July 23, 2021
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It would be interesting and convenient to understand the situation of Chinese government if we use "poverty alleviation (扶貧)" as our entry point.
Two points should be clear here: objectively, the performance of lower-level officials has improved. On the other hand, however, the government's control logic has greatly regressed, and its level of institutionalization has seriously deteriorated.
Let us start with the second point. Government is part of society, made up of citizens, providing public services to citizens across families and communities wherever possible, and is essentially a public instrument. Although this concept once existed within the party after the "reform and opening up (改革開放)", it ended with the end of liberalization after the Tiananmen massacre, which debunked the party’s propaganda that portrayed itself as the servant of the people since the founding of PRC. The masses now realized that the government, in essence, works as their ruler rather than as their servant, that the people exist as a dependency of this authoritarian regime, and the government is just an institution that manages the people in the way managing its resource units.
When the need arises, the regime will pretend to have a democratic government through establishing formal institutions and providing all kinds of public services, but the underlying logic is that "you can take what I give you, but you cannot ask anything that I have not given to you." The dilemma is that an authoritarian regime needs money to suppress any potential risks and providing extra public services that needs extra money will threaten its ability to do so. After Deng’s southern tour (南巡) in 1992, the party elites allowed the government to expand its role when the economy was rising. Although they tried to regulate it, they did not try to interrupt such natural process of transition. The same applies to the Hu-Wen era.
The biggest problem of the Xi Jinping era is that the party elites have completely rejected the theory that the government is a public instrument, and the goal of controlling the society has changed from governance to dominance. Therefore, all policies are optimized only to securitize the operation of the government, not to make the government serve the citizens more efficiently. This leads to the fact that although some things are getting better, they are not the result of subjective willed reforms, but may instead come from the benign development of the natural order of society after the economic framework was set in place decades ago.
The unfair development of the past, which brought about local problems of maintaining stability, is a natural reflection of the backwardness of the system, not a deliberate attempt to keep the injustice. The present approach to maintain stability, on the other hand, is subjectively about achieving a deterrent effect, without slightest restraint in the side effects of abusing power, namely the degradation of level of institutionalization. So, as you can see, the quality of low-level officials did improve when Xi Jinping first came to power, mainly because more university graduates were involved in the grassroot institutions, and they were naturally more educated. Xi’s anti-corruption campaign once had a chilling effect within party and curbed corruption in the first few years, which was also due to the fact that the market and the society had matured while the societal institutions had become more adaptive. Nevertheless, corruption has never been eradicated.
In other word, the level of institutionalization has significantly increased during the first years of Xi Jinping era. Both the structural optimization within the party and the influx of external talents contributed to the government’s self-renewal. Then in the first year of deep reform (深改元年, i.e., 2014), many problems began to emerge, and a series of "far-sighted" policies were announced, including campaign-style poverty alleviation movement as well as the pilot free trade zones that almost foundered now. In general, the notion of “the first year of deep reform” signaled the beginning of Xi’s rule through leading small groups (領導小組) from the party center.
Until this point, the authority was still optimizing its operating environment. Some remarkable reforms include replacing the business tax with value-added tax (營改增), expanding central government’s fiscal authority, streamlining governmental departments, announcing ambitious infrastructural policies, as well as external projects like the Belt and Road initiative (一帶一路) and the Asian Infrastructure Investment Bank (亞投行). These policies marked the highest level of institutionalization pushed by the establishments inside the government before a significant fallback that took place afterwards.
For example, optimizing the debt structure, making debt swaps, extending the debt cycle and lowering interest rates in a disguised form. All these tactics tightened the control over invisible debts and debt issuance channels thus extended the life of local governments, which were all rational decisions made after a very sober realization of its own crisis, at the cost of a deeper damage to the Chinese society. Especially after that, the bad policies that expose the essence of the authority become more and more obvious. The authority now comes up with stupid ideas about the peasants’ homesteads (宅基地) while restricting them to sell their land moving to city (see also Hukou system).
Now let us move back to the issue of poverty alleviation. There is a saying that “teach a man to fish and you feed him for a lifetime”. To be more specific, the authority should concentrate its resources on helping the vulnerable groups, rather than the "poor areas" in the statistical sense. A common phenomenon is that a poor region remains poor due to its undeveloped economic base even if it has received substantial financial assistance.
(This part could not be verified by the translator and is therefore omitted)
In addition, China's economy has reached the window period in which it must transform itself and cannot be delayed any longer. The official solution is “internal circulation (內循環)”, which means to build an economy oriented by domestic demands. But Xi’s government is absolutely unwilling to improve labor treatments by allowing independent trade unions and thus stimulates consumption growth. You can see that there is nothing the authority can do to stimulate domestic consumption, except to promote the industrial investments. Why not allowing independent trade unions? Because the authority controls the labor market through state violence and earns through allowing the enterprises to exploit the cheap labor forces it owns.
Further, the prevalence of 996 (i.e., work for 12 hours a day and 6 days a week) working hour system is not only because the big companies like Tencent need it, but their producing mode has been restrained. The censorship of cultural and entertainment products from movies to TV-series ensured that everything is controlled by the party. The web novels were targeted by the authority, they were censored and banned in a large scale. The China Literature Limited (閱文集團) was purged but not reorganized, let only the oligarchs take control, and the authority in turn controls the oligarchs. Such phenomenon can be seen in almost every sector.
