People in China increased spending as their personal incomes increased through the 1990's, 2000's, and even 2010's, but the cracks began to show during the COVID19 shutdowns, where the CCP had very strict closures that forced many business to fold or go bankrupt in China. This meant the loss of most of the Chinese middle class who owned business that relied on Chinese people patronizing their services, like clothing retailer, jewelry stores and expensive restaurants.
During the good times of economy growth driven largely by manufacturing and export economic improvement in net investment and revenue growth, many millions of Chinese people flocked to cities to find higher income jobs. In these cities bicycles were replaced by scooters, then motorcycle, then cars, then SUV's, but suddenly all this debt spending based on future forecast growth stopped abruptly as the fake economy, fake cities, fake roads, fake products, cloned and copied, cheater economy in China ground to a halt.
Looking to Alibaba or the big e-commerce platform in China, we see that a transition to a consumption based society happened in China as the economic miracle of becoming the worlds manufacturing hub drove much industrial development, investment and economic growth. But without a real middle class of professionals in a broad range of industries like America, China was left with make fake economic miracles, or the wrong dream if you will. Xi and most of the CCP government are the only people making good money by world standards, but they are a small part of the Chinese population. While the USA has a bell shaped wealth distribution, the data plot for income inequality in china looks like a hockey stick where a tiny minority control 99% of the money.
The Russian Federation has a few thousand billionaires and everyone else in Russia lives in relative poverty. In other words Russia has a virtually non existent middle class or radical income inequality debacle. When the communist government of the USSR collapsed a cash grab happened where most of the diplomats in the communist government, a few thousand people, took control and ownership of all the industrial capacity and industries in Russia, a huge portion of which are based on oil exports to Europe and America, though thats come mostly to a stop because of sanctions against Russia for being the aggressor of the War in the Ukraine, under the deranged leadership of Vladimir Putin, a warped sicko as evil as Adolf Hitler.
Ask yourself why people in Shenzhen China are behaving erratically waiting in like for 3 hours at the local Apple Store to buy the latest iPhone when they have $12,000 or more in personal debt and make less than $15,000 in annual income. The new poor in China emerge as the fake middle class disappears. To pay off their debt they would have to work for almost 2 years without buying anything. Chinese people that grew up in the 1980s seeing the economic miracle believe "Money is to be spent not saved" or invested apparently. They work 6 days per week from 9am till 9pm, but cannot endure the daily grind as a lifelong career path to greater income, wealth generation or actually success. They have been seduced by advertising believe in dreams of opulent city life. Companies in china willing to spend millions on ads to sell the idea of a wealthy city life to people who could never afford such a contrivance. These ads are a kind of psychological inception designed to seise the consciousness of consumers so they believe that buying more nicer things defines their progress as individuals.
A surge of new poor in China reflect all the fake cities, roads to no where, cloned and copied products, edible food oil debacle, economic downturns from sanctions imposed on China, and other fake economic progress based on flawed projections of future growth. As people in China made more money they started buying expensive homes that were at the top of their budget. Flashy hyper-cars or supercars they could not afford to fuel or maintain. Stringent government lockdowns during COVID19 closures also closed down thousands of businesses in China. All those good income earning entrepreneurs suddenly lost their incomes, unable to pay their home loans, car payments or food expenses, the economy started crumbling.
House poor in expensive housing with nice cars but no cash, no money, no operating budget. They purchased when the income was good, during times of economic growth and wealth creation from all the manufacturing in China and derivative industrial and commercial activities to support high volume manufacturing so many kinds of goods. Many western countries profited from selling companies in China equipment and expertise. Most of the previous Chinese middle class use only digital payments on phone apps or credit cards and have no gold or cash and are mired in personal debt. Many of the new poor living in luxury apartment but can't even afford food unless it goes on sale for lower prices, they hunt value discounts, because they are barely scraping by. "Should I add an egg to my cheap noodles?" a common idea among the new poor, because the egg the expensive part! Massive home loans, car loans, private school tuition, tutoring, energy, food, they are barely scraping by.
