2024-01-19 01:25:00
[KanzhongcomJanuary192024](Continued from the previous article) The Kanzhong.com website prohibits the establishment of mirror websites. Return to the genuine Chinese website.
To summarize the information we currently know: First, all the decisions made by the Chinese government in the past ten years have been completely wrong. The probability that these mistakes have been made unintentionally for ten years is infinitely close to zero. Second, industrial civilization and totalitarian regimes can only coexist for a generation at most. In other words, by 2014 or earlier at most, China will fall into a huge incompatible contradiction between the economic base and the superstructure. Third, this contradiction cannot be resolved. Either the economy or the political system cannot be protected, but both cannot be achieved at the same time. Combining these three pieces of information, we can only draw a firm conclusion: the Chinese government made a choice 10 years ago – to give up the economy and preserve the political system. It is forbidden to create mirror websites on Chinese websites. Return to the genuine Chinese website.
However, although such a conclusion is shocking enough to write a doctoral thesis in economics, if it can only go to this depth, then compared with the depth of previous annual long articles, this theory cannot even be considered superficial. , we must further ask, how to give up the economy? How to preserve the political system? What is the overall plan that the Chinese government can adopt? Only in this way can we clarify the past and see the future clearly.
Now, let us step into the perspective of the decision-makers of the Chinese government and take a look at it bit by bit. Suppose we ourselves are the decision-makers of a totalitarian regime, what should we do? Here, we must first clarify a piece of common sense in management: it is very difficult to build in this world, and mobilization alone is extremely difficult. It is extremely difficult to mobilize social capital and elite talents to unite to overcome the technical difficulties that are truly a bottleneck. However, it would be very, very easy to deliberately disrupt the economic order and bring about an all-round depression. Destruction is always easier than construction.
The first step is to package well, pretend to do a good job in the economy, and catch up with Europe and the United States. Although as a decision-maker, we no longer have any interest in developing the economy, in order to make the acting more realistic, we can formulate some slogans that look very inflammatory. For example, the slogan of surpassing the United States in 2050 is very good. On the basis of this slogan, you can also make up some industrial development plans that will not be implemented at all, and pile up a lot of clichés and nonsense, but ordinary people will be excited and full of fantasy, and they will not realize the cruel and de-industrialization process. Destiny is about to strike, which minimizes possible social resistance. After all, if we deindustrialize blatantly, it would be too simple and crude, and it would most likely provoke civil unrest, and the result would be difficult to control. But if you use a whole set of words to cover up your true purpose, then the next thing will be much easier to handle.
Next, as decision-makers, we must try our best to empty the pockets of the people and turn all the net wealth accumulated by the people in the previous 30 years into net liabilities, so that the people lose their ability to invest, lose their ability to develop industry, and lose their ability to invest. The ability to start a business freely can only turn into a debt-ridden beast, working hard without daring to complain at all. There is no doubt that if this can be realized, then the development speed of industrialization will basically return to zero. The vast number of small, medium and micro manufacturing enterprises will no longer be able to embark on a refined development path, and can only continue to be stupid, big, black and rough. , repeat production at a rudimentary level until it is naturally eliminated by the outside world. So, how to implement this? It’s very simple. Just go with the flow, push the real estate market bubble to continue to expand, and encourage all the people to speculate in real estate. As a result, in 2014, the real estate market showed signs of decline, and the original small bubble began to burst. When the market was about to return to a healthy development track, the “real estate destocking” policy came out in 2015, and banks, trusts, and funds desperately tried to They lend money to real estate companies, and banks try their best to encourage people to buy houses with mortgages. The more expensive they are, the better.
Changes in sales of commercial housing in China since 2000 (table compiled by the author)
As a result, the bubble was quickly inflated, and annual sales of commercial housing surged from 7.6 trillion in 2014 to 18.2 trillion in 2021. At this moment, people’s wallets were drained and they were unable to support the market. So the bubble burst immediately and the market shrank rapidly. The sales volume of commercial housing in 2022 will drop to 13.3 trillion yuan, and the sales volume in the first 11 months of 2023 will be 10.5 trillion yuan. The annual sales volume is expected to be just over 11 trillion yuan, roughly returning to the level of 2016. In comparison, this kind of shrinkage is far from enough. It will inevitably continue to shrink significantly in the future. It is necessary to shrink to the transaction scale of 2014, and then continue to shrink according to the economic downturn. We will analyze to what extent the real estate market may shrink later.
