新年快乐! We wish you a happy New Year 2025!
In recent years, the days between the years have not been quiet everywhere: In 2020, the political agreement on the CAI investment agreement between the EU and China was pushed through shortly before New Year’s Eve. In 2022, things were bubbling over in the People’s Republic at the end of the year following the White Paper Protests due to the strict Covid measures. In today’s edition, we give you an overview of what happened between the years in 2024.
The tightening of state control from Beijing over Chinese society over the past decade is particularly at odds with the government’s goal of boosting consumption, writes US economist Stephen S. Roach in today’s Opinion. According to Roach, this raises a fundamental question: Is China’s political system incompatible with modern consumer culture?
Investigations into beef: The Ministry of Commerce in Beijing has launched an investigation into beef imports. The background to this is that an oversupply of goods is causing problems for Chinese cattle breeders. Depending on the outcome of the investigation, suppliers from Brazil, Argentina, and Australia may face sanctions in the form of higher import duties. The Chinese authorities are therefore scrutinizing imports of fresh meat, beef heads, and frozen beef. According to the ministry, the investigation was initiated by Chinese livestock associations. They complain that the sharp increase in import volumes has “seriously damaged” the domestic industry.
Express line to Ningbo: JadeWeserPort in Wilhelmshaven now has a direct shipping line to Ningbo. A new express line will call at Wilhelmshaven from the Chinese port city in 26 days. The first ship is on its way and is scheduled to arrive on Jan. 24. The line is unique as a direct connection between China and Northern Europe. From Wilhelmshaven, the goods continue by rail to Budapest, but also by ship to the coast of the USA.
Anti-dumping investigation extended: The Chinese Ministry of Commerce has extended the anti-dumping investigation into brandy from the European Union by three months. The investigation, which began in January 2024, was supposed to be completed in one year. However, due to the “complexity” of the investigation, it will be extended until April 5, the ministry said in a brief statement, without providing further details. The three months is less than the full extension that would be allowed. Since October, China has imposed temporary anti-dumping measures against brandy from the EU. Importers of brandy from the EU have to pay an additional duty of between 30.6% and 39%.
Hong Kong offers bounties for democracy activists: Police in Hong Kong have issued arrest warrants for six democracy activists living abroad and offered bounties of one million Hong Kong dollars (about USD 129,000) for tips leading to their arrest. The activists are accused of, among other things, secession, subversion, and collaboration with foreign forces. Those affected include Chloe Cheung, Carmen Lau, and Tony Chung, who have declared that they will continue their work despite the arrest warrants. The government also had the passports of seven other activists canceled under the National Security Act, including prominent figures such as Frances Hui. Human rights organizations sharply criticized the measures as transnational repression and a breach of international standards.
Comac delivers further C919s: The state-owned Chinese aircraft manufacturer Comac has completed the year 2024 with the delivery of ten more C919 jets. The aircraft were handed over to domestic airlines. With the delivery of these aircraft, Comac has a total of 14 C919s in operation. Most of the aircraft are operated by China Eastern Airlines, which has a total of nine in its fleet. China Southern Airlines currently operates three C919s, while Air China has two.
Xi reaffirms relationship with Russia: China’s President Xi Jinping has reaffirmed China’s relationship with Russia in a New Year’s message to Russian President Vladimir Putin, according to media reports. According to the state news agency Xinhua, Xi said that the People’s Republic and Russia would move forward “hand in hand” on the “right path, without entering into alliances, without confrontation and without targeting third countries”. China is willing to further deepen Sino-Russian relations and continue the close exchange with Putin, he added. Putin also conveyed New Year’s wishes to Xi. Both countries pledged their support in their roles as chairmen of the BRICS states and the Shanghai Cooperation Organization (SCO).
China’s short video market has apparently reached its peak: The number of users on apps such as Douyin, Kuaishou, and WeChat has fallen for the first time, according to an industry report. The total number of users of short video apps in China reached 1.05 billion at the end of June – around 300 million fewer than in December 2023, according to a report by the broadcasting regulator National Radio and Television Administration (“中国短视频发展研究报告” (2024)) published on Monday.
