How do you think about China lifelong tenure president Xi Jinping

[Drewjdeg]

Originally Posted by Avondalist

Xi Jinping cracked down on civil society and economic freedoms because he's preparing China for recession. Recession like Japan is inevitable given the demographics, and since China lacks a democratic pressure release, the government will be forced to suppress dissent to survive the end of fast economic growth.

I think it is more accurate to say that Xi Jinping is preparing China for self reliance. It is true that an aging population and rising wages will severely effect the manufacturing sector, and a recession may be a consequence of that.

However, Xi Jinping's belief is that China is wealthy enough to sustain itself via a service economy and advanced manufacturing (exporting HSR technology, etc.).

In my mind, it is weirdly similar to North Korea's Juche ideology of self reliance.

One other thing is that some prominent politicians in the CCP (allegedly) disagree. And according to them, China is too poor for an American style service economy and needs to retain its low cost manufacturing.

Will be interesting to see if a power struggle develops over this in the coming years.

[Camlon]

Originally Posted by Drewjdeg

I think it is more accurate to say that Xi Jinping is preparing China for self reliance. It is true that an aging population and rising wages will severely effect the manufacturing sector, and a recession may be a consequence of that.

However, Xi Jinping's belief is that China is wealthy enough to sustain itself via a service economy and advanced manufacturing (exporting HSR technology, etc.).

In my mind, it is weirdly similar to North Korea's Juche ideology of self reliance.

One other thing is that some prominent politicians in the CCP (allegedly) disagree. And according to them, China is too poor for an American style service economy and needs to retain its low cost manufacturing.

Will be interesting to see if a power struggle develops over this in the coming years.

China is focused on more than one thing. Self-reliance is just one of the many goals of CCP. If he really was this focused on self-reliance, he would provide support for domestic tech giants, not fight them.

You don't need to be very rich to be a service economy. To have a strong service economy, you need

• Efficient farming sector. More efficient farms mean cheaper food and more people that can work in the service sector.
• Efficient manufacturing sector. Strong manufacturing means cheaper goods and more people that can work in the service sector.
• Reasonable housing prices so people do not spend all their money on housing.
• Strong domestic companies that can provide cheap efficient services.
• Easy to relocate so that people can move to where jobs are.

The US is good at every single point above except manufacturing, which they import from abroad. That is why the US can have a strong service sector. China saw this a long time ago and reforming China to become a service economy been the agenda for a long time, it did not start under Xi. However, Xi has strayed away from these goals. He has not done much to reform the farming sector, he inflated the housing bubble to create growth, he did not make any reforms to the hukou system and he is now going after successful companies who provide to the service sector.

All of this shows the exact opposite. Xi is going away from focusing on the service economy and instead want to support the old economy such as SOE and manufacturing. He is probably more focused on making China strong so that other countries will respect China. I believe that his recent erratic behaviors is because he realizes that he is about to fail and he believes more control is necessary to prevent dissent and fight back.

And despite the propaganda, North Korea is not self-reliant. They had famine in the 90s, because Russia stopped supporting them and they are still heavily reliant on imports from China to have anything more than the basic necessities.

[Drewjdeg]

Originally Posted by Camlon

China is focused on more than one thing. Self-reliance is just one of the many goals of CCP. If he really was this focused on self-reliance, he would provide support for domestic tech giants, not fight them.

You don't need to be very rich to be a service economy. To have a strong service economy, you need

• Efficient farming sector. More efficient farms mean cheaper food and more people that can work in the service sector.
• Efficient manufacturing sector. Strong manufacturing means cheaper goods and more people that can work in the service sector.
• Reasonable housing prices so people do not spend all their money on housing.
• Strong domestic companies that can provide cheap efficient services.
• Easy to relocate so that people can move to where jobs are.

The US is good at every single point above except manufacturing, which they import from abroad. That is why the US can have a strong service sector. China saw this a long time ago and reforming China to become a service economy been the agenda for a long time, it did not start under Xi. However, Xi has strayed away from these goals. He has not done much to reform the farming sector, he inflated the housing bubble to create growth, he did not make any reforms to the hukou system and he is now going after successful companies who provide to the service sector.