Copyright registration number (版號) is a good example of that. Videogames – the composite products of creativity, entertainment and technology – have almost been choked by this system. The authority does not care whether SMEs live or die, and the aim is to force these people to give up their entrepreneurship and move to white-glove oligopolies controlled by the government, so they can exercise deep control over the whole industry. If you give up, someone else will replace you, and the labor price can be depressed indefinitely. If you do not apply for a registration number and choose to release your product on the foreign platforms, as long as you still live on the mainland, your company's operations will hit a wall, leaving you as a Chinese independent developer unable to earn from Chinese consumers.
A registration number is just like a manufacture license, which becomes a tool to control the economy. The frontier industries that China could have overtaken the developed countries were destroyed just because the authority cannot fully control it. Web novels, videogames, movies, TV series, none said Chinese cannot make them, but the regime that rules China does not allow its people making them.
As for real estate – the most vital part of people’s livelihood, the government’s strategy is still to maximize its profit and minimize its cost. Once the real estate prices fall, the executive power will intervene. It is reasonable to do so in a short period in order to prevent panic selling, but the internal logic is to sacrifice the benefits of owners, no matter if they are private landlords or developers, and to provide some buffer for further governmental reactions. The public housing program introduced from Hong Kong has practically failed as well. The outdated tax-sharing system (分稅制) made local governments unable to pay the cost of social welfare, and forced them to live on land transaction fees (土地出讓金). As a result, houses have turned into luxuries from living necessities.
The party tries to reform everything, which indeed made some progress, but basically everything is getting worse. One of the things that impressed me most was the reform of public health insurance, which banned the use of better medical supplies in order to reduce the total spending. The doctors of public hospitals are not even permitted to pay for patients using their own health insurances. Any personal expenditure above the given quota is no longer tolerated (P.S. most governmental officials or “old cadres” are not subjected to this).
The authority’s way of shifting responsibilities is forcing the public hospitals to accept the executive orders that prohibits any spending that exceeded the limit. The bad results are ultimately undertaken by the patients. Then it is advertised to the public that the government has included many, many diseases into the health insurance. But no word is said about the reduction of medical expenditures. The fact is that the government reduced its medical spending and the quality of healthcare plummeted, not to mention that the authority even tried to promote disgusting TCM injections with force as alternatives of imported drugs.
Let us talk more about the issue of real estate mentioned before. China’s average habitable land per capita is completely enough for building a Japanese-style detached house or even a larger one. But the outdated tax-sharing system and household registration system (戶籍制度) that restricted personal access to public services determined that Chinese cities are pig farms of the party. The “pig farms” should neither be too bad, with migrant workers (農民工) willing to provide cheap labor, nor too good, otherwise the authority will lose control on their self-development.
Xi’s administration has been emphasizing “bending the curve” (彎道超車) in high-tech industries, but very little has been achieved. This is because technological innovation requires a friendly environment with weak administrative intervention and sound laws. Now the government’s efficiency has objectively improved, but is it fair and equitable? It messed up almost everything it cannot control.
Back in 2015, the hottest topic for Shanghai was to surpass Hong Kong in terms of free trade and financial judiciary. But now, not only the free trade zone died, but even the structure of international financial center is not yet in place. The local financial disputes still need to be resolved in Hong Kong. Yet the reality is that in a society as large as China, which desperately needs multiple financial centers and a sound financial judicial system to enable the investment, consumption and distribution of vast amounts of money. However, the authority cannot even do a good job of pivotal coordination.
To put it bluntly, the party under the leadership of conservatives like Xi Jinping, can only adapt labor-intensive industries. It worries that the Chinese society will become uncontrollable after industry upgrading. But if it chooses not to upgrade, it will be unable to pay the increasingly high operating costs. So, it began to compete against the people for profits and strictly control the public opinion. It is unnecessary to discuss the details of manipulating public opinion here. As we have witnessed recently, the campaign-based “dynamic zeroing (動態清零)” policy has caused negative impacts on both individual freedom and national economy. The party monopolized all power and voice, but it tried desperately to cover up the case of the Xuzhou chained woman incident.
The government of more than a billion people was as powerful as ever at the end of the first round of the pandemic. Less than two years later, however, the eccentric atmosphere of “thanksgiving (感恩)” is all over the place. Then to the Russo-Ukrainian war, the authority‘s attitude is callous but hesitant. The most infuriating thing is that the government shows no sign of institutionalization and is losing its rationality rapidly. Most of the time I do not think it is about ideology or saving face, those are not dominant reasons. What really matters is that the party is now facing an existential crisis of losing resources.
There are indeed things getting better in some respects, but no one knows whether it is because the society itself is improving or whether it is primarily the result of government actions. Nevertheless, the reason why the social environment is getting worse can be found in the government's decisions. The government is obliged to find a way solving the problems, and it is miserable to be ruled by a government that does not allow its people to find the solutions.
A quick summary (translated from https://old.reddit.com/r/China_irl/comments/tc8x87/论近年国内民生状况与政府关系/i0dn35k/ ):
The authority is now well aware that China urgently needs a new round of bottom-up reforms at the economic and political levels. Many of the slogans chanted at the 18th National Congress, such as "free trade zone", "financial center", etc., have almost bankrupted by the 19th National Congress due to various problems with the distribution of power within the party.
The policies such as "poverty alleviation", "healthcare reform", "stability maintenance" and suppression of labor rights activists implemented by the government in recent years are all aimed at continuing the existing political (e.g., hukou system, tax-sharing system) and economic (labor intensive industries) framework that has been in place since the 1980s without major changes.
Maintaining the old economic model entails increasingly high administrative costs raised from political campaigns, censorship and state violence. The government has been trubled by the financial pressure and is therefore adjusting its strategies, but unfortunately in the direction that is increasingly against the people's interests.
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