In 1989, when the Tiananmen Square protests revealed that the economic reforms begun a decade earlier were creating a growing private sector and a desire for new freedoms, the party saw a golden opportunity for change. I welcomed you. However, liberalizing government institutions in response would undermine the party’s power. Instead, Chinese leaders have chosen to gun down protesters, further tighten control of the party, and indulge in government investments to stimulate the economy.
For a long time, no one cared. When economic or social threats rear their heads, as in the global financial crises of 1997 and 2007, Chinese authorities poured money into the industrial and real estate sectors to reassure the public. Investment-led growth sounded good, but it was far more than the country could digest, leaving empty cities and industrial parks, unfinished bridges to nowhere, abandoned highways and amusement parks. , which left a scar on China’s landscape, including airports with fewer flights.
Additionally, investment in industrial capacity has led to an explosive increase in exports as China has acquired industries previously dominated by foreign manufacturers, such as mobile phones, televisions, solar panels, lithium-ion batteries, and electric vehicles. caused it. Much of China’s economic “miracle” was created by American, European, and Japanese companies who were willing to transfer their technological know-how to Chinese partners in exchange for access to China’s perpetually growing market. Even as China protected its own market, this decimated Western manufacturing. But Western countries left it alone. Cheap products coming out of China kept American inflation in check for a generation, and Western countries clung to the hope that China’s economic expansion would eventually lead to political liberalization that never materialized.
To finance the government’s investment binge, the Chinese government allows local authorities to borrow money against land (all ultimately owned or controlled by the state) as collateral. Ta. This was like a drug. Municipalities borrowed like crazy, but had no real plans to pay them back. Many people are now so deeply in debt that they are forced to cut back on basic services such as heating, health care for the elderly and bus routes. Teachers’ salaries are not paid on time, and civil servant salaries have been reduced in recent years. Millions of people across China are paying mortgages on apartments that may never be completed. Start-ups are collapsing and few people seem to be able to find work.
To boost employment, the party has been telling local governments in recent years to encourage the creation of new private companies, with predictable results. In one prefecture in northern China, village secretaries keen to follow the wishes of the Chinese government reportedly asked relatives and relatives. A friend opens a fake company. One villager opened three tofu shops in one week. Another said he applied for 20 new business licenses.