Incremental changes in real estate loans since 2012 (author’s table)
Here, we need to understand one thing first: when real estate was destocked in 2015, the Chinese government spent real money. The annual increase in real estate loans increased rapidly from 5 trillion in 2015 to 70,000 in 2016. billion, even reaching a peak of 9 trillion in 2020. Later in 2022 and 2023, as the real estate bubble burst, although the government shouted countless slogans to save the real estate market, there were no real money rescue measures. Corresponding to the data, the increase in real estate loans has dropped to the level of 6 trillion, reaching 6.35 trillion in the first three quarters of 2023. Considering that loan increases generally occur in the first half of the year, and banks are mainly chasing repayments in the second half of the year, the level for the whole year is about the same, and may be slightly lower. This also means that in 2023, the Chinese government will not spend much real money to save real estate. Therefore, we can draw the conclusion: the government spent real money to inflate the real estate bubble; but when the bubble burst, the government was not willing to actually spend money to rescue it. In other words, the central government deliberately inflated the real estate bubble. Real estate bubble, let it burst at a high level, then pretend to make a rescue gesture, and wait coldly for the natural death of the entire market. There is no real rescue action. In this process, China’s economy will of course suffer heavy losses, especially the local government debt crisis, which will make people shudder. However, what does it matter?
The real purchasers of local debt are various financial products and insurance products, which are fundamentally people’s money. Therefore, it is the people who really need to bear the storm of local debt. When local debts turn into bad debts, it is nothing more than further draining the wealth of ordinary people. For the decision-makers who are already rushing to “de-industrialization”, this is really a happy thing to see, and they can’t wait for the local debt crisis to break out soon. There is no doubt that we as decision-makers have also done a very good job in this second matter.
Now, we have to do the third thing – we have to quietly drive away foreign-funded enterprises. It is very troublesome to keep them. The arrival of foreign capital is the propeller for China’s industrialization process. The retention of foreign-invested enterprises will leave the spark for industrialization, which is absolutely unacceptable. Therefore, after 2014, the living environment of foreign-funded enterprises has begun to deteriorate. As reflected in the data, after the number of employees employed by foreign-funded enterprises reached a peak of 29.63 million in 2013, it turned downward. By 2022, it had dropped to 22.78 million, a decrease of 23.1%.
Evolution of employment in foreign companies (including Hong Kong, Macao and Taiwan companies) since 2000 (unit: 10,000 people. Table compiled by the author)
However, this decline is not enough, and it is far from meeting the requirements to eliminate the fire. Therefore, in 2023, the living environment of foreign-funded enterprises will further deteriorate. A series of combinations of “spy inspections”, tax inspections, information security inspections, etc. will come down. Foreign enterprises will The speed of escape has accelerated significantly, and basically all foreign financial companies in Shanghai have fled. By the third quarter, foreign direct equity investment in China had turned negative, negative 11.8 billion. At this rate, the number of employees employed by foreign companies in 2023 has probably dropped to less than 20 million. Within three years, except for a very small number of foreign companies that are really unable to withdraw, all others will withdraw from China. Obviously, as a decision-maker, we have accomplished this third goal well.
The evolution of the amount of foreign direct equity investment since 2018 (unit: 100 million U.S. dollars. Tabulated by the author)
Now we have to do the fourth thing: get rid of the dependence on foreign exchange for the issuance of RMB. For a long time, the issuance mechanism of RMB has mainly relied on the exchange of foreign exchange, and correspondingly formed “foreign exchange reserves” in the central bank’s assets. In 2000, when China had not yet joined the WTO, foreign exchange accounted for only 37.6% of the total. By 2013, it peaked at 83.3%. That is, in 2013, the central bank’s assets were basically obtained by exchanging foreign exchange. Since then, the situation has turned sharply, and the foreign exchange ratio has dropped rapidly, falling to 51.5% in 2022, and finally dropped to 49.9% in November this year, which means it finally dropped to less than half. From this moment on, foreign exchange holdings no longer have an absolute advantage among the central bank’s assets. This also means that RMB credit is no longer strongly bound to foreign exchange credit. While the foreign exchange ratio has dropped sharply, the central bank’s borrowing ratio from commercial banks has increased rapidly, from 4.1% in 2013 to November 2023. rose to 38.6%. The central bank’s borrowing from commercial banks is the “debt-anchored” money printing method that has been repeatedly explained before – the central bank prints base currency and lends it to commercial banks, and the commercial banks lend it to people to buy houses. Enterprises engage in production, especially for the most important purposes, and lend it to the government for infrastructure construction. The quality of these debts is very poor, so this also means that the credit foundation supporting the yuan is very poor. But it doesn’t matter. Eliminating the foreign exchange factor in the RMB issuance mechanism is very critical and is a necessary step for “deindustrialization”. Even if the RMB exchange rate depreciates to the beginning of reform and opening up, what does it matter?
