A deep dive with some numbers you may not see elsewhere
From Michael Roberts Blog — blogging from a Marxist economist, August 8:
A December 2020 meeting of the Chinese Communist party Politburo, vowed to end what it called a “disorderly expansion of capital”. The Chinese leaders were worried that the capitalist sector in China had got too big for its boots. Companies like Jack Ma’s Ant Group had expanded into consumer financing and looked to raise foreign funds to do so. In effect, the Ant Group aimed to take over household lending from the state banks. Ant was going to do what it liked and said so with a lot of fanfare in the press. Ant and other Chinese capitalist tech and media companies were increasingly engaged in typically ‘Western’-type mergers, secret contracts and other financial irregularities.
China’s regulators had been turning a blind eye to all this for years. Moreover, the financial faction in China’s leadership had got agreement to allow foreign investment banks to set up majority-owned companies in China for the first time, with the eventual aim of ‘freeing up’ the finance sector from state control and allowing unregulated cross-border capital flows. In other words, China was set to become a full member of international finance capital. The authorities were also allowing uncontrolled cryptocurrency mining and operations in the country.
But the COVID pandemic changed all this. There was growing public anger at how the rich in China, as in the rest of the major economies, have gained hugely from the financial and property price boom during the pandemic, while the majority struggled through the lockdowns and faced increased costs in education, health and housing and a serious risk to decent jobs for graduates and others. Education, health and housing are the ‘three mountains’ that all Chinese households aim to climb to get a better life – and yet costs for these were spiralling while the rich made millions.
Now the Chinese leadership has been forced to zigzag back from ‘disorderly expansion’ and respond to the public backlash through a crackdown on the consumer tech and media giants and by introducing curbs on private education and speculative property development. It has also banned cryptocurrency operations.
Take education. The vast majority of Chinese parents pay for extracurricular private tutoring – survey estimates range from 65% of families with school-aged children in 2016, up to 92% this year. A 2019 survey from recruitment firm 51job Inc showed nearly 40% of parents spent 20-30% of their income on children’s education. The private classes come at eye-watering costs that contribute to an industry worth more than $150bn (£108bn). The quality and resource of education varies greatly between urban and rural areas, from province to province, and between top- and lower-tier cities. There are few university places relative to the number of students and even fewer at prestigious universities, which are concentrated on the east coast and in major cities. It is in these areas where private tutoring has exploded in the past decade. Now China’s state council is barring for-profit companies from tutoring in core curriculum subjects and foreign investment in such companies....
....MUCH MORE
