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They keep talking about fiscal cost as though money is a resource. MONEY IS NOT A RESOURCE. It’s an arbitrary medium of exchange. It’s only useful to measure money cost if you can translate it to either A) natural resource consumption, B) labor, C) externalities you want minimized, D) deepening ensnarement in foreign debt, or E) an increase in money supply disrupting exchange.
If China didn’t borrow internationally to make those investments, it didn’t get deeper into debt to it’s enemies.
If China isn’t seeing inflation, it didn’t flood the money supply.
No country has come even close to fully pricing its externalities and China uses democracy to manage those, so the fiscal cost doesn’t represent that.
If China has better things to do with its labor, then this could represent missed opportunities to do those better things. However, as we’ve seen, China has ever improving living conditions, infrastructure, education, cost of living, etc. It would be difficult for someone to argue what specific things that labor should have been allocated to.
And natural resource consumption is very much the same.
Writing an entire article about the ‘fiscal cost’ as though money is an actual resource with real use valuebis exactly the sort of brain rot to expect from the North Atlantic.
Well, in this case, they do have a valid point, in that the growth that China experienced was due to high amounts of capital investment rather than innovation per say. And as we know from the labor theory of value, high amounts of capital investment comes from a correspondingly high amount of the workforce being employed in producing the means of production (rather than consumption).
But to this point, there are 3 rebuttals
- Xi has made it a point to shift from factor based growth to innovation based growth
- An an underdeveloped country, China needs high growth in capital. The criticism about factor based growth only applies to fully developed countries. Lifting 800 million people out of poverty is proof that factor driven growth was the correct path for China to take
- China only became such a massive exporter of goods because the advanced capitalist countries de-industrialised. At the same time, these regions maintained high consumption due to imperialism. Chinese industry is forced to pick up the slack of America/Europe.
Rapidity of growth is based on starting conditions, available labor, available natural resources, AND the available technological state.
When the starting conditions are making maximum use of available technology with the super majority of labor being employed towards the domestic economy, then the limiter to growth is the available technological state. Innovation in this case becomes the driver for growth as the delta between what is currently possible and what innovation makes possible is the domain of growth.
But then the starting conditions are not making maximum use of available technology, when the majority of labor is employed making an imperialist leech richer, and when natural resources are dominated by imperialists, then the delta between current state and potential state is predominantly in labor, natural resources, and building known technological capabilities. Innovations cannot even be taken advantage of under those starting conditions, let alone developed.
The idea that a peasant society should either innovate beyond the state of technology of the imperialists or else should be tributary states is really just a position that everyone should be tributaries because innovation under imperialist dominance is not feasible as a means of growing an economy.
China’s shift to innovation is therefore not a question of strategy but rather if material conditions and the shift to innovation will emerge only in so far as it is made possible and feasible by labor participation in domestic enrichment, natural resource sovereignty, and development of globally-known technologies that lack uncertainties.
China’s shift to innovation is therefore not a question of strategy but rather if material conditions and the shift to innovation will emerge only in so far as it is made possible and feasible by labor participation in domestic enrichment, natural resource sovereignty, and development of globally-known technologies that lack uncertainties.
This is exactly the case. China has developed to the point where it can seriously consider a change in priorities. Of course, the overall course is still to race towards prosperous socialism but with changing material conditions* come changing tactics.
*the big one being Chinese labor becoming more expensive and Chinese industry becoming highly automated.
Say the Line, The Economist!
But at what cost?
Haha, I was just going to post that. It’s such a cliché:
Made in China 2025 has, then, achieved most of its aims. But at what cost?
And of course the cost is… not enough consumer spending and services. Right. (with a tiny nod towards healthcare.)
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But that performance required enormous inputs of capital.
Obviously. That’s how the economy grows you buffoons.
The economy as a whole has fared badly on measures of “total-factor productivity” (TFP), which try to capture the growth in output that cannot be explained by increases in capital or labour.
I had a whole response typed out, but honestly, unless the article starts giving actual data and what the goals of the government were, any comment I make is just speculation.
Interestingly enough, I found a book that shows that TFP may almost be entirely a product how efficiently an economy processes energy resources. Although I doubt this is what the author of the article had in mind. Instead, they were probably thinking about some business magic racial supremacy number of something.
A different policy mix could have encouraged greater household spending, not capital spending, and flourishing services, not manufacturing muscle. These two shifts could have complemented each other nicely.
The existing policies of high capital spending and focus on manufacturing also complement each other. And have the benefit of picking up the whole world’s slack from the de-industrialisation of America/Europe/Japan.
it is difficult to imagine the Communist Party under Mr Xi pursuing a different strategy. “They basically think that rich countries are those that make stuff and the richest countries are those that make the most advanced stuff,” says Gerard DiPippo of the RAND Corporation, a think-tank.
Bruh
But at what cost? The fiscal expense is impossible to calculate. One attempt by the Centre for Strategic and International Studies, a think-tank, estimated that China spent over 1.7% of GDP on industrial policy in 2017-19, which would add up to over $3trn in today’s dollars if sustained for a decade. That money could have been spent on other things, such as health care, which might have better served the public
Or they could have funneled those trillions into the private pockets of a few billionaires.
LIKE LORD VOLDEMORT from Harry Potter,
Literally the first line lmao was this meant to be a parody
