China politics fact or estimate of the day

This is perhaps the best and most instructive one I have heard:

…Mr Xi’s authority remains hemmed in. True, his position at the highest level looks secure. But among the next layer of the elite, he has surprisingly few backers. Victor Shih of the University of California, San Diego, has tracked the various job-related and personal connections between the 205 full members of the party’s Central Committee, which embodies the broader elite. The body rubber-stamps Mr Xi’s decisions (there have been no recent rumours of open dissent within it). But the president needs enthusiastic support, as well as just a show of hands, to get his policies—such as badly needed economic reforms—implemented. According to Mr Shih, the president’s faction accounts for just 6% of the group.

That is from The Economist.  Along related but not identical lines, here is a good story of the weak control of the Chinese central government:

Through July, claimed capacity reductions were less than half the target for the year (and less than 40% of the target for coal capacity reduction).  Some provinces were reported by the NDRC to have achieved only 10% of their annual targeted cuts.

…This resistance has led to more and more shrill directions from Beijing to act on instructions.  Now Beijing is sending out 10 inspection teams across the country to check on claimed capacity removal and to require follow through on additional closures.  I have one suggestion for them: The only way to ensure a closed plant remains closed is to physically destroy or remove key pieces of equipment.  Otherwise don’t be surprised when it starts back up again.

Don’t forget this:

Many steel mills are the key employer and tax payer in their city. In boom times, they might have provided as much as 30% of the tax revenue for local government.  Workers from the steel mill were at the forefront of buying property in the town, creating a positive cycle of additional demand for housing and steel.  If these workers are now laid off, even with one-time transfers from the center, local government faces an enormous challenge in trying to find new jobs for people who have been in a steel mill all their life.  They can’t all become part-time Uber/Didi drivers. Many government officials see delay as the most logical course of action.

That is from Gordon Orr.


'local government faces an enormous challenge in trying to find new jobs for people who have been in a steel mill all their life'

The disadvantages of feeling the state cannot rely on passive workers simply losing their existence to economic vagaries/realities. If they just followed the American model, the local government could just hand out massive tax breaks to attract new industry, and have no concern that such blatant tax giveaways would lead to rioting from workers unwilling to accept the idea that the rich getting richer is the highest goal of society.

I doubt it. Never heard of a riot caused by tax breaks in the USA. Also the state does a lot of stupid stuff that's popular, like subsidize US sports stadiums, and nobody riots over that.

Is it IRONic that an article on steel is written by certain Gordon ORR? (no relation to Bobby [Fischer]) Iron. Man, that's ironic.

'Never heard of a riot caused by tax breaks in the USA.'

Maybe that was poorly phrased - the idea being that the Chinese authorities need to worry about how Chinese workers losing their existence will react, in comparison to the U.S., where workers seem to merely accept their fate passively, without threatening the power structure that makes decisions. Do note how this web site like to emphasize how French or German taxi drivers/companies have responded to Uber in ways which would be unthinkable in the U.S.

That's basically the opposite of what has been reported/implied for some years now.

It's ironic that The Economist would lecture China to adopt stricter austerity measures. Such measures have worked wonders in Europe.

If you define austerity as "not increasing spending as much as we said we would" and shoveling gobs of money in from other countries, then yeah, it's exactly like Europe.

This seems to be much more about over supply of iron/steel than about austerity.

Sounds like classic prisoner's delimma - everyone hoping others shutdown the spigot whilst hoping to benefit from all the price increase resulting from the drop in supply

I find it hard to believe that after this many years solidly at the top and engaging in a thorough-going purge and gaining the reputation of being the strongest leader of China since Mao that Xi has only 6% of his faction in the Central Committee. What other factions have the other 94%? Zhang's? Hu's? I thought Hu was weak on that front. Are we still talking about a remnant Deng faction? I would expect that the Zhang faction would be the biggest, but I this 6% figure for Xi has got to be some wild underestimate, even if he does not have a majority.

As for lack of central control over the Chinese economy and society, this is not remotely a new story. Indeed, it is more like it has always been this way with only an occasional exception (mostly during the most extreme episodes of Mao's rule). As the old saying goes, "The mountains are high, and the emperor is far away."

Is this anything other than classic central-planning stupidity? If these mills (and localities) can continue to make steel, let them do it. If the price falls and they're no longer competitive, they'll stop on their own.

Hmm... Maybe one way to implement federalism is to have a one-party system with multiple factions that agree to choose the weakest faction's leader as prime minister.

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