Economic Growth: Exploring Diverse Approaches with Consumption as the Cornerstone for Recovery

In response to China's economic downturn, the Chinese Communist Party has introduced various stimulus measures, yet doubts persist regarding their effectiveness. Key economic models have emerged in discussions about potential recovery paths:

1. **Return to Hu-Wen Model**: Some economists propose a massive 10 trillion yuan infrastructure plan to revive land financing, similar to past strategies. However, challenges like diminishing returns on infrastructure investment must be considered.

2. **Boosting Domestic Consumption**: Others advocate for policies aimed at enhancing social welfare and consumer spending, addressing inadequate social security and low disposable income levels to stimulate economic growth.

3. **Xi Jinping’s New Quality Productivity Model**: This strategy focuses on advanced manufacturing but risks fostering overcapacity and mismatches in supply and demand.

Overall, enhancing domestic consumption appears to be the most promising solution for revitalizing China’s economy, moving beyond reliance on infrastructure and exports.

Economic Growth: Exploring Diverse Approaches with Consumption as the Cornerstone for Recovery

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[Waverlyduli]

Thank you, Don. Very interesting. It always perplexes me how deeply disdainful the CCP is of public welfare expenditure on the poorer Chinese while it expects them to irrationally consume without regard for the future.

[stephenhenry]

Excellent analysis. Thank you for your insights and explanations.

[NikolayNikoloff]

5:16 - This is amazing statement which I support 100%!

[charliex]

10-15 years ago, I would recommend China taking a correction like everyone else during the 08 Global Financial crisis. After kicking this can down the road for nearly 2 decades, that major correction became an invetible collapse.😢

[kfpfk]

Don, your analysis is excellent. A planned versus a market economy: Which to choose? I don't think the CCP is ideologically capable of going with a market economy even though it is the gold standard for the most prosperous countries in the world. It will be interesting to see what happens.

[michaelpott]

The whole point of production is Smith

[raetalaward]

Thank you, Don. It's a very interesting topic, and I hope CCP will do as you suggest. Try to revive consumer consumption. I also think that providing welfare assistance to desperately needy citizens, especially medical care, would improve the economy. Surely, if doctors, nurses, and other essential service providers are not being paid, they can not support the domestic economy. I hope and pray action will be taken soon. Kind regards from Rae in New Zealand 🇳🇿 ❤

[velisvideos]

Excellent analysis, Don. I would like to add that China is facing another big problem: lack of confidence. Due to the opaque and highly hierarchical structure of the CCP there is no open discussion and preparation of policies. Rather, policies can change 180 degrees overnight. Also, there is no rule of law, and people and businesses can be shaken down by any number of authorities. Additionally, the lack of credible labor organizations and applicable labor laws imposes maximum insecurity on the labor force. Fixing this failings would go a long way to unleash entrepreneurship and consumer spending. Alas, it would likely also mean the collapse of the CCP, so don't hold your breath...

[parrotraiser]

Hayek explained why centrally planned economies are essentially flawed.

[Tewhill]

Those workers should seize the means of consumption.

[JamesBrown-pe]

Another excellent presentation!Well done!

[balintbosnyak]

Great analysis. I do have one thing to add. The 10t fiscal input should be put into consumption, however, there is not a choice between this technique and the new production forces economy of xi. These two economic practices can be done together, since one of them is an economic model and the other is an economic intervention, not a model. Also there is no way the CCP could put all 10 t in consumption since local government balance sheets are in trouble and need immediate support, thus a lot of economists like Peking university professor Michael Pedas advocates for around 3 t to local governments as a "health" package. Likely Xi will still use his new productive forces model after the economic stimulus which in the long term can erode margins. China does not seem to understand that the sole purpose and end of production is consumption.

[garrettwhite]

8:48 Thank-you for your calm and clear explanation of China’s economic choices. It is very interesting!!

[robertbraden]

Why is it so hard for Xi to understand the purpose of producing something is to consume it? You grow a vegetable in your garden with the purpose of eating it. Otherwise, you would not bother with the labor of a garden.

[sumiland]

But if Xi doesn't have the ability to empathize with the dear peoples of China, how can he ever make any decisions that will benefit the dear peoples?

[---dmvx]

INVESTMENT AND COMPANIES PULLED OUT FOREVER IT'S DONE

[trentmcevoy]

Thanks Don, what are your thoughts on the population of China

[MasticinaAkicta]

Consumption, with what money? Oh the money they have on their banks... the money that is stuck in bonds that are going belly up hence they can't really get to it. If not that they have debts on housing that is never going to be done. Or invested in a business for it to fail.
For Consumption you require money..and not debts. It isn't only their governments and local governments... if they have money they can't access it either. So... what money?

[parrotraiser]

There seems to be a serious correlation between urbanisation and declining population.

[charlesmagugi]

How do you make the populace consume more when they are in debt and their real estate is down 30%