Market-Leninism

SOYMB reads that Huang Rixin, former engineer turned Beijing landlord, has made a name for himself in recent months producing cage-like, 21.5-square-foot living spaces dubbed “capsule apartments” for the capital’s burgeoning class of jobless and underemployed college graduates. Taking Japan’s famous capsule hotels for inspiration, Huang has improved on previous iterations of his pod houses by doubling the size of the rooms and including more shelf space. Huang views his pods, with rent of about $51 a month, as a cost-effective way to house the estimated 3 million recent university graduates seeking employment or earning less than the average starting salary of approximately $400 a month. His capsule apartments highlight the social and economic problems that belie China.

China is now the world’s second biggest economy. The Chinese manufacture more than half the computers in the world. A single factory in Guangdong churns out more than 40 per cent of the world’s microwave ovens, so yours was probably made there too. Your children are playing with toys made in China, as 70 per cent of them are.

Yet per-capita income has simply not kept pace, and millions of people have been left out of the nation’s economic miracle. China’s per-capita income, at around $6,600, is closer to that of Turkmenistan or El Salvador, rather than to the U.S.’s $46,000 or even Japan’s $33,000. In short: Too little of what China produces ends up consumed by the Chinese themselves. In essence, China is still the largest potential market in the world for virtually everything, however, Chinese wages are currently so low that consumers simply are unable to contribute to domestic consumption unless serious wealth redistribution or salary adjustment occurs.

The Communist Party of China has retained a grip on every significant lever of power in China. Richard McGregor, the author of the recently published The Party: The Secret World of China’s Communist Rulers wrote “Most people in China have little day-to-day contact with the Communist Party [of China]. It’s like a radio in the background. As one young woman said: ‘We don’t care about the party, we only care about parties.’"

But McGregor reporter for the Financial Times and a former correspondent in Beijing, also says “The state still controls all the most important sectors of the economy including telecommunications, transport, energy and banking. The genius of the Chinese communists has been to encourage state-owned commercial entities to compete with one another...The Communist Party in China has changed in nature. It wants to make a profit. It is no longer a party of workers and farmers. In the past five years or so, private entrepreneurs have been encouraged to join. The Communist Party welcomes capitalists now... the Communist Party has hitched its continuing survival to capitalism.”