Zhengzhou bans phones in schools: Zhengzhou has banned the use of cell phones in elementary schools, secondary schools, and vocational schools – the first city in the country to do so. Schools must adhere to strict restrictions on bringing cell phones onto school grounds and “no cell phones are allowed to be brought into classrooms except for teaching purposes,” according to last week’s decision by the Standing Committee of the People’s Congress of the Henan capital. Schools must also install “appropriate” public telephones so that students can contact their parents if necessary.
Chinese fleet makes stop in Vietnam: Despite their long-standing disputes over the South China Sea, China and Vietnam are apparently moving closer together on defense issues. A Chinese naval fleet has stopped off in Vietnam a few days after talks on joint sea patrols. The fleet – led by the destroyer “Changsha” and the amphibious ship “Jinggangshan” – docked in Da Nang on the east coast of Vietnam on Saturday, according to a statement from the Southern Command of the People’s Liberation Army. The fleet was welcomed by Vietnamese navy officials and Chinese diplomats. Amelie Richter/Fabian Peltsch
China’s technological prowess is quite simply outstanding. From world-class infrastructure and eco-friendly cities to space systems and high-speed trains, China’s impressive accumulation of cutting-edge physical capital has played a major role in its economic development. However, China’s technical achievements on the supply side do not translate to its socio-technical efforts on the demand side, especially in boosting consumer demand.
The discrepancy stems from the country’s modern political system, which emphasizes stability and control. While this orientation has enabled China to become the world’s “ultimate producer,” it has failed to unlock the DNA of Chinese consumers. Social engineering through state diktat stands in stark contrast to the incentive-based, permissive, individualistic spirit that characterizes human behavior and consumption patterns in the West. With household consumption still accounting for less than 40 percent of China’s GDP – compared to around 65 percent in advanced economies – China has little to show for its long-standing rhetoric about consumption-driven rebalancing.
The US experience, as depicted in John Kenneth Galbraith’s Abundant Society, decodes the DNA of a consumer society. Key features include the upward mobility of income and wealth, open communication and the dissemination of information, individualism and the ability to make free choices, the reduction of lifestyle inequality, the intergenerational transfer of wealth, and finally the ability to elect political representatives. Western consumerism is very much an aspirational model of life.
This raises a fundamental question: Is China’s political system incompatible with modern consumer culture? This question is all the more pertinent given the technological authoritarianism recently pursued in China, which appears to be at odds with the fundamental freedoms on which consumer culture is based. Recent technological advances (particularly in facial recognition and other forms of surveillance), combined with a social credit system and tightened censorship, are almost diametrically opposed to consumer society as we know it in the West.
Ultimately, it is much easier to mobilize the state apparatus to exert influence on producers than to grant consumers basic freedoms. This goes back to the early days of the People’s Republic when China’s producers were under the strict control of the State Planning Commission. And it applies again today, as the pendulum of Chinese economic power has swung back from the once dynamic and entrepreneurial private sector to state-owned enterprises.
The tightening of state control over Chinese society over the past decade is particularly at odds with the government’s goal of boosting consumption. In 2013, shortly after taking office, President Xi Jinping launched an education campaign embracing the concept of the “mass line” to combat four “bad habits” – formalism, bureaucracy, hedonism, and extravagance – which he believed were the main causes of social decay and corruption within the Chinese Communist Party. These efforts, which were initially seen as an ancillary aspect of Xi’s anti-corruption campaign, have since taken on a life of their own.
Xi intensified his focus on bad habits in 2021 with a crackdown on internet platforms, targeting not only Chinese entrepreneurs like Jack Ma of Alibaba, but also the so-called lifestyle excesses associated with video games, online music, celebrity fan culture, and private tutoring. These state-led social engineering measures indicate that the Chinese authorities have little tolerance for the sense of possibility and optimism embedded in the DNA of Western consumer societies.
Another example of this mismatch between ambition and regulatory mentality is China’s repeated attempts to tackle the demographic headwinds of a shrinking labor force, which will continue to decline until the end of this century as a result of the now-abandoned one-child policy. The Chinese government has recently announced measures to increase the birth rate, including better support for childbirth, expanding childcare, and other steps to build a “birth-friendly” society. However, this is just the latest in a series of measures following the adoption of a two-child policy in 2015 and a three-child policy in 2021.
