you see any leftist opposition? No, that’s why fascists are bold enough to roam the streets. Do you think the fascists are going to stop at deportations?

I never said it was good. I said that China had to respond to Soviet aggression, or at least the perception of it. When you’re threatening China, you are playing with fire.

Besides, are you going to deny the success of the Chinese model?

Biden was a brilliant mastermind in leveraging the power of USD as a financial weapon

That’s not what I said. I said that Biden’s big gamble with raising the interest rates had exposed the weakness of the American financial capitalist system and could lead to global de-dollarization. However, they correctly bet that China (the only large economy capable of challenging them) would not be willing to take up the challenger role, and as such the US got away with it.

This position still remains completely correct, for China has only continued to defend the “free trade” against America’s protectionism. Until China has shown a willingness to abandon its IMF export-led growth strategy and turn away from the neoliberal model, I remain correct.

There is a lot of misrepresentation of my arguments as though people who don’t like what I’m saying are unwilling to discuss something complex and nuanced.

often takes credit for socialist achievements that they had no hand in creating

I never took credit, I took the lessons.

using that to belittle American leftists

I did not belittle them, I pointed out their mistakes.

They had paragraphs of justification on why voting for Biden is the best choice

Shows that you didn’t even bother to understand my arguments. I said that if the American left is not willing to fight it to the end, it would be better to have a Biden/Harris Democrat for another 4 years while accumulating strength in between.

Turns out I was right: Trump DOJ is looking at ways to ban transgender Americans from owning guns

The American left has no answer to that.

while also believing that Biden was some Machiavellian mastermind, as opposed to a senile old man herded by staffers.

I have pointed out many times that Biden’s team made a huge gamble on raising the interest rates, which exposed the weakness of the American financial capitalist system. However, they correct bet that China - the only superpower that has the economy to challenge the dollar hegemony - would be unwilling to take on that task and challenge the global neoliberal free trade order.

This stance remains to be correct, until China shows a willingness to abandon its IMF export-led growth strategy and turn domestic consumption. Again, shows that you didn’t even bother to understand the nuances of my arguments.

With respect, I find many Americans like to see things in very black and white with little room for nuances. Maybe it’s the comic books, I don’t know.

lol. Ten years ago many of my friends proudly call themselves “capitalists” (they are working/middle class) and “America is our big brother” while I was the weird “communist”. How the tables have turned.

One example is the Unit 731 movie that is coming out this month. The film has been in production since 2017 and wrapped filming back in 2022 but was suspended by the censorship bureau. Lots of wild theories on the internet about why it was not allowed to be released.

However, it is finally coming out this year, which feels coordinated to a certain extent together with the Nanjing Massacre film. Whatever the reasons, the government deems it appropriate to now show the films.

By the way, I don’t think there is anything wrong with showing Japanese atrocities and reminding people of what it felt like to be a country under threat by foreign imperialism. However when you combine this with the other recent events, it feels like a push towards amplifying nationalist propaganda.

It’s high for a country that is growing at 5%, while many European countries are stagnating at 1-2% growth.

So the question is where did all the growth come from? If it is not translating into more jobs then we have a problem, because the wealth is not being circulated into the real economy.

Casual anti-Indian racism is ubiquitous on the Chinese internet. You just have to be mindful and avoid those content.

Yes this seriously feels like the 1930s all over again. In a few years there will be tons of military equipments all over the world, waiting to be used somehow.

There’s a reason why they’re tweeting in English on Western social media site instead of Chinese on Chinese social media. The rub is finding out exactly what that reason is. And it isn’t because they can’t write Chinese, which leads to mostly unsavory reasons (banned on Chinese social media, general crank, wants attention from Westerners).

You can find similar sentiments on Chinese social media. They’re a minority but they’re there.

I mean the PRC just celebrated its 80th anniversary of defeating Japan. I would wait a year to see if nationalist sentiment is still there. However, 2027 is going to be the 100 year anniversary of the founding of the PLA, so I guess you can look forward to nationalist sentiment coming back in 2 years lol

Not the same. I’ve seen the ebb and flow of anti-Japanese sentiment my entire life. This one feels manufactured more than anything I’ve seen before. But maybe that’s just how social media and their algorithms work these days.

