China tears up the basis of neoliberal globalization
Farid Erkizia Bakht
Profound changes are occurring in China, which will impact its Asian neighbours.
China has made mistakes. Fortunately, for them, their successes have far outweighed the errors. Now that they have eradicated absolute poverty, they are acknowledging the cost of that breakneck growth over the last 30 years.
For a decade, they have been trying to tame the monster that is corruption. The environment is being cleaned up, though there is a very long way to go before it becomes an ecological civilization. Inequality has become the number one political problem to be solved.
is the new goal
This is not the prelude to a European-style welfare state. In terms of per capita income, China is still only at the level of Poland.
It has already embarked on “dual circulation,” which means it is no longer totally dependent on exports for markets overseas. Its own market of a billion consumers is being equal in weight and emphasis. Made in China for the West continues, but Made in China for China is the new dominant variant.
It is supposed to become technology for society, not society served on a plate for Big Tech. Europe wants to do the same, but its political class is under the heel of the big multi-nationals. Beijing has laid down the law in a direct head to head with its own multi-nationals.
The unprecedented level of Main Street savings has always been ploughed into property. The bad old ways of speculation now need a clean-up. One of the biggest companies, Evergrande, is sinking with an unpayable $300 billion debt. This is going to hurt. More will go into social housing, less into speculative private housing. Labour will earn a much larger share of GDP.
business is nervous
The Japanese-owned Financial Times of London has been covering these changes. One of its latest articles unfortunately prefers the old tropes, explaining as an attempt for the Communist Party to amass total control. It paints the latest changes as a return to the days of Cultural Revolution. In terms of geography and location, it is out by several thousand kilometres.
The Cultural Revolution of chaos and social upheaval is to be found in Modi’s India. It is the sub-continent’s superpower which is sinking in the politics of identity and religion.
China underwent all that in the first generation of its revolution. 70 years later, it is preparing itself for storms as well as the sunny uplands of wealthy status a century after the civil war. As is usual, China designates a test zone (in this case, Zhenjiang with a population the size of the UK) to work theory into practice. Then it will be rolled out to the rest of the country.
Chinese big tech has finally understood that it cannot continue as it were Google or Microsoft. In the West, big business towers over meek politicians. There too attempts are being made to bring fairness and equality back into the equation. Its capitulation to capital has been evident since its blank checks to the banks from 2008 and then during the pandemic for the 1%.
Tencent and Alibaba have promised to invest 100 billion yuan each (25 billion euros in total) towards the initiative for common prosperity, for innovation, development, better quality jobs, subsidies for small firms, and support to vulnerable groups. The so-called gig economy which means a precarious existence for tens of millions in the rich world and rich cities of the South is being curbed.
Soon it will, at least intellectually, no longer be acceptable to be filthy rich, gorging while others make do with less in difficult times. Trickle-down economics has ruled the global economy for 30 years. It is now set to be severely modified and later replaced. The sheer size of the planet’s largest economy, in terms of PPP, means that East Asia is signalling a new era is due.
Underpinning all this are profound debates on ideologies long-forgotten, such as Marxist-Leninism. This is not Revolution 2.0 in terms of the 1950s and 1960s. However, it is a shift from the days of “getting rich is glorious” to “let’s all share the growing pie more evenly.” Billionaire George Soros also put pen to paper for an op-ed in the FT. He is unhappy at the curbs and fully appreciates the significance of these developments. If you have been thinking China is just another capitalist society, like the rest, it is time for a re-think. Its political economy is not Western at all.
For a generation, it quietly hunkered down and worked in a Western-dominated structure of globalization. It is now discarding much of that model and rewiring it for the generation ahead. The purveyors of extreme luxury are having to amend their strategies.