Evolution of the proportion of central bank assets since 2000 (author’s table)
It has no impact on decision-makers. It is not enough to do these four things. You know, China’s manufacturing industry has a very strong ability to earn foreign exchange surplus. In the past four years, the goods trade surplus was US$535.1 billion in 2020, US$676.5 billion in 2021, and as high as US$877.6 billion in 2022. From January to November 2023, China’s relations with all European and American countries fell into a frozen state, but the goods trade surplus still reached US$748.1 billion. Facing such a strong export capability is a very headache for our decision-makers. We have now tried our best to eliminate the foreign exchange factor in the RMB issuance mechanism, but the surplus is so large that if we are not careful, foreign exchange accounts will reappear, and the commodity economy will become active again, seriously hindering our “de-industrialization” plan. . How to do it? We must try our best to prevent these surpluses from returning. Even if the money comes back, let it disappear from the financial system. As a result, in the past four years, the foreign trade surplus totaling US$2.84 trillion has completely disappeared, leaving no trace at the level of financial data. The central bank’s foreign exchange holdings and foreign exchange reserves have not only not increased, but have been decreasing; the foreign exchange deposits of domestic commercial banks are decreasing; the overseas assets of China’s banking industry are also decreasing, and China’s total surplus of US$2.84 trillion in the past four years has disappeared. Flying has become the biggest unsolved mystery in the global financial circle. Such a huge amount of funds, enough to shake the global financial market, can completely disappear under China’s strict foreign exchange control measures. This of course cannot be due to the negligence or ignorance of our decision-makers. This is of course the result of our active manipulation as a decision-maker.
At this point, we must summarize. As the decision-makers of a totalitarian government, we have taken five steps and achieved very good results. First of all, we use propaganda tools to announce various economic growth targets that we don’t care about at all, coaxing the people’s faces to look shiny and immersing them in the fantasy of the rise of a great power. Next, we used the real estate bubble as a big killer to completely clean up the wealth of the people across the country. Then, we concentrated on launching three big moves to deal with the most difficult external factors. We drove away foreign companies, lowered the foreign exchange factor in the RMB issuance mechanism, and hid massive foreign exchange surpluses. Next, we still face a very serious question: After “deindustrialization”, how should the Chinese people manage it? Is it okay to take care of it? Can you manage it?
Fortunately, this problem did not bother us for long. At the beginning of 2020, the sudden outbreak of the new coronavirus allowed us to experiment with a new management model: social suppression.
We divided the Chinese people into communities and grids, and kept them in place, not allowing them to move, work, or even buy daily necessities. We can conduct comprehensive tests, from international metropolises like Shanghai to the smallest rural areas, to see whether the people can accept the highly repressive management model, and to see how high their desire for freedom is. The test results are undoubtedly very satisfactory. Both Shanghai and Guangzhou can be completely banned for more than two months, and everything is calm and silent. As for the lower-level towns and villages, they can be sealed off as they want without any objection at all.
In the three consecutive years of social suppression experiments, the government has not even used the most basic violent methods. A casual phone call from the street office and a pull of a rope can make a community of thousands of people quiet to the point where even the dogs don’t bark. The Chinese people have no consciousness of fighting for freedom at all. The industrialization enlightenment of an entire generation has not planted the seeds of “freedom” and “fairness” in the brains of the Chinese people. At the end of the day, there were several so-called “blank paper incidents”. Some students held up blank papers and begged for mercy from our decision-makers. We just laughed at this and didn’t care at all. We can use countless violent or non-violent methods to deal with this low-level begging for mercy.
When things have developed to this extent, the national policy of “intentional depression” has undoubtedly reached the stage of reaping the final results. As a decision-maker, we have cleaned the Chinese people’s brains, cleaned their wallets, and cleaned out the most difficult external factors. At the same time, we have also experimented with the “Great Social Suppression” model to suppress the Chinese people. . There is no need to worry about any large-scale resistance. Then, of course, “deindustrialization” is an irreversible trend.
If you are at the decision-making level and see that all conditions have been fulfilled to this extent, you will probably wake up laughing in your dreams at night. You walk into 2024 happily and prepare to start the final harvest plan…
(To be continued)
Editor in charge: Yu Zhen
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