It is hard with such rapidly changing market dynamics that no longer work with traditional approaches, especially in a labor market that age discriminates hiring anyone over age 35. The onset of the pandemic quarantines and lockdowns disrupted most profit generating businesses in China, many unable to pay their debts or continue, forced to fire all the employees and shut down, creating a surge of unemployed people looking for work in a crowded completive labor market full of young people trying to get started. The cold stark reality is that the world is not fair and very unfair to older people because of age discrimination. Surviving this economic downturn meant many had to adapt frugal meticulous cost cutting lifestyle choices, to step aside and let the world pass them by, unable to pay to play or engage patronizing expensive businesses, or buy nicer products or services. Millions of small businesses in China deregistered and their once wealthier owners forced to work entry level jobs that pay significantly less while being moral defeating because China has highly educated people working entry level jobs that were typically taken by uneducated people, like food delivery or ride hailing (Uber/ Eats) etc
The outlook looks bleak, no plans or ability to stimulate growth based on consumption as the sales markets inside China also sharply declines. This meant an overall decline in revenue, taxation and an economic downturn that continues. Transforming China from a poor rural to wealthy urban society was not possible in such a short timeframe. Many building built from 1980 to 2015 in China are made poorly and prone to mechanical problems and structural failing, not made in a high quality way, it was faster cheaper and all about massive housing market development, but just like the mortgage loan debacle 2008 in America from speculative investing mortgage backed derivatives, the Chinese housing market become widely inflated. Even Japan has a problem with the Lost Generation because home prices are so high in Japan while jobs and opportunities are very rare or hard to find.
Many flashy people sporting expensive clothing and expensive vehicles trying to appear well off are actually poor in terms of annual income. They cannot afford time off or leisure or travel or to enjoy the nicer things in life. Many have impressive social media presence online, while their financial and emotional wellbeing far worse. Many fake rich people can spout off buzz words, sounding intelligent or skilled in the equites markets but unable to develop a revenue stream revealing the lack of real understanding. While someone can claim to be a venture capitalist, that requires tens of millions or billions in cash or high liquidity fungible bits in a network on bank server mostly. Market research or resource integration, or how to leverage growth, they might sound like an economics professor but actually work a daily grind surface job that barely covers the costs of their basic life expenses.
Many people online appear glamorous but that superficial fake trust fund child persona melts when they are approached in first person. Unable to sleep, nervous, anxious and fearful, these people are also suffering from identity crisis, mental problems and are emotionally unstable or unable to engage in a healthy relationship. Many are clinging to shreds of the former growth era, saddened and filled with dispart as the poor choices of the CCP leadership hit hard on the economic realities of real world Chinese people. The CCP bailed out itself while selling out the Chinese people. End the CCP a cultural movement gaining steam because more people around the world are recognizing that China has the most evil government in the entire world!
When all the economic progress tied up in home value, any downturn to housing prices translates into economic decline. The Chinese Communist Party a massively corrupt bureaucracy and the largest employer in China, but has slashed incomes by 30 to 40 percent for many government employees. That means that less than 3% of people in China are actually middle class. America as 60% middle class in the 1960's and 1970's but now down to about 50% middle class today in 2024 by comparison. Forbes claims that only 0.7% of the 1.4 billion people in China are "White Collar" professionals.
When all the economic progress tied up in home value, any downturn to housing prices translates into economic decline. The Chinese Communist Party a massively corrupt bureaucracy and the largest employer in China, but has slashed incomes by 30 to 40 percent for many government employees. That means that less than 3% of people in China are actually middle class. America as 60% middle class in the 1960's and 1970's but now down to about 50% middle class today in 2024 by comparison. Forbes claims that only 0.7% of the 1.4 billion people in China are "White Collar" professionals.
Zygmunt Bauman, a renowned Polish scholar said something like "While every society has its impoverished, the root cause depends on societal perspectives as the solutions differ. Consider the onset of industrialization as a producer society with growth driven wealthy creation that transitions to a consumer society. During the production stage of development the people are indoctrinated with a work ethic, believing that not working was evil or sinful. In this improvised synonymous with unemployment driven by economic, moral or enforced motivations, many poor are compelled to take factory jobs even the wages from working such jobs can barely sustain a minimal living standard. During the 1970's western nations gradually transitioned from a producer society to a consumer society where consumption replaced the traditional work ethic, and where consumption emerges as the dominate society value in a consumer driven era where the improvised are no long merely the unemployed but also those that do not consume."