Despite these efforts, the birth rate in China remains well below the replacement level of 2.1 live births per woman of childbearing age needed to sustain the population. Survey data points to two reasons: concerns about the soaring costs of raising children and the deeply ingrained cultural norms of the nuclear family. The latter point underscores the behavioral aspects of the problem – namely, that a generation of younger Chinese has become accustomed to one-child families. This very human resistance to the government’s attempt to enforce family planning practices is not dissimilar to Beijing’s strategy to increase consumer demand.
The key to unlocking Chinese consumer potential is to turn fear into confidence. This requires nothing less than a fundamental shift in the mindset that underpins household decisions. But this is where the government has reached an impasse. Creating incentives for human behavior is very different from asking state-controlled banks to boost lending for infrastructure projects or state-owned companies to invest in real estate.
I admit that I am looking at a Chinese problem from a Western perspective, and experience has taught me that you have to look at such problems from the perspective of China itself. Nevertheless, the increase in consumption touches the core of the human experience: is a thriving Chinese-style consumer culture, which contradicts the ethos of aspiration of Western societies, even possible?
The ultimate solution to the problem of chronic under-consumption in China may well depend on these profound reflections on human behavior. A recent meeting of China’s Central Economic Conference hinted at further strong consumer stimulus. But if the Chinese authorities continue to insist on tightening their control over social norms and the human spirit, all the stimulus measures in the world – from trade-in campaigns to social safety net reforms – could be in vain.
Stephen S. Roach teaches at Yale University. He is the former chairman of Morgan Stanley Asia and the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Editor’s note: Discussing China today means – more than ever – engaging in controversial debate. We want to reflect the diversity of opinions so that you can gain an insight into the breadth of the debate. Opinions do not reflect the opinion of the editorial team.
These pupils from an elementary school in Handan in Hebei province wish “Hello 2025” from a bird’s eye view. Even though the Chinese Year of the Snake does not begin until the end of January with Chinese New Year, the calendar transition to the year 2025 was also celebrated in China, for example with a large “controlled” fireworks display in the city of Foshan in Guangdong province.
新年快乐! We wish you a happy New Year 2025!
In recent years, the days between the years have not been quiet everywhere: In 2020, the political agreement on the CAI investment agreement between the EU and China was pushed through shortly before New Year’s Eve. In 2022, things were bubbling over in the People’s Republic at the end of the year following the White Paper Protests due to the strict Covid measures. In today’s edition, we give you an overview of what happened between the years in 2024.
The tightening of state control from Beijing over Chinese society over the past decade is particularly at odds with the government’s goal of boosting consumption, writes US economist Stephen S. Roach in today’s Opinion. According to Roach, this raises a fundamental question: Is China’s political system incompatible with modern consumer culture?
Investigations into beef: The Ministry of Commerce in Beijing has launched an investigation into beef imports. The background to this is that an oversupply of goods is causing problems for Chinese cattle breeders. Depending on the outcome of the investigation, suppliers from Brazil, Argentina, and Australia may face sanctions in the form of higher import duties. The Chinese authorities are therefore scrutinizing imports of fresh meat, beef heads, and frozen beef. According to the ministry, the investigation was initiated by Chinese livestock associations. They complain that the sharp increase in import volumes has “seriously damaged” the domestic industry.
Express line to Ningbo: JadeWeserPort in Wilhelmshaven now has a direct shipping line to Ningbo. A new express line will call at Wilhelmshaven from the Chinese port city in 26 days. The first ship is on its way and is scheduled to arrive on Jan. 24. The line is unique as a direct connection between China and Northern Europe. From Wilhelmshaven, the goods continue by rail to Budapest, but also by ship to the coast of the USA.
Anti-dumping investigation extended: The Chinese Ministry of Commerce has extended the anti-dumping investigation into brandy from the European Union by three months. The investigation, which began in January 2024, was supposed to be completed in one year. However, due to the “complexity” of the investigation, it will be extended until April 5, the ministry said in a brief statement, without providing further details. The three months is less than the full extension that would be allowed. Since October, China has imposed temporary anti-dumping measures against brandy from the EU. Importers of brandy from the EU have to pay an additional duty of between 30.6% and 39%.
