Reading this debate on consumption is also a reminder that China isn’t just Xi. It has local interests, sectional interests, debt issues, etc. it’s not like there is just a knob in Xi‘s office where he turns consumption up and down. China would be better off rebalancing, but as you say, that means redistribution—income, capacity, labor, trade. Assuming they want to change, it’s a tough job. Having volatile US policy adds to the challenge.
Pettis knows his stuff. I may think he suffers from tunnel vision, but I am talking about newspaper class China discourse. Those are the people who think setting consumption rates is like setting interest rates.
We have had this discussion before but worth flagging again that it is perfectly possible for the state to take charge of providing high quality public infrastructure in a way that delivers benefits to workers equivalent to consumption and while from the outside it may look as if consumption is being suppressed to fund such infrastructure investment, it is not perceived or felt that way by workers who derive real tangible benefits from such infrastructure which by its nature could not be purchased on an individual basis. That is not a fanciful description of at headboard of how things operate in China. The extraordinary improvement of publicly available facilities - “free” goods delivering great benefits to people - is delivering massive benefits to ordinary Chinese workers. Their (narrowly defined) consumption may be suppressed but the diverted value is converted into tangible worker benefits through the state. In so far as such high quality infrastructure is also growth enhancing, which it clearly is, workers benefit from the faster growth of incomes and consumption.
Reading this debate on consumption is also a reminder that China isn’t just Xi. It has local interests, sectional interests, debt issues, etc. it’s not like there is just a knob in Xi‘s office where he turns consumption up and down. China would be better off rebalancing, but as you say, that means redistribution—income, capacity, labor, trade. Assuming they want to change, it’s a tough job. Having volatile US policy adds to the challenge.
Pettis knows his stuff. I may think he suffers from tunnel vision, but I am talking about newspaper class China discourse. Those are the people who think setting consumption rates is like setting interest rates.
We have had this discussion before but worth flagging again that it is perfectly possible for the state to take charge of providing high quality public infrastructure in a way that delivers benefits to workers equivalent to consumption and while from the outside it may look as if consumption is being suppressed to fund such infrastructure investment, it is not perceived or felt that way by workers who derive real tangible benefits from such infrastructure which by its nature could not be purchased on an individual basis. That is not a fanciful description of at headboard of how things operate in China. The extraordinary improvement of publicly available facilities - “free” goods delivering great benefits to people - is delivering massive benefits to ordinary Chinese workers. Their (narrowly defined) consumption may be suppressed but the diverted value is converted into tangible worker benefits through the state. In so far as such high quality infrastructure is also growth enhancing, which it clearly is, workers benefit from the faster growth of incomes and consumption.