These individuals often find themselves unable to seise opportunities or make choices to fulfill societal roles and thus are sidelined from both standard and affluent lifestyles. Upon entering the producer society the indigent were redefined as a large poor of reserve labor, equating them with unemployment and destitution, however they remained valuable as the affluent pushed them into factories where they were coerced to work longer hours with less pay, through moral obligations to economic incentives or outright forced labor aimed to exploit their labor as long as they had jobs they also felt a sense of dignity, but in the consumer society the impoverished evolved into non-consumers. Modern economies no longer demand vast labor forces, in part because of automation and robotics applied to manufacturing lights off and similar, whether the destitute participate in production or not has little impact on productivity or capital profit, which from the capitalist perspective say that producers are temporary and replaceable or disposable.
Crucially if an individual does not consume they are deemed valueless. For the first time in history the impoverished became entirely redundant. The poor in the consumer society became superfluous and unwanted, contributing not to societal wealth but societal burden. Unlike wester society experiences, the Chinese economy evolution a concentrated and extreme case within a brief timeframe. Consider the Mao era economic progress based on vast agricultural development of food producing farms. After China entered the World Trade Organization, the focus shifted to a manufacturing for export economy where western countries would consume the exports as the welcomed China as the new manufacturing hub for the entire world. In 2001 foreign capital investments started flooding into china, fueling the building FEZ or free economic zones where most of the factories in China were built. Then booms in real estate, online gaming, e-commerce, electronics, and foreign trade powered radical wealthy generation. Many Chinese cities experiences thousands of percent increases in revenue flow, fantastically increases tax revenue for local governments. Local governments then invested in roads, multi story housing developments, power plant construction, and other infrastructure based on future increases in revenue growth and taxation, that largely failed to materialize after 2019.
"At the forefront of industry even pigs can fly" says founder of Xiomi, that economic prosperity usually translate into increasing corporate profits, sales and cash flow, maximizing the utility of existing capacities that promotes higher profit forecasting that encourages businesses to increased fixed investments. Any further economic growth relies on stimulating consumer purchases. "Whoever can supply them illusions is easily their master" ~ Gustave Le Bon in his seminal work on crowds and the popular mind. The rise of consumerism in China transformed branded commodities into emblems of status and identity.
How else can someone prove their love Haute Michelin starred restaurants if not to dine at such places. How about working out at fancy gyms to be observed or giving expensive diamond rings as engagement gifts? When consumerism becomes the collective consciousness individual critical thinking is often overwhelmed as many become accustomed to seek validation through consumption and gauge others by this same metric of competitive culture flaunting expensive things begins to dominate with everyone trying to catch up with he Joneses or one up each other. Their optimism and hope for a better future blinded by a myopic outlook, with short term affluence becoming reckless debt spending. A common sentiment that a move up to a weather class inevitable and present consumption merely the anticipation of future prosperity.
The economic policies of Xi leader of the CCP, led to the withdrawal of foreign investments. This caused the closure of many private enterprises of business in China and general overall economic downturn. The promise to demographic dividends vanished and opportunities for lucrative investments dwindled. The once high flying pigs found themes in false prosperity based on misguided expectations of future growth, as debt spending consumption bubbles burst,
Many people who made money in China left and moved to Canada, America and countries in Europe an South America. They take millions, usually 5 to 25 million dollars with them when they leave china, having stepped on other Chinese people to climb the latter of income generation, effectively harming or hurting others with lies or corruption or dishonesty or cheating or betrayal, so some very high quality personalities move abroad. They regularly buy expensive housing paying for it outright, then drive expensive newer German luxury cars with a driving style that reminds me of DUI or driving under the influence of intoxicating substances like alcohol or barbiturates or cannabis, with terrible situational awareness bobbing agains the fog line and lane line by not looking ahead far enough as the driver of the automobile. I have and upload dash cam videos of such observations.
The vast corrupt bureaucratic apparatus of the Chinese Communist Party a group uninvolved in genuine production of products or services, and thus do not contribute value or create added value to the Chinese economy, thus existing as a parasite draining money away from the tax paying citizens, many of whom now struggle deeply with depression, weight gain, hopelessness, under a pile of increasing personal debt, entangled in sleep deprivation with empty marriages, who feel like colossal failures, seeing only a looming darkness that obscures any glimpse of a brighter future.
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