Hong Kong offers bounties for democracy activists: Police in Hong Kong have issued arrest warrants for six democracy activists living abroad and offered bounties of one million Hong Kong dollars (about USD 129,000) for tips leading to their arrest. The activists are accused of, among other things, secession, subversion, and collaboration with foreign forces. Those affected include Chloe Cheung, Carmen Lau, and Tony Chung, who have declared that they will continue their work despite the arrest warrants. The government also had the passports of seven other activists canceled under the National Security Act, including prominent figures such as Frances Hui. Human rights organizations sharply criticized the measures as transnational repression and a breach of international standards.
Comac delivers further C919s: The state-owned Chinese aircraft manufacturer Comac has completed the year 2024 with the delivery of ten more C919 jets. The aircraft were handed over to domestic airlines. With the delivery of these aircraft, Comac has a total of 14 C919s in operation. Most of the aircraft are operated by China Eastern Airlines, which has a total of nine in its fleet. China Southern Airlines currently operates three C919s, while Air China has two.
Xi reaffirms relationship with Russia: China’s President Xi Jinping has reaffirmed China’s relationship with Russia in a New Year’s message to Russian President Vladimir Putin, according to media reports. According to the state news agency Xinhua, Xi said that the People’s Republic and Russia would move forward “hand in hand” on the “right path, without entering into alliances, without confrontation and without targeting third countries”. China is willing to further deepen Sino-Russian relations and continue the close exchange with Putin, he added. Putin also conveyed New Year’s wishes to Xi. Both countries pledged their support in their roles as chairmen of the BRICS states and the Shanghai Cooperation Organization (SCO).
China’s short video market has apparently reached its peak: The number of users on apps such as Douyin, Kuaishou, and WeChat has fallen for the first time, according to an industry report. The total number of users of short video apps in China reached 1.05 billion at the end of June – around 300 million fewer than in December 2023, according to a report by the broadcasting regulator National Radio and Television Administration (“中国短视频发展研究报告” (2024)) published on Monday.
Zhengzhou bans phones in schools: Zhengzhou has banned the use of cell phones in elementary schools, secondary schools, and vocational schools – the first city in the country to do so. Schools must adhere to strict restrictions on bringing cell phones onto school grounds and “no cell phones are allowed to be brought into classrooms except for teaching purposes,” according to last week’s decision by the Standing Committee of the People’s Congress of the Henan capital. Schools must also install “appropriate” public telephones so that students can contact their parents if necessary.
Chinese fleet makes stop in Vietnam: Despite their long-standing disputes over the South China Sea, China and Vietnam are apparently moving closer together on defense issues. A Chinese naval fleet has stopped off in Vietnam a few days after talks on joint sea patrols. The fleet – led by the destroyer “Changsha” and the amphibious ship “Jinggangshan” – docked in Da Nang on the east coast of Vietnam on Saturday, according to a statement from the Southern Command of the People’s Liberation Army. The fleet was welcomed by Vietnamese navy officials and Chinese diplomats. Amelie Richter/Fabian Peltsch
China’s technological prowess is quite simply outstanding. From world-class infrastructure and eco-friendly cities to space systems and high-speed trains, China’s impressive accumulation of cutting-edge physical capital has played a major role in its economic development. However, China’s technical achievements on the supply side do not translate to its socio-technical efforts on the demand side, especially in boosting consumer demand.
The discrepancy stems from the country’s modern political system, which emphasizes stability and control. While this orientation has enabled China to become the world’s “ultimate producer,” it has failed to unlock the DNA of Chinese consumers. Social engineering through state diktat stands in stark contrast to the incentive-based, permissive, individualistic spirit that characterizes human behavior and consumption patterns in the West. With household consumption still accounting for less than 40 percent of China’s GDP – compared to around 65 percent in advanced economies – China has little to show for its long-standing rhetoric about consumption-driven rebalancing.
The US experience, as depicted in John Kenneth Galbraith’s Abundant Society, decodes the DNA of a consumer society. Key features include the upward mobility of income and wealth, open communication and the dissemination of information, individualism and the ability to make free choices, the reduction of lifestyle inequality, the intergenerational transfer of wealth, and finally the ability to elect political representatives. Western consumerism is very much an aspirational model of life.
