Recently, a spokesperson from the China Household Electrical Appliances Association (CHEAA) published an article encouraging Chinese consumers to replace household appliances once they reach their shelf life. This is part of Xi Jinping’s policy of stimulating consumption in China.
Replacing Old With New
Guo Jun, the editor-in-chief of The Epoch Times Hong Kong edition, stated on NTD’s Chinese-language program “Pinnacle View” that while the CHEAA is not a government entity, the article published in the CCP Central Party School’s “Study Times” represents the view from the Chinese leader.She explained that Xi proposed the policy of replacing old with new to stimulate the economy at the end of last year’s CCP Central Economic Work Conference.
“The current CCP operates under a cult of personality, where all policies originate from Xi Jinping alone, making it China’s economic policy,” Ms. Guo said.
On March 13, the CCP’s State Council released an action plan to promote large-scale equipment renewals and trade-ins of consumer goods. This plan consists of two main parts. The first part requires industrial enterprises and infrastructure-related equipment to be replaced. The second part concerns ordinary people, calling for the trade-ins of consumer goods, including vehicles, home appliances, and home decor goods.
Ms. Guo explained that the key aspect is introducing new replacement standards since mere encouragement is not enough to motivate people. Therefore, there will need to be a mandate. This mandate will be based on new standards, such as fuel efficiency standards for cars, power consumption standards for household appliances, etc. Such standards have been first introduced in Guangdong Province on April 6.
Hu Liren, a former Chinese entrepreneur living in exile in the United States, said on the show that the CCP currently faces the major problem of many domestic businesses shutting down and foreign enterprises leaving China a few years ago. Some large state-owned enterprises, which used to be strong in production and mainly exported products, are reducing exports significantly due to political reasons.
The Wealth Gap
Shi Shan, senior editor and chief writer of the Chinese edition of The Epoch Times, said on “Pinnacle View” that the CCP’s authoritarian structure was established during times of crisis and designed as a wartime system.“This wartime system has many advantages, such as being more adept at mobilizing society and managing an economy prone to shortages,” he said. “However, its entire system lacks a mechanism to deal with surpluses in case there’s an excess of goods. It resorts to the same methods it uses to manage shortages to manage surpluses, which translates to forcing the people to buy, creating a very peculiar situation.”
Ms. Guo pointed out that by February this year, there were 140 trillion yuan ($19.3 billion) in private deposits in China, more than the country’s annual GDP. The CCP believes that as long as some of this money is spent, it will greatly stimulate the economy.
According to data from the China Merchants Bank, private banking clients with assets of more than 10 million yuan ($1.38 million) account for only 1.88 percent of customers and hold 81 percent of the total wealth, while the bottom 98.12 percent hold 19 percent of the wealth, with an average of only 25,000 yuan ($3,451) per person.
“The truly wealthy people are not concerned with consumption upgrades because they have likely already upgraded,” Ms. Guo said, “Instead, they are more interested in investments, focusing on the security of their assets and increasing their wealth. On the other hand, the bottom [98 percent] simply cannot afford consumption upgrades.”
She explained that the CCP is essentially forcing the bottom 98 percent of the people to upgrade consumption, essentially increasing their financial burden. To solve the consumption upgrade problem, the CCP actually needs to address the issue of unequal wealth distribution. It is necessary to address the problem of wealth disparity to achieve the current goal rather than forcibly increasing the debt of China’s poorest people.
“However, this is an impossible task because the wealthiest people in China are the [CCP elites] determining wealth distribution. So, this is the reason why the authoritarian system cannot solve the wealth gap problem, and why it cannot expand the domestic consumption market or sustain economic growth,” she said.
During the CCP’s Two Sessions in March, the Hurun Report’s research suggested that more than 80 Chinese billionaires attended the plenary sessions of China’s rubber-stamp Congress. The Party delegates at the Two Sessions consisted of the CCP’s elites and special interests. Under the authoritarian system, such wealth will never “trickle down” to the common people.
