The 20th National Congress of the Communist Party of China is approaching. Xi Jinping’s re-election seems to have no suspense. The eye-catching and suspicious Beidaihe story is no longer new. In the real world, the story of the capital group being reorganized and the wealth of the prosperous industry evaporated. Various speculations are coming, and Wall Street analysts are cautious. They only say that they are policy adjustments and worry about the prospects of foreign investment in China. There are two classic sayings from overseas Chinese media: Xi Jinping is about to engage in a planned economy, and Xi Jinping is about to close the country. Wall Street analysts check it out because they are outsiders; but if you are familiar with China’s political economy, you will understand that this round of rectification is not a “chaotic cloak” type of heavy blow. , The implicit axis-the strategic goal is to adjust the public and private weights of the economy and capital.
The background and principles of Xi Jinping’s rectification of the industry
Let me talk about the background conditions first: Why is 2021 the year of Xi Jinping’s major adjustments? I think there are two reasons:
In domestic politics, Xi Jinping believes that the conditions for his re-election are ripe, and no one in the party has the strength to challenge his authority. He has finally succeeded in “borrowing from heaven for another ten years” (or more), and it is time to realize his economy. Blueprint: Reshuffle of ownership at the economic level; in terms of the international situation, Xi Jinping’s judgment has two well-known sayings: “East rises and west falls” and “China can look at the world.” This year’s China-US Alaska talks and the Tianjin talks, China’s aggressive attitude without retreat, shows that Xi Jinping and his think tank really believe that the United States will fall into an inevitable process of decline after 2020.
Next, let’s talk about the principle of rectification. Regarding whether Xi wants to engage in a planned economy, I wrote an article as early as 2018, “Can China Return to the “Administrative Economy” Era? “, pointed out the many political and social conditions for China to implement the planned economy in the hairless era; I can write a special article about the latter in the future, but this article simply wants to point out: China’s economy is highly dependent on the international market, whether it is resources or the market. To close the country is tantamount to suicide. So, Xi Jinping has recently made frequent shots in various industries. One industry today and a group tomorrow. Is it really an unruly “chaotic cloak” punch?
It’s really not. If you understand Xi Jinping’s economic insights and statements over the past few years, you will find that these rectifications are entirely Xi Jinping’s implementation of his own economic thinking. To adjust the economic structure, including the weight of the state-owned economy and the private economy, and strengthen the CCP’s control over industries that are related to the national economy, the people’s livelihood, and the safety of the regime, the key words are two: the industry is free from the virtual to the real, and the capital structure is to adjust the weight of public and private capital.
The common denominator of the reorganized industries: virtual economy
On July 29, the US Goldman Sachs Group released a review on China’s economic rectification: Since November 2020, Chinese regulators have taken more than 50 actual or reported actions involving antitrust, financial In the areas of data security and social equality, at least one action is taken every week.
Didi, the first to be rectified, is said to be involved in network information security, because the China Cyberspace Administration of China announced that “according to the report, after testing and verification, the’Didi Travel’ App has serious illegal collection and use of personal information problems”—— It belongs to the service industry, taxi-hailing service.
The off-campus training industry has been rectified and compressed with three purposes: 1. To serve the diversion of education. It was considered in 2005. After 2007, it entered the “regular position war” and had no time to take care of it; 2. Gradually reduce study abroad and consume education. Stay in the country; 3. The strategic positioning of “learning fully in the government”-the education and auxiliary industry is the service industry;
Takeaway platform. The following is a complete picture of the economic and social benefits of the food delivery industry: In 2019, the scale of China’s food delivery industry was 653.6 billion yuan. As of December 2020, the number of users reached 419 million, accounting for 42.3% of the total netizens. The takeaway user group mainly includes high-paying white-collar workers (no time to cook); secondly, they are urban college students, who are relatively resident and do not like to go out. According to Meituan data, in 2019, the post-90s and post-00s take-out user groups accounted for more than 60%. (Analysis of the market status and development trend of China’s food delivery industry in 2020, third- and fourth-tier cities will become new breakthroughs in the industry)
Game industry: “China Game Industry Report 2020”: Market revenue increased by 20% to 278.6 billion, breaking through 100 billion for the first time overseas; in 2020, the number of game users in China reached 665 million, an increase of 3.7% year-on-year. The government is happy to make money to boost GDP, but on the other hand, “Internet addiction” has become a social cancer that is second only to “drug addiction.” The incidence of Internet addiction among Chinese youth has reached nearly 10%. It is not only reflected in the impact on physical health, It is also reflected in causing cognitive impairment.
The medical beauty market is growing rapidly. From 2015 to 2020, the scale of China’s formal medical cosmetology market has grown from 63.8 billion yuan to 151.8 billion yuan, and various legal disputes are often reported in the press. On June 10, eight ministries and commissions including the National Health Commission, the Central Cyberspace Administration of China, and the Ministry of Public Security jointly issued the “Special Rectification Work Plan for Combating Illegal Medical Beauty Services”, and decided to jointly launch the fight against illegal medical beauty services from June to December 2021. Service special rectification work.