All of this shows the exact opposite. Xi is going away from focusing on the service economy and instead want to support the old economy such as SOE and manufacturing. He is probably more focused on making China strong so that other countries will respect China. I believe that his recent erratic behaviors is because he realizes that he is about to fail and he believes more control is necessary to prevent dissent and fight back.

And despite the propaganda, North Korea is not self-reliant. They had famine in the 90s, because Russia stopped supporting them and they are still heavily reliant on imports from China to have anything more than the basic necessities.

I disagree. Xi wants a service economy that is loyal to the party. They cracked down on Jack Ma not because they wanted to crush Alibaba, but because they are afraid that these tech companies were becoming power centers that were able to subvert the power of the state.

Another example is the recent denial of all of these companies from having an IPO in US markets. In my view, they are not "going after" these companies necessarily, but they are trying to bolster their own domestic financial markets (another service industry) by denying them access to the US markets.

Also, I think Xi is trying to reform the manufacturing sector in the sense that they are now focusing on exporting more high value goods. That is one of the reasons China is in Africa, to develop an overseas market for their high value rail, hydroelectric, construction, etc. industries.

In my personal view, I think Xi will fail. Chinese tech companies won't be able to innovate and export compelling products from an authoritarian state that is increasingly cut off from global markets and the broader information landscape.

I think the demographic situation is huge headwind that is unlikely to be resolved, especially because China does not allow really immigration on a scale that could solve it.

Lot of issues for them that I don't think I can be resolved in the way that they are currently heading. That does not mean, IMO, that Xi doesn't want a service style economy, I just think he will probably fail.

[Camlon]

Originally Posted by Drewjdeg

I disagree. Xi wants a service economy that is loyal to the party. They cracked down on Jack Ma not because they wanted to crush Alibaba, but because they are afraid that these tech companies were becoming power centers that were able to subvert the power of the state.

Another example is the recent denial of all of these companies from having an IPO in US markets. In my view, they are not "going after" these companies necessarily, but they are trying to bolster their own domestic financial markets (another service industry) by denying them access to the US markets.

You can't have a service sector that is loyal to the party and still have a strong service sector. When you set up a new company or an existing company expands their business, then the main question should not be, "How do I make sure the government regulators approve of my company".

When the focus of companies becomes making the government happy, then companies stop taking risks and that will prevent innovation. And if you take away foreign funding, then an innovative business will depend on getting money from Chinese banks, who has favoured SOE for a long time.

The question then becomes, is Xi Jinping so stupid that he does not realize this is not good for innovation in the service sector, or does he know but he is focused on something else like making SOE stronger?

Xi Jinping calls for China’s state-owned enterprises to be ‘stronger and bigger

Also, I think Xi is trying to reform the manufacturing sector in the sense that they are now focusing on exporting more high value goods. That is one of the reasons China is in Africa, to develop an overseas market for their high value rail, hydroelectric, construction, etc. industries.

Sure, but at the same time, he is damaging his own efforts with wolf warrior diplomacy that makes him unpopular abroad.

Originally Posted by Drewjdeg

In my personal view, I think Xi will fail. Chinese tech companies won't be able to innovate and export compelling products from an authoritarian state that is increasingly cut off from global markets and the broader information landscape.

I think the demographic situation is huge headwind that is unlikely to be resolved, especially because China does not allow really immigration on a scale that could solve it.

Lot of issues for them that I don't think I can be resolved in the way that they are currently heading. That does not mean, IMO, that Xi doesn't want a service style economy, I just think he will probably fail.

I am holding the view that Xi Jinping does know what he is doing, and he knows that the service sector will get hurt, but he doesn't care because he has other things to focus on.

The way he is making his changes, show me a man who doesn't care how it affects the service sector. The crackdown on education does not provide a guide forward to what kind of business will be allowed. Right now, the big education centers are not doing anything hoping it was just empty words. The crackdown on DIDI and Alibaba also does not provide any guidance for what kind of IPOs are allowed, they have just stopped doing them altogether and it scared off foreign investors.

I have seen this kind of action before in other countries, and it is always fueled by ideology. They are not seriously trying to reform the IPOs or the education sector, they are just trying to show they are doing something.