Yes, and I believe it is fully justified. The sudden uptick in nationalist propaganda over the past two months is what trips me off. You know the feeling when you see the news and popular social media channels suddenly start talking about a particular issue. It feels unnatural, but that is just a gut feeling. Maybe everyone is just trying to catch on to the latest sensation. That’s why I am watching with caution and see where this is going.

There is also economic downturn and the broad pessimistic mood across China at the moment, so it would not surprise me to see that nationalist/patriotic propaganda can serve as a release valve at the same time. What’s more, we have high youth unemployment, and what better way to keep that number down through military recruitment (the number of applicants to military and police academy this year has surged, according to recent news report).

Many here don’t seem to understand the historical context. The rise of Juche correlated with the 1973 US-Soviet wheat deal.

Here’s the context: agriculture is difficult - very difficult - in Northeast Asia due to its harsh climate. For years, and certainly as a beneficiary of the Sino-Soviet split, the DPRK had relied on the Soviet Union for economic assistance.

However, the crop failure in the Soviet Union in the 1970s caused a break in its ability to supply to the DPRK. The leadership understood that continual reliance on foreigners will only place the nation in a vulnerable position. Juche - which means something like “self autonomy” - was an ideology that served to rectify its geographical and geopolitical shortcomings. It is rooted in the idea that “man shall conquer nature”, and that “nature” refers to the extremely difficult climate of Northeast Asia.

And the DPRK did succeed to some extent, with a surge in food production, high mechanized farming and one of the earliest countries to reach an urbanization rate of 70% by 1970s. The living standards in the DPRK was much higher than China in the 1970s.

However, this also comes at the cost of spending nearly 20% of its annual GDP on agriculture, and continue to remain so to this day. For comparison, South Korea spent merely 2% of its GDP on agriculture, as it chose to import from Western countries.

This was all reversed after the fall of the Soviet Union, and after the unprecedented famine - caused both by rare weather events in 1994-1996 and the loss of petroleum supply from the Soviet Union necessary for a highly mechanized agricultural sector - the DPRK economy simply never recovered.

You can think of it like this: when reckless Wall Street bankers crashed the economy in 2007, who were the ones that paid the price? Was it the Wall Street bankers, or the 9 million American families that lost their homes and the millions more that became unemployed as a consequence?

This is one of those pro-China propaganda and social reactionary accounts you find on the English side of the internet that I’ve long written off lol. And it is true that most Chinese people don’t even give this question a second thought.

However, there are some merits to be worried… There is a recent rise in nationalist propaganda, especially anti-Japanese sentiment, across all mainstream and social media platforms across China, especially after the recent House of Councillors election in Japan where anti-Chinese far right political parties made incredible progress.

Combined with the recent release of the film Dead to Rights about Nanjing Massacre that has caused quite a sensation, and another Unit 731 film to be released soon, together with the full blown militarization advertisement and the recent military parade, it is quite clear that nationalism/patriotism is on the rise accompanying the economic downturn (especially the high youth unemployment) that is currently happening in China.

I watch with caution where this is heading. The trend towards militarization is clear, which is not unique to China but similarly occurring in the US and Europe. Whether this is just a big propaganda push to distract people from the economic issues, or whether there is something more organic underneath it, I’m not so sure.

Not necessarily. Japan doesn’t follow MMT and is just as much of a neoliberal brainrot. Bond vigilantes have been hysterically speculating for years about Japanese Government Bonds, yet nothing ever happens. Turns out the yield curve was under the control of Bank of Japan at all times. That’s because Japanese debt was only issued in yen, of which it has infinite supply of.

As @FuckyWucky@hexbear.net said, Truss was weak, and so she got bullied by the bond speculators.

As for the US, there is no credit risk for US treasuries. It is near impossible to get to a point where the US government cannot pay its interests, unless some major catastrophe happened in the country and its economy collapses overnight. As such, US treasuries are simply free money for the rich and there will always be a demand for it.

The main error of these bond vigilantes is that they still think of currencies in terms of fixed exchange rate as in the gold standard or Bretton Woods era, which hasn’t been the case in our world for at least 50 years. It’s also why Austrians (and some neoclassicals) continue to believe in gold and crypto and bet on the dollar collapsing.

Correct. As I said, it’s real factor, not the nominal cost that matters.