The common feature of the above industries is that they belong to the service industry. The so-called “barbaric growth” problems summarized by the CCP’s senior officials basically exist. The industry has made money and left a lot of problems to the society. The food delivery industry seems to have no problems. Presumably, the authorities believe that this kind of service encourages young people’s laziness, homecoming, and games. These industries all belong to the service industry (virtual economy), and they do not belong to the service industry for which the national economy cannot operate normally without it.
Here I have to explain why the US investment banking industry does not understand why the Chinese authorities are cracking down on these industries. Although the progressives of the U.S. Democratic Party and the Chinese Communist regime both learned from the same ancestor Marx, the waters and soils of the two countries are different, and the standards for how to transform “new socialists” are even more different. The American progressives have now entered the stage of lifelong welfare, remediation of sexual organs, sex change, and legal anaesthesia. Xi Jinping’s “new socialist” is completely different from the ultra-left progressives in the United States. They listen to the party and follow the party. They must work hard, live a healthy lifestyle, and bad habits such as Internet addiction and narcotics should be banned. Every time China catches it in Western countries When the drug dealers were sentenced to death, they had to try to rescue them, but the Chinese government remained unmoved. It was almost a standing diplomatic play. In cracking down on the above-mentioned industries, the United States only sees the loss of money and the evaporation of capital in the eyes of the United States, and cannot understand the social significance of the Chinese government’s move.
Why does Xi Jinping hate the “virtual economy”?
After Xi Jinping took office, the biggest risk in the economic field was financial risk, and the source of financial risk was the fact that a large amount of funds was “off the real to the virtual”, real estate and asset bubbles (P2P, financial fraud) and other huge “gray rhinos” squatted. There, it was hard to implement the “six stability” policy, which made financial stability maintenance a top priority, and it took a lot of effort to rectify it. This kind of ruling experience has made Xi Jinping in his bones disgusted and vigilant about China’s economic “virtual economy”-the “virtual economy” including the tertiary industry. For example, in 2017, China began to rectify the financial market. Deng’s family and Sun Ma Wu Xiaohui’s Anbang was impressively registered. The official media unanimously claimed that this was the central government’s “financial anti-corruption aimed at the de-realization of funds and asset bubbles”-not hesitating to commit crimes. The Deng family will also have a battle, and Xi’s determination can be seen here.
From then on, Xi Jinping regarded the development of a manufacturing-based real economy as the top priority of adjusting the economic structure. This process is called “bringing from the virtual to the real”, and it was officially proposed around 2017. It is under the guidance of this strategic thinking that China has the “Made in China 2025” that has made the United States popular, accusing it of plagiarizing, stealing, and copying American intellectual property. After the two-year trade war with the United States, the Wuhan virus spread to the world. When the epidemic was raging, China also tasted the benefits of economic “removing from the virtual to the real”: medical and health supplies and daily life that countries urgently need due to the epidemic. , Electronic products, etc., have become the main pillars of China’s export growth.
In other words, before 2017, China had tasted enough of the economic development of China’s capital “from the real to the virtual”. Since 2020, it has finally tasted the benefits of “bringing from the virtual to the real” in developing industries. This process prompted Xi Jinping to make up his mind to start industry rectification, but manufacturing is not included in the rectification.
The Wall Street Journal understood this point. On August 9th, it published an article “China hopes that the manufacturing industry will provoke the economic beams, not the Internet”, pointing out the fact that at the same time that China is adopting regulatory and rectification measures on the technology industry, The government continues to provide substantial subsidies and protections to manufacturers. But the analysis said that it was Xi Jinping who was wary of the challenge to power in the scientific and technological field.
In fact, Xi Jinping himself has said many times before that the need to develop the technology industry. This worry is the problem that the 2020 U.S. election will cause heads of government around the world to suffer. As Google, Facebook, Twitter, Youtube and other high-tech companies that master information dissemination have seriously intervened in the U.S. election and manipulated public opinion, causing anxiety among allies in the United Kingdom, Australia and other countries, including Brazil and other Latin American neighbors. I hope that similar phenomena will not occur in this country. The country has passed legislation and fines to restrict the behavior of these companies. China wants to restrict such companies to include their domestic counterparts in China in a far simpler and more straightforward way than in Western countries.
This method of adjusting the structure of the industry through political rectification is too lethal and its prospects are unclear. However, compared with the US Biden administration’s false “green economy” and the “removal of reality to the virtual” policy orientation of capital flow to the refugee industrial chain, Americans’ worries about China’s economy can only be said to be “a hundred steps of laughter”. Fifty steps”-China has recovered from the “removal from reality to reality” that began during the Hu and Wen period, and it is about to “break away from reality to reality.” From the real to the fictitious, China has retreated from a hundred steps on this wrong road to the present fifty steps. The Biden administration of the United States is running happily on this road.
(Sister article: “Strategic Goals of China’s Industry Reorganization: Adjusting the Public and Private Weights of the Economy”)
The Epoch Times
Editor in charge: Zhu Ying
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