“Rectifying disorderly low-price competition among enterprises” is probably the most important one. It sounds like something of the order of “houses are for living, not for speculation”, the expression Xi used to announce the deflation of the real estate bubble.
Xi is saying he wants an end to “involution” (“内卷”, Neijuan), a term he mentions several times in his text, and which is very trendy in China right now. Probably the best translation for it is not actually “involution” but more something akin to “rat race”, “race to the bottom” or “destructive, zero-sum competition”. It doesn’t only relate to businesses, but also to social issues in China like the extreme competition for education, the 996 culture, the feeling of running faster and faster just to stay in the same place.
It’s true that when you look at the current extreme competition in business, it makes everyone worse off: for instance China leads the world in solar because of this competition but when you look at it individual companies’ margins are razor thin, making this quite the pyrrhic victory for individual Chinese companies.
Same thing for education for instance, where you need ever-higher degrees for the same jobs. What once required a bachelor’s now needs a master’s; everyone studies harder but no one is better off.
To call changing all this “major” is even an understatement given how deeply embedded these competitive dynamics are in all layers of Chinese society and economy. This isn’t just tweaking policy at the margins: this is a bit like trying to transform a Formula 1 race into a marathon while the cars are still on the track. He’s right that this is more and more of a problem in Chinese society but at the same time much of China’s current architecture is built around this hypercompetitive model.
What Xi promotes instead is “high-quality development” which, when it comes to business, means innovation and differentiation rather than price wars, sustainable margins and market consolidation.
He doesn’t touch much in his article about the social changes this implies but we got a preview about what that could mean a couple of years ago when China banned the tutoring industry - an attempt to break the education arms race where parents were outcompeting each others to give their kids every possible edge, which wasn’t good for the kids and the families’ wallets. A typical example of “Neijuan.”
Let’s see how this all materializes but the one thing is sure: the level of ambition here is staggering, even by Chinese standards.
https://xcancel.com/RnaudBertrand/status/1967520398112878698
I’m gonna try to interpret what I think I understand from this. Please respond if you think I’m mistaken on something.
It sounds like they plan to assert even more control over enterprises. Either getting more “golden shares” or making them more powerful or maybe even full on nationalizing a bunch of importent enterprises.
This probably involve two things:
1 - getting enterprises to give worker more for the same work (so that it’s not necessary for them to work so much overtime), aka probably higher salaries + more benefits.
2 - Taking even more advantage of China’s automation capability. They’ve been working on various robots and AIs capable of automating work to an extent never seen before for a few years now, they’re probably going to go all in on this, even more than before.
The only way to deal with this problem while keeping prices low that I can think of is nationalization. So maybe that’s what they’ll do.
On that point, they may want even more peoples going into engineering and science. Since getting enterprises to be less picky when hiring for engineering or r&d jobs would help with that. Significant given that China dominate in number of patents and cited scientific papers.
Innovation and differentiation rather than price war seems consistent with wanting more peoples going into engineering and r&d, wanting to push for more automation, nationalization and wanting workers to get more for the same positions.