Using Fakery and deception to steal the economy, another masterpiece. The CCP demand side reforms

Russia Moscow Katyusha Farm, Wen Qiang

The so-called demand for side reforms was first proposed by the Communist Party at its  meeting of China’s Politburo on December 11, 2020. The meeting concluded the following explanation for the demand and supply-side reforms: first, structurally control the demand-side reforms. At the same time, emphasizing the importance of supply-side reforms, demands through tackling choke points, an improvement on shortcomings, streamlining production, distribution, circulation and consumption. Which will create a demand driven supply chains, leading to a high level of balance within the supply chains. Ultimately, increasing the overall effectiveness of the national economic system. Second, adhere to the strategy to expand domestic demand and strengthen the strategic and technological support.

For the Communist Party to achieve these goals, they need to boost consumption and expand domestic demand. Keep in mind, due to the pandemic China’s internal economy is on a deteriorating trajectory. Therefore, by analyzing the various relevant data in recent years will help us determine the feasibility of these goals.

Let’s start with China’s consumption figures compared to the US. Since 2007, the total retail sales of consumer goods in China have increased significantly, and the gap between China and the United States has been narrowing rapidly. By 2019, the total retail sales of consumer goods in the Chinese Communist Party were 411649 billion yuan, while the total retail sales of consumer goods in the US were 6,237.557 billion USD. According to the State administration of Foreign Exchange. In 2019, the total retail sales of consumer goods in China were 270.332 billion U.S dollars less than that of the US.

On the other hand, according to the data from the National Bureau of Statistics of China, in 2019, the GDP of China is 99086.4 billion yuan, of which fixed asset investment is 5,551478 billion yuan, accounting for 55.7%, and the total retail sales of consumer goods are 4,11649 billion yuan, accounting for 41.5%. In terms of proportion, consumption accounts for a relatively low proportion of the economy of China, while investment accounts for the highest proportion of the GDP of China. Therefore, China’s GDP is still dominated by capital investment and that conflict with the consumption-oriented economy.

To put things in perspective, household consumption as a share of GDP in developed countries. At 2019, the per capita GDP of the Chinese people reached 10,276 U.S dollars, passing the 10,000 U.S dollar mark for the first time. In the US, Japan and South Korea per capita GDP topped 10,000 U.S dollar in 1978, 1981 and 1994 respectively.

When per capita GDP exceeded 10,000 U.S dollars in China, the share of US household consumption reached 60.5% of the GDP. Japan and South Korea are lower than the US, but also at 53.9% and 51.8% respectively. The share of household consumption to GDP in China is only 38.8%, 21.7% lower than the United States and 15.1% lower than Japan during the same stage of development. China is significantly lagging behind developed countries such as the United States and Japan.

From the perspective of the average consumption tendency (defined here as the ratio of consumption expenditure to disposable income), when the per capita GDP exceeds 10,000 U.S dollars, the average consumption tendency of American residents is 87.0%, while the   Japanese residents is 79.2%. The average consumption tendency in China is only 70.1%. This means that at the same income level, Chinese citizens are willing to spend less money.

Under the CCP, What is the reason causing ordinary people to be afraid, unwilling or even unable to spend?

First, higher leverage ratio restrains the consumption power of Chinese residents. 

When the per capita GDP of the United States, Japan and South Korea exceeded 10,000 U.S dollars, the household leverage ratio of the three countries was very close at around 48%, while the household leverage ratio of China has reached 55.2%. Thus, the leverage ratio of China’s household sector may have exceeded the normal level of its economic development stage.

According to data released by Suning Institute of Finance, from 2008 to 2016, the household debt ratio of The Chinese Communist Party again showed a rapid rise, with the ratio soaring from around 18% to around 45%. As of mid-2019, the debt ratio of Chinese households reached 55%. It is worth noting that the housing sector has been a major driver of increased leverage. By the end of 2019, the leverage ratio of China’s housing sector was 55.8%, compared to 52.1% at the end of 2018, it went up 3.7 percentage points in a year. The high debt burden has reduced the discretionary income of residents, especially urban residents, leading to a decline in their spending power. At present, the cash liquidity of Chinese residents is basically exhausted by mortgage loans, resulting in the inability of ordinary people to spend under the Communist Party’s ruling.

Second, the imperfect social security system makes people afraid to consume.

According to the World Bank, China’s government spending on health care was about 2.9% of the GDP in 2017. In comparison, during the same time the US and Japan were 8.6% and 9.2% respectively. Also At 4.4% of the GDP, South Korea spends less than the US and Japan, but more than China.

According to the data released in the 2019 Statistical Communique on National Economic and Social Development, by the end of 2019, the total number of people participating in the basic old-age insurance for urban workers and the old-age insurance for urban and rural residents in China was about 967.54 million. Therefore, among the 1.4 billion people in China, there are still about 500 million people without pension insurance.

By 2018, more than 45% of Chinese citizens had a savings rate higher than the average in developing countries and double that in developed countries. The imperfect social security system has increased the demand for precautionary savings, which hindered the growth of consumption, thus causing the people under the rule of the Communist Party to be afraid to spend.

Lastlythe proportion of the elderly is too high and the overall social willingness to consume is reduced.

The Communist Party’s brutal one-child policy created a demographic rift that began in the 1980s. There are an increasing number of elderly people. According to the National Bureau of Statistics of China, by the end of 2019, there were 253.88 million people aged 60 or above, accounting for 18.1%. By 2050, the number of people over the age of 60 is expected to exceed 34%, meaning the Communist Party has entered an aging society. Historically, when Japan population that is above the age of 60,  accounted for 20% of the society, Japan entered the so-called low desire society, because the person is older leading to lower consumption. When the national elderly increases, the whole society’s consumption will remain at a very low level. And now China has entered a low consumption state, which was created by the rule of the communist party of China, more and more people are reluctant to spend.

Therefore, no matter from the perspective of social security, mortgage pressure or demographic structure, it is impossible for the current Chinese Communist Party to attempt to boost consumption at a practical level. The demand for side reform is basically an unachievable goal.

Judging by the 5G big data and digital currency launched last year, this so-called demand for side reform means that the Communist Party wants to control the people’s consumption. Specifically, when the digital yuan is promoted, coupled with 5G big data monitoring, the Communist Party can use these to manipulate everyone’s consumption habits and control consumer demand. The first step is to encourage people to buy domestic goods and resist imports. Second, the communist party will use digital yuan to create electronic food coupons combining with the SCM system to control the consumption of the people. The digital currency can only be used internally within the people’s communes. At the same time, detailed records of how much and what consumer goods were purchased will be recorded. In the age of total information control, no one can reserve supplies and food in advance. People will live under the planned economy, which means the Communist party controls the sky above you, the land below you, and the air you breathe, the era of slavery has arrived.

In recent years, the Communist government has embarked on a series of so-called innovations and reforms. But only two things have changed. First, the size of the wallet of the party leaders and their families. Second, the right to live as a Chinese citizen. For a Ponzi economy run by the Chinese Communist Party, any reform would end up completely worthless.

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