This raises a fundamental question: Is China’s political system incompatible with modern consumer culture? This question is all the more pertinent given the technological authoritarianism recently pursued in China, which appears to be at odds with the fundamental freedoms on which consumer culture is based. Recent technological advances (particularly in facial recognition and other forms of surveillance), combined with a social credit system and tightened censorship, are almost diametrically opposed to consumer society as we know it in the West.
Ultimately, it is much easier to mobilize the state apparatus to exert influence on producers than to grant consumers basic freedoms. This goes back to the early days of the People’s Republic when China’s producers were under the strict control of the State Planning Commission. And it applies again today, as the pendulum of Chinese economic power has swung back from the once dynamic and entrepreneurial private sector to state-owned enterprises.
The tightening of state control over Chinese society over the past decade is particularly at odds with the government’s goal of boosting consumption. In 2013, shortly after taking office, President Xi Jinping launched an education campaign embracing the concept of the “mass line” to combat four “bad habits” – formalism, bureaucracy, hedonism, and extravagance – which he believed were the main causes of social decay and corruption within the Chinese Communist Party. These efforts, which were initially seen as an ancillary aspect of Xi’s anti-corruption campaign, have since taken on a life of their own.
Xi intensified his focus on bad habits in 2021 with a crackdown on internet platforms, targeting not only Chinese entrepreneurs like Jack Ma of Alibaba, but also the so-called lifestyle excesses associated with video games, online music, celebrity fan culture, and private tutoring. These state-led social engineering measures indicate that the Chinese authorities have little tolerance for the sense of possibility and optimism embedded in the DNA of Western consumer societies.
Another example of this mismatch between ambition and regulatory mentality is China’s repeated attempts to tackle the demographic headwinds of a shrinking labor force, which will continue to decline until the end of this century as a result of the now-abandoned one-child policy. The Chinese government has recently announced measures to increase the birth rate, including better support for childbirth, expanding childcare, and other steps to build a “birth-friendly” society. However, this is just the latest in a series of measures following the adoption of a two-child policy in 2015 and a three-child policy in 2021.
Despite these efforts, the birth rate in China remains well below the replacement level of 2.1 live births per woman of childbearing age needed to sustain the population. Survey data points to two reasons: concerns about the soaring costs of raising children and the deeply ingrained cultural norms of the nuclear family. The latter point underscores the behavioral aspects of the problem – namely, that a generation of younger Chinese has become accustomed to one-child families. This very human resistance to the government’s attempt to enforce family planning practices is not dissimilar to Beijing’s strategy to increase consumer demand.
The key to unlocking Chinese consumer potential is to turn fear into confidence. This requires nothing less than a fundamental shift in the mindset that underpins household decisions. But this is where the government has reached an impasse. Creating incentives for human behavior is very different from asking state-controlled banks to boost lending for infrastructure projects or state-owned companies to invest in real estate.
I admit that I am looking at a Chinese problem from a Western perspective, and experience has taught me that you have to look at such problems from the perspective of China itself. Nevertheless, the increase in consumption touches the core of the human experience: is a thriving Chinese-style consumer culture, which contradicts the ethos of aspiration of Western societies, even possible?
The ultimate solution to the problem of chronic under-consumption in China may well depend on these profound reflections on human behavior. A recent meeting of China’s Central Economic Conference hinted at further strong consumer stimulus. But if the Chinese authorities continue to insist on tightening their control over social norms and the human spirit, all the stimulus measures in the world – from trade-in campaigns to social safety net reforms – could be in vain.
Stephen S. Roach teaches at Yale University. He is the former chairman of Morgan Stanley Asia and the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Editor’s note: Discussing China today means – more than ever – engaging in controversial debate. We want to reflect the diversity of opinions so that you can gain an insight into the breadth of the debate. Opinions do not reflect the opinion of the editorial team.
These pupils from an elementary school in Handan in Hebei province wish “Hello 2025” from a bird’s eye view. Even though the Chinese Year of the Snake does not begin until the end of January with Chinese New Year, the calendar transition to the year 2025 was also celebrated in China, for example with a large “controlled” fireworks display in the city of Foshan in Guangdong province.
